Regulators, investors, and the public are increasingly concerned that cryptocurrency mining leaves a significant carbon footprint. That is why experts have been actively searching for green cryptocurrencies in recent months.
According to buidlbee.com, one of the most notable decisions in this regard was Elon Musk’s abandonment of Bitcoin as a means of payment for Tesla cars, as well as the Cambridge Center for Alternative Finance report, which compiles an index of electricity consumption by the BTC network.
Given the high energy consumption of the Bitcoin blockchain, the question arises, which cryptocurrencies are the most environmentally friendly? The answer is green.
What is green cryptocurrency?
Mining Bitcoin in a year requires more electricity than a small country needs. The same amount of kWh is consumed by Argentina and other states similar in area. With the growing popularity of cryptocurrencies, the number of miners, the amount of energy consumed and the amount of CO2 emissions into the atmosphere are increasing.
In response to concerns about the sustainability of mining, a new proof-of-stake (PoS) protocol has emerged. Through the PoS protocol, the integrity of the network is maintained by multiple holders who are known as validators, and they use their tokens to mine cryptocurrency.
POS-based crypto tokens can be considered greener as they consume less energy.
Thus, the term “green cryptocurrency” refers to digital assets that have no transaction history after receiving a block. The token is issued in the wallet without the use of the pool economy and the commission for calculating capacities.
In other words, green cryptocurrencies are tokens that are created without the use of classical mining. Their extraction doesn’t require the use of expensive equipment. As a result, the load on the energy system is reduced, and the environmental friendliness of the coins is increased.
What modern cryptocurrencies are considered green?
Initially, the second largest altcoin by capitalization worked on the PoW algorithm, but after the Ethereum 2.0 update, it completely switched to the environmentally friendly PoS cryptocurrency model. The popularity of Ethereum is confirmed by the creation of more than 3,000 DApps and hundreds of new coins on the blockchain. The full transition of the green cryptocurrency to PoS took place in September 2022.
Dr. Gavin Wood, co-creator of Ethereum, founded Polkadot (DOT) after he has created a number of algorithms and programs that are used to operate smart contracts on the Ethereum network.
The Polkadot network, which was officially established in 2017 by Wood and other programmers, intends to solve Ethereum’s flaws by allowing the blockchain to grow through the use of parachains.
Parachains minimize the amount of transactions that nodes must verify, reducing network stress, which is precisely what many Ethereum supporters have been moaning about.
The IOTA token has a low carbon footprint. Used to facilitate transactions between devices on the network. When creating, the Tangle consensus algorithm was used, which requires verification of two transactions to complete the transfer.
The Cardano (ADA) network runs on the POS protocol, and it may well take the place of Ethereum. This blockchain is believed to be more scalable and resilient.
Network developer Charles Hopkinson is confident that blockchain infrastructure has the potential to revolutionize commerce by creating a secure network that businesses can use to verify IDs and track transactions.
Cardano runs on the Ouroboros protocol, which claims to be the first peer-reviewed POS protocol.
Stellar is a POS network that supports the exchange of foreign currencies and tokenized assets using the blockchain. Stellar aims to simplify all procedures that have seemed complicated for centuries, thanks to the blockchain, which guarantees the transparency, accuracy and security of all currency exchange transactions.
Other assets can also be exchanged with Stellar, including crypto tokens, gold, silver, and various commodities.
Stellar plans to provide a blockchain-based payments ecosystem by making infrastructure for decentralized applications that can be developed based on user needs.
The list of green cryptocurrencies goes on. All of them are united by low energy costs for mining and conducting a transaction.
In 2022-2023, the growing segment of digital assets is sure to be very sensitive to environmental issues. Therefore, we can expect that this asset class will move towards a greener path in the coming months and years. And given the growth in demand, investments in green tokens can bring additional income.