It is no longer news that the United States has restated its commitment toward lowering carbon emissions and taking an active part in the quest to normalize environmentally friendly measures on the global scene. This drastic shift in policymaking will spur the introduction and establishment of more stringent approaches to climate change. Undoubtedly, the reentering of the United States in the climate change conversation is indicative of the seriousness of this crisis and the drastic decisions countries would likely make to meet the environmental goals set in Paris, known as the Paris Agreement.
At the heart of this political and economic restructuring is the growing impact of innovative technologies in the pursuit of a sustainable environment. You would expect that innovations should contribute positively to this movement. It is futile to invest trillions of dollars in developing new technologies without factoring in the long-term propensity of adhering to the 2030 Sustainable Development Goals, especially on matters relating to environmental sustainability. Thus, it is imperative to analyze the viability of blockchain from the critical lenses of an environmentalist.
Is there a place for blockchain in an environmentally conscious society?
Blockchain has become one of the most revered technologies in the last couple of years due to the growing acceptance of digital assets. The possibility of enabling a new order of monetary services has propelled the technology to the hallowed realm of innovations potent enough to fuel the Fourth Industrial Revolution. However, at the moment, the most widely used application of blockchain technology — Bitcoin (BTC) — tends to attract unwanted publicity regarding its role in climate change.
Bitcoin utilizes a process called mining to mint new coins. This requires miners to solve highly complex problems with advanced computing machines to create new blocks and receive new coins as rewards. It goes without saying that this mechanism plays a pivotal role in securing the network against manipulations and double-spending. Since Bitcoin relies on a decentralized approach to consensus, it is therefore understandable that it has sought to replace intermediaries with a nodal-based verification system, called proof-of-work. Here, the commitment toward allocating computing power to the network improves the chances of emerging as a stakeholder momentarily.
Even though this approach is laudable, it is not eco-friendly. The sheer amount of energy required to sustain the Bitcoin network has come under intense scrutiny. The carbon footprint of the global Bitcoin mining operations is comparable to that of New Zealand. Another telling factor of PoW’s environmental unfriendliness came to light in 2019, when researchers discovered that Bitcoin mining accounted for 0.2% of electricity consumed globally.
How can blockchain become more environmentally friendly?
Remarkably, the nascent but explosive blockchain industry has developed several other consensus models. These alternatives are designed to eliminate the limitations of the proof-of-work mechanism. As such, they are more in tune with the environmental movement. Some of the models introduced over the years are proof-of-stake, practical Byzantine fault tolerance, proof-of-burn and proof-of-weight. Instead of entailing miners to solve problems, these models opt for less energy-intensive tasks to secure blockchain networks and validate transactions.
For instance, PoS elevates participants that are financially committed to the ecosystem to the role of validators. Here, the algorithm picks validators from a well of individuals or entities that have locked a…