One major plus of Ethereum’s impending Merge is the resulting environmental impact or, rather, lack thereof, as its proof-of-work system is changing to change to a proof-of-stake system, which is expected to reduce the network’s electricity consumption to only one-thousandth of what it was before.
If the transition goes smoothly, it will prove the practical applicability of sustainable business initiatives, but it could also boost confidence in the Ethereum network and its token Ether. Overall, the evolutionary move by Ethereum could demonstrate that “There is still a lot of support and belief in the industry” as a whole, according to Max Kordek of Lisk.
Concern about the environmental impact of blockchains – like Bitcoin’s – that function by proof-of-work is nothing new. A proposal was almost passed in the European Parliament in March this year that would have curtailed the use of these energy-guzzling operations in all 27 nations of the European Union.
Politicians around the world pointed out their heavy toll on the planet. In September, Europe’s Green Party wanted to set aside $803,000 for developing greener methods of mining for cryptocurrency. Even back in July 2021, Alex Brammer of Luxor Mining declared that “Public markets nowadays have no appetite for proof-of-work mining that is powered by non-renewable [energy sources]”.
Such sentiment raises the question of whether more cryptocurrencies may consider similar moves to attain more sustainability, both in terms of the environment as well as social relevancy. Furthermore, how could such moves affect the crypto trading prices of key cryptos like ETH and BTC? Let’s take a closer look at how some other cryptos are aiming for a greener future.
Bitcoin mining, which functions via the proof-of-work method, works by rewarding the first person to produce a valid block with a certain amount of digital currency. The miner goes about the job through trial-and-error – not his own, but that of a network of machines that continuously completes calculations.
The financial incentive has drawn on many people who were previously uninvolved in the crypto trading sphere to get their own machinery set up, a chain reaction which has led to unprecedented energy consumption. The energy used to facilitate one Bitcoin transaction could bring to completion as much as 988,922 VISA transactions, which makes them extremely energy intensive.
Perhaps more worrying than this issue, though, is the fact that many of these machines are powered by fossil fuels like coal, which leave a damaging carbon footprint on the planet. In one year, the size of Bitcoin’s carbon footprint rivals that of Colombia.
On the other hand, proof-of-stake systems require none of these machines or the power running through them. In theory, Bitcoin could make the switch to this kind of system if it chose to, however, how would such a feat be pulled off, and would it take Bitcoin offline, thus impacting crypto trading prices?
Early last year, altcoin Cardano CEO Charles Hoskinson said his (proof-of-stake) network uses less than 0.01% of the energy that Bitcoin’s does. He also proudly calls Cardano “The most environmentally sustainable cryptocurrency” in the world.
Nigel Green of DeVere Group thinks Cardano could one day overtake Ethereum because “Not only can it be used as a currency, but its blockchain can also be used to build smart contracts, protocols and decentralized applications”.
Algorand works with carefully engineered consensus procedures that eat little energy and there’s no mining connected with the blockchain at all, putting its carbon footprint at zero. Founder Silvio Micali, who is a professor of computer science, says he created the network simply because he cares about the planet.
One arena in which Algorand shines is that of NFTs, which are normally mined and traded on proof-of-work blockchains, each of them leaving about 200kg of carbon in the atmosphere. Creating an Algorand NFT, by contrast, produces only 0.0000004kg of carbon, and the company tries to address the environmental effects of even this small quantity. Transactions on the blockchain are also considered fast and secure.
The Bitgreen blockchain uses 99.9% less power than Bitcoin’s, and creates Carbon Credits, which it hopes to use to protect the environment, eradicate carbon dioxide in the atmosphere, and help communities.
The company exists to make sure a great many funds end up in renewable energy projects and their ambitious goal is to raise $1 trillion in ten years for the purpose. They set up the Bitgreen Impact Investing Platform, which makes it easy for people or companies to send funds over to sustainability projects.
Especially in the wake of Ethereum’s big Merge, environmental consciousness in the crypto trading world is bound to become more and more a part of the world of digital currency. This may influence other cryptos to make a similar changeover and could impact the question of which cryptos will survive into next year and beyond.
With respect to crypto trading, this may form a hurdle for Bitcoin that will take some mounting. If crypto trading as CFDs is in your future, it’s worth spending some time reading up on the greenest blockchains arriving on the scene these days and what future crypto trends they could foreshadow.