DeutschThe crypto industry is currently undergoing change. The topic of “energy consumption” in particular has recently taken up a lot of space around cryptocurrencies. One example is Elon Musk’s discussion about the energy consumption of the Bitcoin network. This has led to numerous energy-neutral and sustainable projects that are currently attracting attention. Environmentally friendly crypto projects: This small overview is intended to help show the current situation (as of today).
Industry under Constant Fire: Environmentally Friendly Crypto Projects a Must
Cryptocurrencies are typically “mined” in data centers that rely on energy from fossil sources (e.g. coal). The combustion of these fossil fuels leads to an inevitable increase in carbon emissions, which in turn contribute to climate change.
According to various studies, Bitcoin (BTC) consumes more energy than any other type of cryptocurrency. The mining process for producing bitcoins consumes around 116 terawatt hours (TWh) of electricity per year. This corresponds to the electricity consumption of a larger EU country. Fortunately, some mining centers are already switching to renewable energy sources such as solar, hydropower, wind or even geothermal energy.
Dealing with social issues and the environment are among the key parameters for the growth of companies in the coming decades. That is why the market-leading companies in various industries are aligning their operations accordingly. The crypto industry has also faced heavy criticism due to the excessive use of energy for the mining process – and recently also heavy regulatory countermeasures. First, China began with strict measures against Bitcoin mining and forced the miners to give up their business or move to neighboring countries. But also in the rest of the world, eco-mining is moving into the foreground.
Related: Kazakhstan instead of China: Mining continues to shift
The whole thing also affects the market for non-mineable tokens (Non-Fungible Token, NFT), whose minting requires a lot of electricity and therefore mostly coal power. The minting of an NFT is estimated to consume as much energy on average as an EU citizen in an entire month. The NFT market reached its peak in May 2021, but since then the number of NFT users has declined significantly.
Which Form of Cryptocurrency is the most Environmentally Friendly?
Almost overnight, cryptocurrencies went from a fringe innovation in the financial sector to a mainstay of modern investment. Unfortunately, the crypto mining is not exactly the most environmentally friendly process, as it consumes enormous amounts of energy. But as more and more investors and companies understand and appreciate the economic benefits of switching to an environmentally friendly cryptocurrency, the topic is moving further into focus. And investors are paying more and more attention to energy consumption in addition to the yield opportunities.
Infographic: Proof of Work vs. Proof of Stake – a comparison
As a result, more and more blockchain and crypto projects are switching from the Proof-of-Work (PoW) consensus model to a more energy-friendly Proof-of-Stake (PoS) consensus model. But numerous projects have already proven their foresight in advance and have gone in this direction from the start – led by Open-Source Distributed Ledger IOTA – a project that is geared towards the ecosystem of the Internet of Things (IoT).
As is usual for cryptocurrencies, their environmentally friendly variants are also relatively volatile, but each of them has its own methodology to achieve both profitability and sustainability. Environmentally friendly crypto projects: CoinPro.ch introduces them in front.
- Cardano
According to Market Realist, Cardano is considered the most sustainable cryptocurrency currently. Founded on peer-review research and developed through evidence-based methods, the Cardano project is based more on the percentage of coins a miner holds than on the processing power of his equipment. Cardano networks also have some of the highest security features that prevent digital attacks or theft. Read more: Morningstar analyst calls Cardano one of the top 3 cryptocurrencies - SolarCoin
SolarCoin is one of the most interesting cryptocurrencies on the market because it consumes less energy than traditional Bitcoin mining while encouraging investment in solar panels. For every megawatt hour generated from solar power, a SolarCoin is created. - BitGreen
Like SolarCoin, BitGreen also promotes environmentally friendly actions such as carpooling via a ride-sharing app or buying sustainable coffee. BitGreen was founded primarily because of unsustainable and energy-consuming currencies like Bitcoin. - Chia
Chia replaces the “Proofs of Work” method known from the Bitcoin network with “Proofs of Space”. This is a cryptographic technique where verifiers show that they are using unused hard drive space for transactions and securing the network. Chialisp is Chia’s transaction programming language, which is powerful, easy to audit, and secure. - Nano
The cryptocurrency Nano also uses a proof-of-work model for mining. This model uses an energy-efficient block lattice instead of the digital blockchain architecture. Therefore, Nano is considered one of the cleanest alternatives to Bitcoin. - IOTA
IOTA uses an alternative form of technology with “Tangle” and is therefore unique for two reasons: First, it does not require huge, overheated data centers and second, it does not require miners. Tangle means that every device that wants to carry out a transaction in the network must confirm at least two other transactions. The more transactions that are carried out, the more efficient the network becomes. Therefore, IOTA offers an alternative to the traditional blockchain processes that are used to mine Bitcoin & Co. The distributed IOTA ledger makes it possible to transfer values and data free of charge throughout the IoT ecosystem. The IOTA Distributed Ledger is a completely new development from the ground up, which places great emphasis on the social impact of all projects set up. IOTA has even launched its own NFT marketplace, which is based on energy-saving solutions and has so far met with a great response. In addition to socially useful projects, IOTA also works in the areas of environment and social affairs. - Enjin Network
The Enjin Blockchain Network has now become the leading social gaming community platform, serving a massive user base of 20 million people. Enjin’s ecosystem is based on non-fungible tokens and is powered by blockchain technology. As a member of the Crypto Climate Accord, Enjin promises to develop solutions that promote scalability without compromising sustainability. The Enjin network is considered climate-neutral because the in-house Jumpnet blockchain consumes 99.99% less electricity than Ethereum consumes. Related: Enjin (ENJ) price up 800% in the last month - Elrond Network
The ultra-fast Elrond network processes 15,000 transactions per second and develops blockchain solutions for the Internet of Things (IoT). With transaction costs of just $0.001 and a latency of just 6 seconds, the Elrond network is up to 1000 times better than its competitors in terms of price, scaling and blockchain pace. Developed with conscious measures against high energy consumption, with a focus on CO2 footprint compensation as well as various wind energy initiatives, the network has made a name for itself among the most well-known green cryptocurrencies. - Qtum
The Qtum ecosystem has its own open source blockchain that can be used to execute smart contracts and Defi products as well as robust decentralized apps (DApps). In addition, there is also the application of smart contracts, first-class security instruments and the hosting of non-fungible tokens (NFTs). Qtum offers a strong security infrastructure of the Bitcoin blockchain and already uses the energy-friendly Proof-of-Stake (PoS) model. - Minima
This decentralized data and value transfer company is revolutionizing the blockchain by lowering the high gas costs through its super-slim protocol, which can even be operated on a mobile device. With Minima, mobile phones act as hubs, so the cryptocurrency can be mined directly from the mobile phone without the need for additional devices. In addition to decentralized data and value transfer, the protocol is also resistant to censorship, while lowering the barrier to entry promises broad scalability and acceptance.
Regardless of the current discussions, most cryptocurrencies are becoming more environmentally friendly from day to day. Should the trend continue, it could prompt investors to think just as carefully about the sustainability of their investment as about the profits themselves, and then environmentally friendly crypto projects naturally have very good market opportunities. It remains exciting.
More insights and background information on cryptocurrencies
