Why green cryptocurrency?
The global cryptocurrency market is projected to grow from $910.3 million in 2021 to $1,902.5 million in 2028 at a CAGR of 11.1% in 2021-2028, as per insights from Fortune Business Insights, a market research platform. Reportedly, Bitcoin currently consumes around 110 Terawatt Hours per year, which is 0.55% of global electricity production. This is belived could be one of the contributing factors of climate change, which is further expected to amount to three percent of GDP by 2060. It is here that green crypto can focus on real-world environmental and social impact, as traditional crypto primarily revolves around delivering, high-functioning decentralised technology and investment potential, among others. “Innovations such as tokenisation of carbon credits and using smart contracts to monitor emissions, among other, can reshape the cryptocurrency landscape. The industry’s future can be bright, propelled by growing interest and widespread acceptance, along with an influx of innovative and energy-efficient practices in future,” Rahul Pagidipati, CEO, ZebPay, a crypto-exchange platform, highlighted.
Reportedly, Liu He, Vice Premier, China, told a group of finance officials that the government would “clamp down on Bitcoin mining and trading activity” to ensure financial stability. This crackdown is expected to be driven by the nature of cryptocurrencies and the Chinese Communist Party’s (CCP) aversion to risk or anything outside its control. But compounding matters is the enormous environmental toll of cryptocurrency mining, which undermines Xi Jinping’s, president, China, plan to make China carbon neutral by 2060. The distinctive essence of green cryptocurrency lies in its fundamental departure from established norms in the cryptocurrency sphere.“Opting for eco-friendly consensus mechanisms can address environmental apprehensions linked with traditional proof-of-work systems. This distinction can allow to minimise carbon footprint, positioning green cryptocurrency as a more sustainable and responsible alternative,” Pranav Srivan Elankovan, co-founder, Crypfi, a cryptocurrency exchange platform, explained.
To a greener future
Industry experts believe that green cryptocurrency industries such as renewable energy, carbon credit trading, and eco-friendly supply chain management, among others, can benefit from blockchain technology’s secure and transparent transactions. These use cases have the potential to extend beyond the financial realm, showcasing the adaptability and relevance of green cryptocurrency in sectors seeking eco-conscious solutions. As per several media reports, Ethereum underwent the Merge Upgrade in September 2022, shifting its mechanism from Proof of Work (POW) to Proof-of-Stake (POS), resulting in about 99.5% reduction in energy consumption. “ Greener protocols with lower energy consumption might be less susceptible to volatile energy prices. Embracing sustainability can improve the image of the cryptocurrency industry, attracting wider adoption and regulatory acceptance. However, it needs to be noted that green cryptocurrency is still nascent and might carry risks,” Gracy Chen, managing director, Bitget, a cryptocurrency trading platform, said.
It is expected that cryptocurrency largely remains a solution in search of a problem. “I doubt greening crypto mining will ease any of the fundamental concerns either the tech: large scale dispersed ledger updates are expensive and have latency problems that grow with size. So it makes blockchain hard to scale, and therefore for it to solve the problems it aims to solve, and that traditional systems have been solving seamlessly for decades at this point. Green crypto feels like another hopeful stab at relevance that might, unfortunately, be divorced from reality,” Utkarsh Sinha, managing director, Bexley Advisors, a boutique investment bank firm, concluded.
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