Technological progress and sustainable development may be at odds sometimes. However, it is the environment that should be humanity’s top concern and we should not let technology exert a negative impact on it.
The multi-faceted nature of blockchain has allowed it to secure a place in a variety of fields, including supply chain, healthcare, fintech, and insurance. The technology also facilitates crypto mining and NFT minting which have proved to be the most popular blockchain-powered activities.
However, all that glitters is not gold. Crypto mining has been a sore point for eco-activists and environmentally conscious businesses because of the amount of energy its complex levels of computation require. Notably, the Bitcoin network has been the most “energy-thirsty”. There is even a special website, the Cambridge Bitcoin Electricity Consumption Index, which tracks the network’s power demand.
But is there any hope that the situation will get any better? Can crypto mining and NFT minting become more eco-friendly? Read on to find out more about the solutions that can contribute to green cryptocurrency mining and NFT minting, and discover environmentally friendly cryptocurrencies which are already out there.
Why are blockchain crypto mining and NFT minting bad for the environment?
Crypto and non-fungible tokens have sparked a lot of heated debate, and their environmental impact has been literally the hottest topic. But how exactly do these processes harm the environment?
The energy problem with crypto mining
To date, more than 20,000 cryptocurrencies have been created, with Bitcoin and Ethereum having the most widespread appeal.
People across the globe have been embracing crypto because of its extraordinary benefits, including accessibility, decentralization, inflation protection, diversification, simplified transfer of funds, cost-effective transactions, and more. As a result, crypto has become enormously popular and much sought after. The report published by crypto.com states that the total number of crypto users by December 2022 could be as high as one billion.
Still and all, crypto mining comes at a cost and has a huge energy footprint. The activity needs resources such as:
- High-performing computer units contending against one another to verify transactions in exchange for coins
- Huge amounts of electricity for fueling complicated calculations
- Power that often comes from fossil fuel-generated non-renewable energy sources
According to Fitch Ratings, if crypto mining remains unregulated, energy markets could face severe disruptions, leading to power resources being diverted from other sectors, particularly in emerging markets.
Also noteworthy is that the majority of the most prominent tokens such as BTC, ETH, DOGE, LTC, and so on are predicated on the Proof of Work (PoW) consensus mechanism that is widely considered the most energy-consuming consensus.
NFTs and their environmental impact
As far as NFT minting is concerned, it is essential to stress that NFTs themselves do not exert any impact on the environment. It all depends on the NFT marketplace platform they are minted on.
The majority of present-day NFT marketplaces are created on the basis of Ethereum which is reliant on the PoW consensus mechanism.
Ethereum has become the blockchain of choice for NFT minting platforms because of the advantages it offers: the ability to effectively handle digital transactions, a well-established developer community, and a large pool of NFT enthusiasts who produce and buy their NFTs on Ethereum-powered platforms.
As a result, a lot of popular NFT marketplaces have been launched on Ethereum, with OpenSea, Rarible, Nifty Gateway, KnownOrigin, SuperRare, and Decentraland being the best examples.
The problem is that the Ethereum blockchain (just like Bitcoin) is energy hungry. It’s estimated that a single Ethereum transaction needs 181,55 kWh of electrical energy and emits around 101 kg of CO2, equivalent to the carbon footprint of 224,427 VISA transactions or 16,877 hours of watching YouTube ?.
Get insights into this niche Flow-powered NFT marketplace for opal trading
Are there any options for green crypto mining?
Fortunately, yes. There are some viable initiatives and approaches that have the potential to alleviate the burden and promote green crypto mining. Though there is still a long way to go before mining becomes 100% eco-friendly, the solutions that we will look into below give a ray of hope that the situation can change for the better.
Shifting from PoW to greener consensus algorithms
As we have stated, the PoW consensus is too energy consuming, but is also the most widely used, as the two popular blockchains — Bitcoin and Ethereum — are based on it.
Considering the key disadvantage of PoW, developers and blockchain enthusiasts have tried to introduce more eco-friendly alternatives, with the Proof of Stake (PoS) consensus mechanism being the most successful.
PoS is said to consume less energy than PoW since instead of relying on massive computational power to solve a complex math puzzle, it distributes the right to validate transactions across various validators according to the percentage of tokens locked by each validator.
It is expected that soon currently-PoW-powered Ethereum will eventually move to the Proof of Stake consensus which will make the blockchain “a bit greener”. The shift to PoS also has the capacity to lower ETH inflation, provide it with better security, and position it as a digital bond.
Also noteworthy is that Proof of Stake has served as a foundation for several other similar yet distinct consensus mechanisms such as Delegated Proof of Stake (DPoS), Liquid Proof of Stake (LPoS), and Proof of Staked Authority (PoSA).
What’s more, many other sophisticated and more sustainable consensus mechanisms have come to the fore. These include Proof of Authority (PoA), Proof of History (PoH), Proof of Ethic (PoE), Proof of Weighted Randomness (PoWR), and many more.
Take a look at our insightful overview of different consensus mechanisms
Buying carbon credits
Another solution that can foster green crypto mining is the introduction of carbon credits.
Carbon credits are viewed as certificates representing CO2 or other greenhouse gasses that have been removed from the atmosphere via a certain activity.
To make their activity a bit more sustainable, cryptocurrency miners can buy and retire carbon credits. This may help offset their carbon footprint coming from mining and pave the way for zero carbon emission crypto mining.
Relying on renewable energy sources
Fossil fuels are not the only energy source for crypto mining.
