Cryptocurrency might be best known for its potential financial risk, but it’s increasingly under fire for another less-than-desirable issue. Concern has swirled around the negative impact that crypto is having on the environment. That impact, in a nutshell, is that as cryptocurrency trading becomes more common, so does energy use as a result of it.
The Cost of Mining Coins and Tracking Transactions
Estimating the energy consumption involved with cryptocurrency mining is a complex task, but it’s generally understood as the energy used to digitally mine crypto coins and process transactions plus the power usage of the hardware devices used to support these efforts. Columbia University’s Columbia Climate School places the annual energy consumption tied to crypto as being on par with that of Argentina, a nation with a population of 45 million. What’s more, U.S. bitcoin miners could increase demand by as much a six gigawatts, or the amount used by Houston, by mid 2023, Columbia noted, citing the Electric Reliability Council of Texas.
15 Environmentally-Friendly Crypto Options
If you’re interested in investing in digital currency but want to do so in the most eco-conscious way possible, take a look at cryptocurrencies that are forging the path to sustainability.
1. Algorand (ALGO)
Algorand declared its blockchain to be completely carbon-neutral in April 2021. This crypto has also fostered a partnership with ClimateTrade, an organization dedicated to helping companies improve their sustainability profiles.
2. BitGreen (BITG)
BitGreen’s preferred form of industry disruption is financial incentives that can drive toward policy change. The project has a mobile wallet app that lets users trade in the coin and earn coins for participating in actions that have a positive environmental impact.
3. Cardano (ADA)
Created by Ethereum‘s co-founder, Charles Hoskinson, Cardano refers to itself as a third-generation blockchain. It’s the first blockchain to use multiple layers of technology, and the coin is currently the eighth-largest in terms of market capitalization. Cardano is part of the Net Zero Asset Managers Initiative. It’s proof-of-stake algorithm eliminates the need for mining and allows for scaling without a corresponding increase in energy consumption.
4. Chia (XCH)
Chia, which was created by Bram Cohen of BitTorrent, can be mined on the Amazon Web Services cloud computing platform. It puts a user’s desktop to use by offering downloadable software that allows users to earn Chia tokens by running the decentralized platform on their hard drives. While perhaps not as environmentally friendly as other cryptocurrencies on this list, Chia’s hard drive-based “farming” process is far less energy-intensive than the mining process employed by proof-of-work blockchains.
Devvio is an enterprise blockchain solutions company that operates a platform called DevvX. The company recently completed a study that found its platform consumes 3.5 billion times less energy per transaction than Bitcoin and 347 million times less than Ethereum. Use cases for DevvX include environmental, social and governance initiatives, non-fungible tokens, identity, supply chain and payments, according to a statement Devvio released introducing its findings. Devvio claims that it can process up to eight million transactions per second.
6. Hedera Hashgraph (HBAR)
Hedera Hashgraph’s popularity is on the rise, surpassing ethereum (ETH) in number of trades last year. The technology behind this crypto is complex, with the system relying on a note-comparing protocol that eliminates the need for progression through the entire blockchain.
An upcoming upgrade to the system will allow for the deployment of smart contracts. Sharding, which will fragment the network to allow for growth in the number of transactions without an energetic downside, will also be supported.
7. Holo (HOT)
Holo sets out to provide its users with their own blockchains. Each individual “agent” or “host” exists as both its own storage site and blockchain and earns holo tokens in return. Holo is growing rapidly in popularity, particularly because of the potential for the network to empower anyone with a browser and an interest in cryptocurrency.
8. IOTA (MIOTA)
IOTA doesn’t rely on a blockchain. Instead, this crypto uses a cryptography-based method of verification called Directed Acyclic Graph (DAG). DAG allows real-time transaction verification with very little energy consumption.
9. MetaHash (MHC)
This decentralized, open-source cryptocurrency runs on Blockchain 4.0 and claims a validation rate of fewer than three seconds per transaction. In its 2021 results report, MetaHash said it plans to implement smart tokens and bridges in a larger release of tools.
10. Nano (NANO)
Nano doesn’t require mining to validate transactions. Instead, individuals running the software on their own computers serve as individual but connected blocks. Compared to a proof-of-work network like bitcoin, Nano uses very little energy.
11. Ripple (XRP)
Ripple describes itself as an “open-source, permissionless and decentralized blockchain technology that can settle transactions in three to five seconds.” The native cryptocurrency is XRP, and all the coins have already been mined. Ripple expects to be carbon net-zero by 2030, according to its website.
12. Signum (SIGNA)
Signum calls itself the first fully sustainable blockchain. It’s similar to Chia in that transactions are verified using network users’ hardrive space — in this case, via a proof of commitment algorithm — with no mining required. The network can be used for everyday applications such as token creation, smart contracts and messaging.
13. Solarcoin (SLR)
This crypto runs on real-time, in-real-life energy conservation — each megawatt hour of power generated with the use of solar technology creates one new solarcoin for the generator.
14. Stellar Lumens (XLM)
Stellar Lumens is the cryptocurrency of Stellar, an open-sourced blockchain system that offers an open-source payment alternative. Stellar excels at efficient cross-currency transactions, which matters more as cryptocurrency trading becomes more common.
15. Tron (TRX)
TRX is the native cryptocurrency on the Singapore-based Tron blockchain, which aims to decentralize the web. It has one major perk the other networks don’t — in its purchase of BitTorrent in 2018, Tron adquired 100 million active daily users on which to test scalability, Inc. reported.
Good To Know
Myriad companies are taking action to make cryptocurrency sustainable. An initiative in the private sector, called the Crypto Climate Accord, is a collection of players in the space working toward net-zero emissions from crypto-fueled electricity consumption by 2030. The entity takes its inspiration from the Paris Climate Agreement. At present, over 200 blockchains, companies and other entities participate in the Crypto Climate Accord.
An Industry Moving Rapidly Toward Sustainable Crypto
Although much remains to be done to reduce the environmental impact of trading cryptocurrency, eco-minded investors can feel good about the fact that there’s a notable and ongoing movement in that direction. While the Crypto Climate Accord continues its work and the environmental impact of cryptocurrency trading remains under scrutiny, concerned traders have many ways to vote with their coins.
GOBankingRates’ Crypto Guides
- What Is Cardano? (ADA)
- What is Bitcoin Cash? (BCH)
- What Is Chainlink? (LINK)
- What Is Dogecoin? (DOGE)
- What is Litecoin (LTC)
- What is Polkadot? (DOT)
- What is Ripple? (XRP)
- What is Stellar (XLM)
- What is Tether? (USDT)
Daria Uhlig contributed to the reporting for this article.
Information is accurate as of May 29, 2022.