Since extreme weather like droughts, floods, and heat waves is happening more frequently around the world, people are starting to take an interest in green technologies. However, among us in the fintech industry, whether cryptocurrencies are ultimately good or bad for the planet remains divisive.
Bitcoin and Ethereum, among others, have been criticized for having questionable environmental credentials. According to the Cambridge Bitcoin Electricity Consumption Index, the annual electricity used to mine bitcoins could provide hot water for all the tea drunk in the United Kingdom for thirty years.
2022’s Most Energy-Efficient Cryptocurrencies
Cryptocurrencies and the technology that supports them can benefit from a financial or environmental perspective. Let’s take a quick look at five that are particularly noteworthy.
BitTorrent’s creator, Bram Cohen, launched his own torrenting network, Chia Network, in 2017. Chia is a blockchain and smart transaction platform that makes use of idle computer resources to power the distributed system. The Chia Network uses Proof of Space and Time in place of proof-of-work algorithms like Bitcoin, allowing users to earn the network’s native XCH token by storing data for a specified amount of time.
Mainnet is Chia’s blockchain transaction platform, and both it and Chialisp, their new smart contract programming language, are accessible for direct download from their own websites. In addition, the Amazon Web Services cloud computing infrastructure supports XCH mining. XCH has been called the “greenest” cryptocurrency. Chia’s Green Paper offers an in-depth, microscopic view of the platform for individuals with a keen interest in the nitty-gritty details.
Because it does not include mining, Algorand has a good environmental reputation. It takes very little power to operate a network node, and it can be done with anything as inexpensive as a Raspberry Pi, as stated on their website. Initial investigation shows that creating and transacting digital assets on Algorand generates roughly 2 million times less CO2 than on other blockchains.
To do this, Algorand and ClimateTrade will launch a sustainability oracle that will on-chain notarize Algorand’s carbon impact at the end of each epoch (a set amount of blocks). To ensure that its protocol continues to operate in a carbon-negative manner, Algorand will lock the corresponding amount of carbon credit as an ASA (Algorand Standard Asset) into a green treasury using its cutting-edge smart contracts. By 2030, all 10 billion ALGO will have been distributed.
In contrast to the energy-intensive process of bitcoin mining, Solarcoins are distributed to solar panel owners based on the amount of electricity their systems produce. The SolarCoin Foundation is a global solar energy incentive program active in over 100 countries. Information about energy generation is transmitted from individual owners’ systems to the foundation via a central monitoring system or platform. In this system, generators earn one coin for each megawatt-hour of electricity they produce. The use of solar panels to produce one’s own electricity and hence financial gain.
The platform’s stated goal is to “speed up the worldwide adoption of solar energy and the transition to a low-carbon energy supply.” It is hoped that Solarcoin will serve as a free worldwide incentive for solar energy production over the next four decades. It seems like a win-win situation to incentivize solar electricity generation by paying generators in solar coins, which in turn reduces the cost of electricity generation.
Perhaps surprisingly, Hedera Hashgraph, a public decentralized network used for in-app payments and micropayments, is also one of the largest cryptocurrency networks in the world. Its native, energy-efficient cryptocurrency, HBAR, operates on a proof-of-stake public network that is powered by hashgraph consensus and features extremely low bandwidth usage. Furthermore, it is governed by the Hedera Governing Council, which is made up of up to 39 companies and organizations with fixed terms, including Google, Boeing, Deutsche Telekom, LG, and others.
To produce and develop sustainability projects, Hedera Hashgraph has partnered with Power Transition, a cloud-based software, and hardware platform that enables peer-2-peer energy trading and microgrid management. This has resulted in the provision of more efficient energy to homes and apartments in the UK, as well as a reduction of charging costs at EV charging stations of up to 50% using Hedera Token Service as its payment rail.
BitGreen, launched in 2017, is a Proof-of-Stake (PoS) cryptocurrency that operates on a low-energy Proof-of-Work (PoW) algorithm. Similarly to SolarCoin, they place an emphasis on sustainability by providing financial incentives for eco-friendly behavior. Users that make decisions that minimize their carbon footprint—through actions like using bike-share programs, volunteering, or supporting sustainable businesses and charities—are rewarded (s).
BitGreen Mobile is a mobile-first wallet where users can find greener options and connect with partners to earn and spend rewards in BitGreen as well as their native coin. Inspiring people everywhere are working to restore our planet, combat climate change and inequality, and create a better tomorrow, as BitGreen puts it on its website. Even if they only achieve a small portion of their ambitious aims, the world will be a better place.
We should expect to see new, more sustainable, eco-friendly cryptocurrencies and the digital infrastructure(s) upon which they are produced and run as the use of renewable energy, more energy-efficient protocols, and carbon footprint offset increases.
Fintech’s forward-thinking, creative approach to environmental, sociological, and economic concerns includes cryptocurrencies that are both profitable and environmentally sustainable.
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