In fact, according to the Bitcoin Mining Council’s Q3 2021 report, 57% of the energy used for crypto mining comes from renewable sources of energy, including hydro, wind, solar, nuclear, geothermal, and carbon generation with carbon offsets.
However, this approach has a slight downside. Clean energy is now regarded as the cheapest and the most available power source in decarbonization-oriented countries, making it enticing to miners. As a result, it is expected that the interest in green energy will be on the rise.
Though it seems to be a win-win solution for both the environment and miners, the rush for green energy is bound to pose a challenge to the electricity sector. Given that other industries have been considering reducing (or even eliminating) their reliance on fossil fuels, the demand for renewable energy is constantly increasing, thus sparking tough competition.
And a bit of irony…
While we have been busy pondering how to reverse the impact of blockchain and tokens on the environment, we have missed a trick. As crazy as it sounds, distributed ledger technology and NFTs can be leveraged to upgrade the carbon credit landscape.
Evergreen Carbon Credits, for example, launched a sophisticated purchasing and verification system of certified carbon credits that relies on NFTs and blockchain. It enables individual businesses to choose the number of carbon credits they want to buy using a special online calculator. After that, an NFT certificate of the purchased carbon credits is transferred to their digital wallet.
How to make NFT minting more sustainable?
As we are cautiously optimistic, we will say that the biggest energy challenges related to crypto mining can be mitigated somehow. Of course, the target to make crypto mining totally green is enormously hard to achieve. But it is a relief to know that the global crypto community is attempting to make strides to combat the detrimental effects of crypto mining.
But what about NFT minting, huh?
As we have discovered, the sustainability of NFT minting depends on the blockchain that the corresponding NFT marketplace is running on.
Even though a lot of NFT platforms leverage Ethereum, the number of marketplaces based on alternative, more eco-friendly blockchains (the ones that leverage more sustainable consensuses) has been on the rise, e.g. Flow-powered xtingles, DigitalEyes on Solana, and so on.
If you are keen to create your own NFTs or just want to find out more about NFT blockchains, we suggest you peruse our comprehensive guide to the best blockchains for NFT development. We have compared ten blockchains based on parameters such as performance and execution speed (TPS), transaction cost, smart contract functionality, consensus mechanisms, and their level of eco-friendliness ?.
What eco-friendly cryptocurrencies are out there?
Crypto enthusiasts do not live by BTC and ETH alone.
As popular as they are, these cryptocurrencies are too expensive (for some enthusiasts) and energy-consuming.
The good news is that there is a vast variety of cryptocurrencies to choose from. Below, we check out some of the most popular green cryptocurrencies and the blockchains they are based on.
The Chia blockchain network has developed its own Chia coin that is less energy consuming compared to many of its crypto counterparts.
Chia farming relies on the Proof of Space and Time (PoST) algorithm. To start farming, users need just their PC and be ready to allocate extra storage on the hard drive.
While reliant on PoW, Nano uses advanced block lattice technology that allows the crypto to be relatively energy efficient and sustainable.
Unlike many other cryptocurrencies, Nano does not leverage a chain to record every transaction. Instead, the block lattice uses blockchain to produce an account chain for each network user. Therefore, the amount of energy needed to execute each transaction is small enough to be powered by ordinary computer units.
On top of that, Nano uses an Open Representative Voting protocol to minimize energy use and boost efficiency.
Based on a blockchain of the same name, Bitgreen is a cutting-edge sustainable cryptocurrency. It has been designed to foster and encourage the production of solar energy by rewarding generators with solar coins.
In addition to this, Bitgreen rewards its holders for shopping with sustainable and local vendors. All in all, the initiative strives to help grow conscious communities and substantially minimize the damage done to the environment.
IOTA uses a distributed ledger technology that is different from blockchain. It makes use of Tangle, a special consensus algorithm that obliges users to validate two transactions in order to complete their own IOTA-enabled transactions.
In May 2021, IOTA released statistics outlining a possible 33-95% decrease in its energy reliance. That was due to the Chrysalis upgrade that was initially aimed at cutting down IOTA’s energy requirement to over a millionth of a kWh per transaction.
Hedera is on the rise. In fact, back in May 2021, Hedera Hashgraph exceeded the number of ETH transactions. This milestone made it one of the world’s biggest cryptocurrency networks.
The technology that underpins Hedera is complex. The system relies on a note-comparing protocol that removes the need for progression throughout the entire blockchain.
Blockchain vs Hedera Hashgraph: which technology is better?
In spite of all their benefits, cryptocurrencies and NFTs do exert a less-than-positive impact on the environment and their production requires a lot of energy.
Luckily, some feasible initiatives have been rolled out to help make these activities a bit more sustainable. So far, the most promising of these have included switching from the PoW consensus to more environmentally friendly alternatives, purchasing special carbon credits, and utilizing renewable energy sources.
As well as this, many green cryptocurrencies have been introduced whose mining is far less energy intensive compared to Bitcoin and Ethereum.
Should you ever want to develop your own environmentally friendly blockchain solution, we have you covered.
Our blockchain experts at PixelPlex helped develop the HELO blockchain powered by the groundbreaking, eco-friendly Proof of Ethic (PoE) consensus mechanism invented by Nathan Trudeau, Founder & CTO at NuPay Technologies and PRISM.
Contact us today to find out what we are capable of. Be sure that our professional team will bring to life even your most challenging ambitions and ideas.