One popular narrative concerning digital currencies is this: they are bad for the environment. The stance that revolutionary digital currencies like Bitcoin, Ethereum, and other cryptocurrencies are bad for the environment is based on their mining process.
The environmental effects of crypto mining
Cryptocurrencies are supported by blockchain technology and are created through a process called mining. Mining is a core process used to create Bitcoin. Bitcoin mining is an energy-intensive process that involves computers solving complex mathematical puzzles to verify the authenticity of transactions on the blockchain network.
The mining process takes a tremendous amount of electricity generated from fossils. Its energy-intensive nature has led to eco-enthusiasts calling for a change to reduce environmental impacts.
However, contrary to the view that cryptocurrencies are bad for the environment, there is a role these currencies play in solving environmental crises globally.
Ways Digital Currencies Can Solve Environmental Crisis
Although there have been changes within the crypto space to reduce the environmental impact of digital currencies, here are some innovative ways these digital assets can help solve the environmental crisis.
- Adopting renewable energy use: Renewable energy use is one of the most significant ways to reduce negative environmental impacts. Incorporating renewable energy use into the crypto industry can help digital currencies contribute to solving the crisis facing the environment today. A good example is what SolarCoin does in allowing solar energy producers to receive one SolarCoin for every solar energy produced.
- Creating incentives for sustainable behavior: People can adopt more sustainable practices by creating incentives for sustainable behaviors like riding a bicycle rather than taking a car and recycling. A platform like GoodDollar allows users to earn while participating in environmentally beneficial activities.
- Carbon trading: Another way to encourage better sustainability is by enabling the development of carbon credits. Carbon trading allows companies to buy and sell carbon credit, representing the right to emit a certain level of carbon dioxide. With carbon credits, companies can offset emissions and engage more in sustainable projects. Digital currencies like Terra facilitate carbon trading using blockchain to incentivize companies that reduce carbon emissions.
- Encouraging green investment practices: Green investment practices cover investments in environmentally sustainable projects. Finding green companies on the stock exchange or investing in renewable energy can facilitate better environmental practices globally.
- Growth of eco-friendly cryptocurrencies: Aside from cryptocurrencies like Bitcoin and Dogecoin that consume vast amounts of energy to produce, there are green currencies that have a lighter impact on the environment. Some of these green currencies include SolarCoin, Cardano, and BitGreen. In addition, a move from Proof-of-Work to Proof-of-Stake can also help to lessen the climate crisis.
For digital currencies to solve the environmental crisis globally, policymakers, environmentalists and crypto investors must work together. Where the appropriate reforms and sustainable solutions are in place, it is easier for these digital currencies to help solve the environmental crisis.
In addition, the role of education cannot be overemphasized. When people are educated about the impact of cryptocurrencies and the possible ways they can aid a sustainable planet, they are encouraged to adopt these technologies and use them best.