In 2022 we saw even more cryptocurrency companies emphasizing “green energy” to reduce carbon emissions, as more and more users demand more environmentally friendly blockchains, but also due to growing investor awareness of climate change and government concerns about energy consumption in the cryptocurrency sector.
The benchmark of the year is Ethereum’s transition from the proof of work (PoW) mechanism to that of proof of stake (PoS) – which was hailed as a technological miracle in the way it was achieved – as it reduced network energy consumption by 99.9% in doing so.
Here are the most environmental friendly blockchains as of writing this article.
The Chia Network takes a unique approach to lower carbon emissions, using a time and space proofing protocol that is very different from the original energy-intensive cryptocurrency mining mechanisms that require powerful GPUs and processors.
The process works through a decentralized network of nodes acting as clients and servers connected to their peers. The low processing power requirements allow anyone with a decent spec computer to collect Chia tokens (XCH).
The network relies on farmers to provide storage and then assigns mining rights to each miner based on the randomly generated numbers assigned. The storage whose stored numbers closely match those generated by the network earns mining privileges. Use cases for the Chia Network include support for decentralized finance projects, asset creation platforms and decentralized exchanges.
On the energy front, the Chia Network claims to use about 0.12% of the annual energy used by the Bitcoin network. While the idea is inventive, it has drawbacks. Such as the growing demand for hard drives and solid state drives in countries like China, because XCH mining can wear out drives in as little as 40 days in some cases.
Despite this drawback, the network has presented money-making opportunities for data storage providers with unused space and companies with worn but functional data storage hardware that is no longer actively used.
The Algorand blockchain network since its creation has focused on an environmental focus and has made significant strides towards becoming carbon negative over the past two years.
In 2021, Algorand partnered with ClimateTrade, a company that uses blockchain technology to help businesses offset their carbon footprint by enabling them to track their emissions to pursue broad sustainability goals.
The partnership has enabled a portion of the fees from transactions on Agorand to be used to purchase the carbon credits needed to offset the grid’s carbon footprint. Algorand is a proof-of-participation blockchain, making it more energy efficient than Bitcoin’s consensus proof-of-work mechanism.
Solana is a blockchain platform designed to host decentralized applications. It uses the PoS consensus mechanism to validate transactions and incorporates the principles of green token generation. The platform can theoretically process over 60,000 transactions per second.
Transactions within the chain are settled using the SOL currency. The network, since its inception, has been working towards carbon neutrality and reached the milestone for the first time in 2021 by participating in a carbon offset program.
Earlier this year, Solana received a favorable carbon rating from the Crypto Carbon Ratings Institute (CCRI) for consuming the lowest energy at a rate of 0.166 watt/h per transaction.
Solana’s efficiency is also boosted by another new mechanism called Proof of History (PoH). With PoH, a timestamp creates a historical record to prove that an event occurred at a specific time. The smart, innovative solution allows the network to focus on validating current transactions without having to report previous time claims from nodes. This creates consistency, as nodes must adhere to the order of transactions set. The process makes the protocol fast and energy efficient.
Avalanche is a blockchain platform that aims to address the blockchain trilemma: of scalability, efficiency and security, using the proof of participation mechanism. The platform uses the native currency, AVAX, to facilitate transactions and distribute rewards.
Avalanche has been lauded as one of the most energy efficient chains in 2022.
According to a research study by CCRI, the public blockchain, Avalanche, consumed about 0.0005% of the amount of energy used by the Bitcoin network, which is quite impressive.
These and other high performance properties have made Avalanche the platform of choice for projects with environmental concerns.
The future of environmentally friendly cryptocurrency projects
Eco-friendly cryptocurrency projects are here to stay. They are designed to be environmentally sustainable and are becoming increasingly popular with users due to their potential for scalability and lower fees. The benefits they provide will likely lead to the development of more environmentally friendly blockchains while encouraging the improvement of existing ones.
Consequently, 2022 marked a new era where green cryptocurrency projects are sought after and popular.