Since the emergence and exponential growth of cryptocurrencies over the past decade, a rising concern for many people is the energy required to maintain blockchains and process transactions. The processing power needed to mine and transact cryptos is often remarkably high, and it is exacerbated by wherever the mining takes place and the energy format the location is reliant on.
It’s worth noting that the energy needed varies drastically from crypto to crypto. The most well-known and trusted cryptocurrency - Bitcoin, requires between 2,000 to 2,250 Kilowatt-hours (kWh) worth of electricity. For context, the average UK household uses 3,730 Kilowatt-hours (2021) worth of electricity annually, meaning transacting Bitcoin uses the equivalent of more than 50% of the average UK households' annual electricity. The mining of Bitcoin annually requires 91 terawatt-hours of electricity. Again for context, the entire United Kingdom used 286 terawatt-hours of electricity in 2020. This means the energy used to mine Bitcoin each year is almost a third of the energy consumed by one of the most developed countries in the world during the lockdown. While individuals are constantly asked to decrease their energy usage, this is in direct contrast to what is happening in the ever-growing crypto market.
While Bitcoin, Litecoin, and other coins continue to dominate the market, more and more eco-friendly alternatives are emerging, and many established currencies are switching their systems to become greener.
One of the most common denominators of greener, low energy consumption cryptocurrencies you’ll see listed here, or indeed elsewhere, is the verification mechanism used, which will likely be ‘Proof-of-Stake’, as opposed to ‘Proof-of-Work’. Put it simply, PoW transaction verification relies on computational power to solve complex mathematical puzzles, whereas PoS requires staked verifiers to approve transactions. PoW relies on specialised, high spec hardware, whereas PoS relies on the initial investment to buy the stake and build the reputation.
Lets deep dive in our selection of greener cryptocurrencies.
7 Eco-friendly Cryptocurrencies in 2022:
- Ethereum 2.0
Cardano is a Proof-of-Stake cryptocurrency and the ninth-largest cryptocurrency by market cap. The co-founder of Ethereum created it, and while Bitcoin can achieve approximately 7 transactions a second, Cardano can achieve around 1,000.
Launched in late 2015, Nano is the greenest cryptocurrency currently out there, with virtually no carbon footprint or energy consumption. While Bitcoin requires 2,000+ kWh per transaction, Nano requires a minuscule 0.00011 kWh of power per transaction. For every Bitcoin transaction, the same amount of energy could power almost 20M Nano transactions. This is all because each address on Nano has its own blockchain, meaning each user provides the power to verify their own transactions. Unlike the majority of cryptocurrencies, this allows Nano transactions to be processed without fees.
As its name may suggest, SolarCoin is connected directly to solar energy. For every verifiable, solar-powered Megawatt generated, one SolarCoin is created. SolarCoin aims to ‘incentivise a solar powered planet’, and reward the continued shift towards renewable energy.
The second largest and second most popular cryptocurrency Ether, is currently going through a major update that will see it improve its sustainability considerably over the next year. Ether has historically run on a PoW system but is now switching over to a PoS system which, as mentioned earlier, will dramatically decrease the energy consumption needed to transact the token. This move to PoS will of course, mean speedier transactions and lower transaction fees overall. For more detailed information, you can read our full article on Ethereum 2.0.
Hedera is another Proof-of-Stake crypto and is owned and governed by some of the biggest companies in the world, including Google, LG, IBM, Tata Communications, and Boeing. Operating on a high-level security system, the Hedera network is much faster than other networks, mainly because transactions are processed simultaneously rather than in a serial fashion. Hedera will be updating later in 2022, introducing sharding into the transaction process (which incidentally, the aforementioned Ether 2.0 will also be introducing in 2022) - cutting the blockchain into smaller segments, allowing for even quicker transactions. Hedera requires an insignificant 0.001 kWh to transact and has grown significantly in the past couple of years, surpassing ETH transactions in 2021 and making it one of the world’s biggest cryptocurrency networks.
In addition to environmental sustainability, for those looking for stability in a largely volatile environment, look no further than IOTA. This cryptocurrency only relies in part on PoW, and transactions require 0.11 kWh of power.
Algorand is a young cryptocurrency, released in 2019, and operating on a PoS system. Despite its infancy, Algorand, in just over a year, skyrocketed to over 1 million transactions a day. The entire network was designed with energy efficiency in mind from the moment it was released, and by April 2021, it became a carbon-neutral network. Algorand transactions require a tiny 0.0002kWh of power, surpassed only by Nano in improved energy consumption.
The Future of Greener Cryptos
While many of the most established cryptocurrencies continue to require a approximately a family home’s power to operate, there are currently various alternatives. With thousands of existing tokens out there, more of them will switch to PoS, and new cryptocurrencies will continue to materialise. If you’re looking to invest while minimising your carbon footprint, it is easier to do so than you may have previously thought.
You can sign up for a Nebeus account to buy, send and hold some of the most eco-friendly cryptos.
La inversión en criptoactivos no está regulada, puede no ser adecuada para inversores minoristas y se puede perder la totalidad del monto invertido.