Blockchain technology is arguably one of the most revolutionary technologies in this century. First launched in 2009, the technology has majorly served as a platform for cryptocurrency projects. Awareness of environmental sustainability has grown exponentially in that period too.

Nevertheless, it has continued to find effective applications in more industries every year. As a result, current projections show that the global blockchain market will witness a compound annual growth rate of 84% before 2032.

Naturally, as the industry evolves, so does concern for emerging issues. One of the most important concerns for any sector now is environmental harm. Environmentalists and crypto experts alike have weighed in on how blockchain technology impacts the environment.

In this post, we will examine some of these environmental concerns. We will also look at some some probable solutions to these issues. Let’s proceed.

Environmental Impacts of Blockchain Technology

Blockchain stands for decentralization, improved transactional security, and greater transparency for many. Blockchain-based decentralization has been a driving force in the movement’s popularity.

Yet, there are some concerns about Blockchain activity surface in the face of such issues as the global energy crisis and environmental pollution. Chief among them are energy consumption, e-waste, and carbon footprint. We’ll be looking at each in turn.

Energy Consumption

After Bitcoin, the first blockchain project was launched in 2009, one of the first things that eventually became obvious was just how much power consumption its growth meant. This problem derives primarily from “mining” operations.

In mining operations, miners use computers to attempt to solve complex math problems to verify transactions on the Blockchain. The system traditionally uses a peer-to-peer algorithm known as proof-of-work (PoW). When miners solve these problems, they get rewarded with crypto coins. This is how new crypto coins are minted.

Now, in the earlier days, one could run the mining program on a good PC. However, Bitcoin’s popularity quickly exploded, and more people became interested in mining it. The result? Bitcoin mining activity went through the roof, and the POW algorithm became more complex. Thus, the processing power required for mining Bitcoins has only increased.

Currently, Bitcoin transactions and mining operations are estimated to have an annual power consumption of about 204.50 TWh. That’s equivalent to the total power consumption of Thailand. Of course, figures like this would still be concerning if all we had to consider was Bitcoin and its POW.

However, Bitcoin is not the only cryptocurrency contributing to global power consumption. Ethereum transactions, for another example, also rely on the POW algorithm, and they consume about 84.77TWh annually, a figure equivalent to the annual power consumption of Finland.

Overall, cryptocurrencies are now thought to be the most significant contributors to the massive power consumption of Blockchain projects today.

Carbon Footprint

Much scientific research has brought to light the accumulation of greenhouse gases in the Earth’s atmosphere. This has led to concerted efforts by the international community to curb national and industrial carbon emissions, and Blockchain technology has come under the environmental sustainability radar in this respect as well.

Green energy for environmental sustainability

But, again, we find major Blockchain projects like Bitcoin and Ethereum in bad water.

With the vast amounts of energy Bitcoin mining requires, the resultant carbon footprint has environmentalists and ecologists worried. To be sure, mining itself does vanishingly little to add to the carbon load. However, it happens to be the case that about 80% of global energy comes from fossil fuel combustion.

This means that most mining operations have fossil fuels as their energy source, hence the carbon footprint.

Estimates of the annual carbon footprint from Bitcoin transactions place it on par with nations like the Czech Republic, with a figure of about 114.6 metric tonnes. The Ethereum network fairs better as it generates about 50 to 60 million metric tons of CO2 a year – about half the figure for Bitcoin. However, there is still a lot of concern with Ethereum, especially regarding NFTs, which are traded most notably on the Ethereum network.

If you watched 20,000 hours of YouTube, you would still have generated less carbon than you would have if you engaged in a single NFT transaction. However, there remains some debate about the true role of NFTs in Ethereum’s carbon emissions and environmental sustainability.

Some contend that the carbon emissions from NFTs would have happened even without NFTs and that the degree emitted is small compared to that of the rest of Ethereum. Nevertheless, it is still the case that NFTs currently have a measurable contribution to the Ethereum carbon footprint.

E-Waste

Aside from vast energy consumption and carbon emissions, the generation of e-waste is another area of concern regarding Blockchain technology. The problem arises because as most Blockchain networks become bigger, the algorithms become more complex and require even more specialized hardware to run.

In addition, the widely used POW algorithms revolve around processing power, and there is a constant arms race to develop more efficient mining hardware that maximizes it.

The history of Bitcoin mining provides a perfect example of this arms race. As we have previously seen, Bitcoin miners could originally work even on a laptop as long as it had a good CPU. Before 2011 (3 years after Bitcoin launched), however, the network had grown significantly, and miners had discovered that GPUs were more efficient for the now-more-difficult mining operations.

This caused a rush to build specialized mining rigs with powerful GPUs. Not long after, miners began to shift to FPGAs (field-programmable gate arrays), which were more specialized, more efficient, and reprogrammable to mine practically anything.

By 2013, however, miners had moved tents again. They had discovered the use of ASICs (application-specific integrated circuits), which were more specialized and more efficient (being wired to perform only one type of calculation).

The major results of this arms race of specialization and increase in efficiency are twofold: a disruption in the global supply chain for semiconductors and an increasingly dense trail of mining hardware made obsolete by newer and more advanced ones.

