On May 12th, Elon Musk announced that Tesla would no longer be accepting bitcoin (BTC) payments due to environmental concerns.
Experts have raised concerns that BTC has a negative impact on the environment, as mining it is extremely energy-intensive. On the other hand, investors argue that much of energy consumed in the mining and processing of bitcoin is clean and renewable.
Studies have found that around 70% of BTC’s energy consumption is carbon neutral. Additionally, it can be mined just about anywhere, meaning there’s a larger range of renewable energy sources that can be accessed, such as hydropower in China or geothermal power in Iceland.
Despite this, there are still environmental concerns surrounding BTC mining. The good news is there are some greener alternatives out there. Here are some examples of cryptocurrencies that have similar characteristics to BTC but are much more environmentally friendly.
Nano aims to use more eco-friendly practices without relying on mining, printing or minting. For instance, it uses an Open Representative Voting (ORV) protocol for improved efficiency, while using minimum energy consumption. Nano aims to address the current inefficiencies in conventional payments channels by limiting transaction fees and providing faster processing speeds.
ECO tokens are rewarded through certain actions that help improve the environment. For example, eating meat-free meals, switching to a green energy provider or cycling to work instead of driving. In exchange, you’ll be able to spend the tokens on ecological goods, services and experiences.
SLR is similar to ECO in how it rewards its users. This time, however, you’re rewarded with SLR for installing solar panels on your roof. You can then exchange the tokens for government currencies on cryptocurrency exchanges.
BITG was created as a response to BTC’s environmental impact. Again, it functions in a similar way to ECO when it comes to rewarding users for certain actions, such as buying sustainable coffee or volunteering. It uses a low-energy Proof of Stake (PoS) algorithm and can be spent through BitGreen’s partners or traded on certain exchanges.
Power Ledger (POWR)
This acts as an operating system for new energy markets. Specifically, it allows users to directly buy and sell renewable energy to each other without the need for a power or utilities company.
There are other well-known cryptocurrencies striving to be more environmentally friendly, too. Most notably, Stellar (XLM), Ripple (XRP) and Cardano (ADA).
XLM uses a model that validates transactions in a way that’s energy efficient and only requires a couple of distributed nodes to confirm each one. As a result, XLM does not use an excessive amount of energy.
XRP boasts a low kilowatt hour (KWh) per transaction - essentially, this means that that less energy is used during transaction processing.
ADA relies on a proof-of-stake (PoS) model, which instantly makes it more environmentally friendly. Moreover, it also claims to use just 6 Gigawatt hours (GWh) annually, which is significantly less than the amount BTC consumes.
An article by Internet Retailing reported that in the UK, 80% of internet users aged 16-64 are increasingly concerned about the environment. As a result, this affects the brands they choose to interact with.
When asked to elaborate on their concerns, 64% reported that plastic pollution was their biggest environmental worry. Moreover, 56% reported that they believed the energy industry needed to do more to reduce their impact on the environment. Air pollution was also a concern among 49% of respondents.
But how does crypto come into this? Let’s look at the environmental damage of cash. Most notably, mining and transporting pennies.
According to the American Council on Science and Health, the mining and transportation of pennies has caused 48,000 tonnes of carbon dioxide emission. For reference, one gallon of diesel fuel produces 23.8 pounds of carbon dioxide fuel when burned.
A California-based bike store chain, Mike Bikes, stated that it no longer accepted pennies as a form of payment in their stores because pennies waste natural resources and are toxic to the environment. The chemical composition of pennies in the USA is 3% copper and 97% zinc - and they are largely made from virgin ore. This was backed up by an article on Treehugger, which noted that it didn’t make sense to move 50,000 tons of rock to get a thousand tonnes of zinc – all for something that people use less and less in recent years.
The harmful process of mining, smelting, minting and trucking the pennies is also a consideration.
While cryptocurrency uses a large amount of energy, there are so many out there that use increasingly-environmentally friendly practices. Additionally, the increase in environmental awareness is likely to influence people’s choice of cryptocurrency.
Crypto is headed in the right direction. The introduction of less energy-intensive coins and renewable energy for mining could make it a significantly eco-friendlier option going forward. BTC itself could become an eco-friendly digital currency, now that influential public figures like Elon Musk are working with miners to help make it greener.
Will our increased awareness of the environment influence the mainstream adoption of eco-friendly cryptocurrencies? Let us know your thoughts!