A Greener Way for Crypto. Why the industry is becoming more eco-friendly

Thousands of computers all over the world are constantly solving difficult mathematical problems to develop and maintain bitcoin. This indicates that the network is always consuming energy. And it's not an issue exclusive to bitcoin. Recently, concerns regarding cryptocurrency's effect on the planet have become more vocal in the discussion. The good news is that there are always new efforts being developed to boost the industry's green credentials. With this in mind, say hello to Codos.

Crypto has an appetite for energy

Annualized electricity consumption from worldwide crypto-assets surged quickly from 2018 to 2022, with estimates ranging from doubling to quadrupling. As of August 2022, it shows that crypto-assets use between 120 and 240 billion kilowatt-hours of electricity worldwide each year.

This range is larger than the yearly electrical consumption of numerous countries, including Argentina and Australia. This is on par with the total yearly electricity consumption of all conventional data centers throughout the world, or between 0.4 and 0.9% of the world's total annual electricity consumption.

The vast majority of power consumption for crypto assets is driven by consensus procedures. Proof of Work (PoW) is the most popular method, and that is what the Bitcoin blockchain uses. As more entities attempt to validate transactions for coin rewards, the PoW process is designed to demand increasing computer power.

Things in crypto need to get different

This is causing concern in countries all around the world, notably the United States, which has asked the industry to meet its climate targets. Reducing greenhouse gas emissions, avoiding operations that will raise electricity prices for consumers, avoiding operations that will decrease the reliability of electric grids, and avoiding negative impacts on equity, communities, and the local environment were all cited as goals that crypto-asset policy should prioritize during the transition to clean energy.

It's not a new battle to limit cryptocurrency's negative impact on the planet, and each year brings more rules in favor of renewable power. But can green energy be used in crypto as well?

Environmentally friendly alternatives

Many alternatives to the Proof of Work consensus process, which is intentionally inefficient, exist. For example, Proof of Stake is used in some energy-saving consensus techniques. With this system, responsibilities are distributed in direct proportion to the number of tokens in circulation. It requires no unique tools, and it cuts energy consumption by 99.9 percent. Although it is less secure than PoW, it has a far longer lifespan. Polkadot, Cardano, and EOSIO are just some of the blockchains now using it.

There are, however, digital assets that use less energy and hence have less of an effect on the environment. According to data from TRG Datacenters, IOTA (0.00011 kWh), XRP (0.0079 kWh), and Chia (0.019 kWh) appear to be the most energy-efficient coins (0.023kWh).

Another example is Codos, a global platform that encourages commuters to switch from traditional internal combustion engine vehicles to more sustainable alternatives. To calculate CO2 savings compared to driving, the Codos app employs machine learning and artificial intelligence to discreetly identify the mode of transportation employed.

"There is a crypto community behind many projects like this, but there are also many commuters out there who are already doing a good job, and most of them could do better. Our goal is to use this technology in a way that people can understand, where they can actually win something in a fun and innovative way," said Luca Kern, a co-founder of Codos during the interview with 10Clouds' media team. 

Finally, there is the Ethereum network that has upgraded to proof-of-stake. It is claimed that "The Merge," as this procedure is more commonly known, will drastically reduce Ethereum's energy consumption by 99.5 percent.

There is a thriving cryptocurrency trading community, DeFi lending platforms, NFT marketplaces, and other programs built on the Ethereum network. This is because Ethereum expanded upon Bitcoin's original concept by incorporating "smart contracts," essentially self-executing code that stores information on the blockchain. 'The Merge,' should strengthen the network and make it ready for expansion.

Conclusion

New initiatives are continuously developing to improve the cryptocurrency mining industry's environmental credentials as growing concern over the amount of energy utilized in cryptocurrency mining prompts action.

Renewable energy expansion, improved energy management procedures, and carbon offsets are all examples. The development of new, more environmentally friendly cryptocurrencies is expected, along with significant shifts in the protocols governing the use of existing monies.

Looking for a team to help you set up an Ethereum project?

Get in touch with our Head of Sales, Dennis Van Der Vecht, for a free blockchain consultation at dennis.vandervecht@10clouds.com or +48 793 200 141.