As a crypto enthusiast, you’ve likely read about crypto assets’ energy impact on the world. One challenge with cryptocurrencies is that their mining consumes a lot of energy. According to one recent report, the total energy consumption related to crypto assets is close to 120 to 240 billion kilowatts per year. This energy can be easily used to power an entire city worldwide. It is because of this reason that the call for a greener alternative has risen. Developers have been searching for new consensus mechanisms that can be used to validate transactions and add data. The proof of stake consensus mechanism has risen as one of the alternatives to provide validation.
Similarly, the rise of green cryptocurrencies is just on the horizon. You must be interested in knowing what currencies are currently working with a greener principle. So let us dive right into the depths of a sustainable crypto future.
Developers Searching for Sustainable Alternatives
Source / Greener approach for the crypto world
The Ethereum Foundation is already working towards providing a more sustainable mechanism to the ETH chain. With the launch of Ethereum 2.0, it is claimed that energy consumption on the Ethereum blockchain will reduce by 99.95 percent. Since Ethereum is the second biggest cryptocurrency in the market and its chain is used for a lot of DeFi expansion, the decision for ETH to go green will also create a large impact over other assets. Elon Musk was seen as a spokesperson for the crypto world when he announced accepting Bitcoin payments for Tesla. But as he got into a deeper understanding of its mechanism, he too had to pull out of accepting BTC payments as it would cause an even further impact on energy consumption. Developers are now trying to shift towards using renewable energy sources for mining and validation purposes.
Moreover, they are also looking for consensus mechanisms that will reduce energy consumption to a minimum. Some unused conventional power plants are also employed for crypto mining and validation. Crypto developers have also become successful in reducing energy consumption and have come up with currencies that use the lesser energy.
Greener Cryptocurrencies
Crypto developers have already started to seek a greener approach for cryptocurrencies, and the market currently has several crypto assets that work on greener mechanisms. Let us take a look at some of them and appreciate that the crypto world is not just about finances; it is also about a sustainable future.
CHIA
You will be surprised to know that ‘farming’ crypto is also an option today. That is what the CHIA coin is currently promoting in the crypto space. Unlike BTC, this crypto asset does not utilize the proof of work mechanism and thus does not need to be mined. Instead, users must employ their hard drives and, ultimately, their computers to ‘farm’ the cryptocurrency. It is a concept called the ‘proof of space’ where the users have to use software to integrate a mechanism where the hard drive is used to slowly ‘farm’ the currency. The unused space on the hard drives is used as a ‘plot’ where the algorithm works to solve equations and add the crypto asset to the plot. This reduces energy consumption by a lot and is therefore considered a greener alternative for cryptocurrencies.
Cardano
Talking about green cryptocurrencies, the honorary mention of Cardano is important. It uses a proof of stake mechanism called the ‘Ouroboros.’ Here, unlike the competition amongst the participants for mining the crypto, you will have to pay a fee to join the staking process. Your crypto asset will be staked until you solve the complex equations, validate the transaction and add it to the block. The whole process reduces energy consumption as the competition is completely avoided, where all the miners use computing power simultaneously. According to the developers, this mechanism can even be used for global requirements without harming its security protocol and scalability.
Solana
One of the most eco-friendly cryptocurrencies has to be Solana. The transactions involving SOL use only 3,290 Joules of energy per transaction. This is significantly lower compared to what BTC consumes per transaction. Solana uses a unique consensus mechanism called ‘proof of history.’ If you try to understand this mechanism simply, it is just time stamping a transaction on the blockchain to provide validation. A hash is used to provide a guarantee of valid completion of the transaction and thus adds its information to the block. This way, there is minimal usage of energy to compute and validate the transaction. Proof of history is a rather new concept and is still being worked upon to develop more crypto assets using it.
Green Cryptocurrencies: Where are they headed?
This discussion is just scratching the surface of what the developers are working with to provide a greener alternative for crypto assets to be more sustainable. Currencies like HBAR, DOT, ALGO, FLOW, and so on use consensus mechanisms that use less energy. Moreover, even BTC and ETH are shifting towards using renewable energy and employing better protocols to their consensus. All of this is done to improve the future of cryptocurrencies and make them a global force. You can grasp a lot of information about various green cryptocurrencies from exchange platforms like Giottus. Giottus is promoting the exchange of greener crypto assets to ensure that crypto walks into the future with higher sustainability. So, the crypto future seems to be promising with the greener approach being employed.
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions.
