Blockchain, the distributed and decentralized system that helps verify crypto transactions and record ownership of NFTs, requires a huge amount of computing power and electricity. And as the NFT market and other Web3 technologies continue to expand, the environmental impact of blockchain has been increasing.

The incentive to create cryptocurrency “mines” or huge server farms is high. Bitcoin, which is the world’s largest cryptocurrency, consumes approximately 150 terawatt-hours of electricity each year, an amount equivalent to the entire country of Argentina. Producing that much energy emits approximately 65 megatons of carbon dioxide into the atmosphere annually.

But as society’s thirst for Web3 technologies continues to grow, the industry will need to find ways to become more sustainable, so that new technology doesn’t set back our efforts to combat climate change.

Let’s look at some of the ways that blockchain, cryptocurrency, and NFTs can transition to greener technologies and more sustainable energy sources.

How to Reduce the Effects of Blockchain Technology

Here are some ways to make blockchain technologies, cryptocurrency mining, and NFTs cleaner and more sustainable:

Adopt more energy efficient blockchain systems

Many of the most popular cryptocurrencies rely on energy inefficient troubleshooting systems known as “Proof of Work.” In POW systems, miners compete against each other to see who can solve problems the fastest in exchange for crypto rewards. POW systems like this consume a large amount of power.

“Proof of Stake” systems, on the other hand, are based on market incentives, with “validators” putting down a stake (a deposit) in exchange for the right to add blocks to the blockchain. Removing competition from the system by using Proof of Stake (POS) reportedly uses 99.9% less energy than Proof of Work and therefore reduces carbon emissions. Ethereum, the second largest blockchain, recently made a successful transition from POW to a POS system.

Adoption of renewable energy sources

One clear way to make blockchain more sustainable is to mine with solar power and other green energy sources.

Iceland-based Genesis Mining is one of the largest miners in the world, uses 100% renewable energy and enables Bitcoin and Ethereum mining in the cloud.

Since each company using blockchain defines its own miner compensation systems, it is possible that new blockchains offer incentives to use green energy.

Although renewable energy can be difficult to store, some nations have a clear advantage. For example, Paraguay’s power supply is based almost 100% on hydroelectric sources. Bitcoin mined in this country will have a lower carbon footprint than nations that rely on fossil fuels.

How Blockchain could be useful in the fight against climate change

Some experts predict that blockchain could be the key to sustainability innovations that can help us combat climate change. The technology could be useful in controlling contamination and monitoring the sustainability of products.

Furthermore, blockchain technology could help speed up the deployment of renewable energy in developing countries.

Mark Radka, Head of UNEP’s Energy and Climate Branch, says: “The world needs to cut emissions by nearly half over the next eight years to stay on track for a 1.5°C world, while expanding globally. access to energy to attract hundreds of people. millions of people online. Blockchain technology can play a role in enabling more accurate monitoring, generation and load distribution on the network through the efficient use of data.”

The Greening of Blockchain

The blockchain, NFT and Web3 spaces will face many challenges as researchers and developers try to go green and reduce their environmental impact. Integrating renewable energy sources and shifting to truly sustainable mining practices are just some of the ways the fourth industrial revolution can become more sustainable.

To stay on top of the latest in new and emerging technology and business trends, be sure to sign up for my newsletter, follow me on TwitterLinkedIn and YouTube, and check out my books ‘Tech Trends in Practice’ and ‘Business Trends in Practice’, which won Business Book of the Year 2022.