Experts reveal game-changing ways cryptocurrency can boost local economies — do the perks outweigh the cost?

As more people become aware of the negative environmental impacts of advancements in technology, certain industries and businesses are looking to pivot and remake their images in the name of the green transition.

In the cryptocurrency world, Ethereum in 2022 changed its modus operandi from proof of work to proof of stake — and reduced its energy consumption in doing so by nearly 100%. This switch was projected to reduce the company’s pollution from 11 million tons of carbon each year to 870 tons, and it doubled its value to $600 billion.

Bitcoin adherents are touting its ability to contribute to a cleaner future, too. Daniel Batten, an analyst and climate investor, has said that mining operations can help renewable energy farms become immediately profitable and drive continued investment in that industry. 

Bitcoin, though, still generates an estimated 95 million tons of carbon dioxide equivalent annually, per the University of Cambridge’s Bitcoin Electricity Consumption Index. That’s a figure some insiders, such as Batten, say is out of step with the latest percentages of renewable energy, which a Bloomberg analyst has put at over 50%, and indeed the Cambridge index says “the estimates currently displayed on our website are grounded on electricity mix data available as of January 2022.” A lot has changed in the nearly three years since, with many professional mining operations going off the grid with renewable energy to improve their long-term return on investment. 

These blockchain-based marketplaces provide examples of where the technology has been, how it has changed, and where it’s going. Other breakthroughs could help crypto contribute to sustainability, as CCN reported.

“Skeptics question whether the environmental benefits of blockchain outweigh its energy costs,” Lorena Nessi wrote. “Some argue that while blockchain offers tools for climate solutions, the emissions from mining and other processes may offset these gains.”

The reason many people are so high on the technology is because it offers an efficient, decentralized alternative to traditional methods.

Take, for example, how blockchain has transformed a couple of cities as they relate to the energy industry, as CCN relayed. In New York and Western Australia, homeowners can generate, buy, sell, and trade solar energy. Blockchain technology allows for transparent transactions, enabling the creation of a free market, encouraging the use of renewable energy, and ensuring energy independence while supporting the local economy.

Other developments facilitated by blockchain include the granting of tokens for sustainable behaviors, such as recycling or reducing energy use. The “tamper-proof system” also means ledgers can be created to monitor the environment and verify climate data as well as manage carbon credits, which could revolutionize the questionable nature of such programs. 

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But CCN noted that integrating artificial intelligence — another energy-sapping technology — and overly relying on such tools, which lack regulation, are great risks.

The wealthy companies that use blockchain, AI, and other inventions that stress the electrical grid have the power to make this change a reality. Otherwise, it will remain up to the public to try to hold them and their executives accountable.

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