E-Waste Now

According to a 2021 research study by Digiconomist founder Alex de Vries, Bitcoin’s annual electronic waste generation as of mid-2021 amounted to about 30.7 metric kilotons. That’s a lot of electronic junk.

Of course, the problem with all this e-waste does not lie in the sheer bulk alone but also in the effects on environmental sustainability, especially on soil and sea ecologies. Electronic equipment is rich in toxic chemicals and trace metals which may leach into the soil or when improperly recycled.

Some equipment may even be dumped into the sea, unleashing these chemicals on marine life. All in all, the e-waste production due to these Blockchain technologies is a concern that needs addressing.

Current Strides In Addressing These Concerns

Naturally, the global community of Blockchain users has since begun to respond to these concerns. This is hardly surprising given the liberalistic and usually eco-friendly ideals underpinning the blockchain revolution (even though it has sadly fallen short of some of them). However, many wonder about the possibility of Blockchain truly going green.

Thus far, there is a lot of indication that it can. Some strides have been taken in just that direction thus far, and we will talk about them.

Alternative Consensus Algorithms

As we have previously seen, the PoW consensus mechanism of most Blockchain projects requires enormous amounts of energy to run, and this usually translates to a higher carbon footprint.

In addition, the equipment needed to run these mining operations is typically specialized, and they are constantly rendered obsolete by the continuous mining tech arms race, thus creating loads of electronic waste.

Blockchain paves the way

However, many far more efficient and more eco-friendly alternatives are now being applied in a lot of the newer Blockchain projects, such as the Tezos network. The most common one is the proof-of-stake (PoS) which was first used with Peercoin as far back as 2012.

Unlike the PoW system, which rewards processing power, the PoS system allocates validator responsibility in proportion to how many of the relevant crypto coins a given participant holds. This system is so much less energy-intensive than the annual energy consumption of Tezos validators is about seven orders of magnitude less than that of the Ethereum network.

Other such alternatives include the proof-of-capacity system (which uses free storage space on a user’s device to store solutions to hashing problems) and the proof-of-history system (which cryptographically records and verifies the time between two events). An added green advantage of these alternatives, especially PoS, is that they require less hardware specialization. This means they contribute a lot less to the electronic waste problem.

Essentially, alternative consensus mechanisms can kill all three birds (power consumption, carbon footprint, and e-waste) with one stone. Sadly, these mechanisms tend to be less centralized and secure than the PoW system.

For instance, while PoW systems have thousands of validators, alternative systems like the PoS tend to work with just a few hundred. This is one of the concerns currently blocking major projects like Bitcoin and Ethereum from fully adopting PoS.

However, the good news is that plans are underway for the Ethereum network to adopt the PoS system in the future. And while it remains unlikely that Bitcoin will do the same anytime soon, the situation will likely change when these alternative algorithm concerns are resolved.

Green Energy Resources and Policy Regulations

With regards to green energy use, there has been quite a bit of good news as well. As mining communities become more environmentally conscious, many have begun to adopt more green and renewable energy solutions.

environmental sustainability and blockchain tech

Blockchain tech bodies like the BMC are now advocating for more renewable energy use in Bitcoin mining. According to a 2021 survey of about 46% of its global Bitcoin network, the sustainable power mix in its energy consumption is now about 66.1%.

Blockchain and computing companies have also been making moves here as well. For example, Soluna has recently raised about $35 million towards building sustainable green data centers for crypto mining and machine learning.

Government regulations and incentives by people of sufficient means and influence are also helping to move crypto further into the world of renewable energy. For example, under the investor tax credit, investors and homeowners get a federal tax deduction amounting to about 26% of the cost of installing a solar energy system.

In addition, business tycoons like Elon Musk are also getting involved. In May 2021, Musk announced that Tesla would cease accepting Bitcoin as payment. Citing environmental concerns, he further announced that transactions with Bitcoin would only resume once Bitcoin transactions become more environmentally sustainable.

This is a good sign that the government and big businesses are taking the issue of environmental sustainability more seriously.

Environmental Sustainability and Blockchain Tech: Final Thoughts

Environmental sustainability continues to be a concern in virtually all global commercial sectors, and Blockchain systems are evidently not an exemption. Thankfully, as we have seen, many strides are being taken towards making Blockchain technology, especially its crypto use cases, more environmentally sustainable.

However, the journey towards this goal is not going to be an easy one. After all, some current solutions to these environmental concerns seem to reduce such important Blockchain features as security and decentralization.

Others, such as green energy, will rely on the availability and accessibility of such energy alternatives. Unfortunately, such factors stand in the way of these environmental sustainability solutions being adopted by major projects.

Nevertheless, the Blockchain industry is a growing enterprise, and we can be confident that progress will be made. As global governments and corporate entities (especially ones specialized in green energy) continue to make these energy resources cheaper and more accessible, the Blockchain Industry will gradually shift toward greater reliance on green energy.

Blockchain technology will continue to be improved, and these less energy-intensive Blockchain algorithms will slowly give way to cheaper and more energy-efficient ones.