How does blockchain technology impact the environment?
By Giorgi Mikhelidze – 4 Feb 2022
If we are talking about apps based on blockchain and Web3 in a time of climate crisis, it is important to understand why and how energy is used by blockchains and how this has an impact on the environment.
• What you need to know
• Blockchain and the environment
• Can we reduce BTC pollution?
What is there to know
Through its application in cryptocurrencies, the digital ledger technology known as blockchain has gained considerable notoriety. There are hundreds of cryptocurrencies (e.g. Ethereum, NEO, Litecoin), as well as a wide range of other applications developing in a variety of industries, including supply chains, digital content (e.g. patents and smart contracts), governance and electronic voting. The technology was introduced in 2008.
Fundamental knowledge of blockchain technology is needed to assess the potentially enormous and transformative ramifications for society, the economy and the environment of this new technology.
Blockchain and the environment
To avoid the ecological catastrophe and the social and political upheaval that would unleash, it is now beyond question to suggest that economies, companies and technology must work towards zero emissions as soon as possible.
Despite this, a technology that tries to use as much energy as possible is becoming more common. The amount of energy used by a single transaction is equivalent to that consumed by an average American family over the course of many months.
As more and more companies become associated with non-fungible tokens (NFTs) and begin to think about the potential blockchain technology has for them, these transactions are becoming more and more essential in the world of marketing.
A blockchain (distributed database) is more than a speculative market; it is – at least theoretically – both a store of value and a means of payment.
Regarding security, the weakest point of cryptocurrencies is in payments, where consensus must be reached across the distributed database (or at least 51%) through a process known as Proof-of-Work for each transaction. It is also vital to remember that transactions involve the minting or transfer of NFTs.
Processing and adding transactions to the blockchain are the responsibility of the miners. Super-users compete in order to process transactions by solving the mathematical problem (a cryptographic puzzle) in the shortest possible time. The winner receives a small number of dollars in exchange for this procedure. Since the calculations are not done by a human with a calculator, the winner will be the one with the most powerful computer processor.
Furthermore, they contribute to the defense of the network against cyberattacks. One of the most common attacks is a Sybil attack, which occurs when the attacker establishes more than 51% of the network’s fake identities to influence the majority’s judgment as to whether a transaction has occurred. Overpowering the grid in a PoW system would require an impossibly large amount of power.
Can we reduce BTC pollution?
Among the digital currencies, Bitcoin is one of the most popular. A Bitcoin purchase involves a number of things. New transactions are added to the Blockchain as a result of the work done. ‘Mining’ is an excellent parallel to buying Bitcoin, as expenses and effort increase as a diamond miner progresses in the mine, just like in Bitcoin mining.
Bitcoin mining takes a lot of energy
despite its many advantages. Bitcoin mining and trading could negatively impact government efforts to conserve energy and prevent climate change due to their high energy use and emissions.
Jon Truby, a professor at the University of Qatar, published research in the journal Energy Research and Social Science examining how Blockchain could be used to promote green applications while preserving the value of this rapidly expanding industry. Instead of trying to figure out how to promote the use of more energy efficient Blockchain technology, the author looks at the legislative options that might work. Rather than focusing on a single nation, this research examines policy options across a wide range of jurisdictions.
Bitcoin’s regulation requires policy makers to consider whether or not it is relevant to their country’s treasury system. Attempts to define Bitcoin have instead encountered difficulties. As a well-known digital money, Bitcoin is often referred to as a cryptocurrency, however, the author argues that Bitcoin is not a currency. Additionally, the US Treasury considers cryptocurrencies