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Can blockchain ever be part of the solution to combat climate change?

Elon Musk gained the world’s attention when he announced that Tesla would no longer accept bitcoin as a payment method, citing the environmental impact of the blockchain.

While this brought headlines to the debate about cryptocurrency and climate, it has been an issue that has been going on for years.

Bitcoin’s proof-of-work consensus mechanism is highly energy intensive, and seems to be a problem that is only getting worse – with giant data centers set up as miners to get their hands on the supply of new coins Which have decreased further since 2020. Halve

Digiconomist. Latest figures of suggest That the annual carbon footprint of bitcoin is now equal to the whole of Portugal. A single BTC transaction uses CO2 equivalent to completing 1.26 million visa transactions or watching 95,000 hours of YouTube. Worse, this single transaction uses the same amount of electricity as a normal American household in 40 days. A few weeks ago this figure was around 28 days.

This is a problem that is getting worse, not better. You know you have a problem when the environmental group Greenpeace says that It will no longer accept donations Which are created using bitcoins.

Worse still, some giants in the crypto industry believe that, unless the issue is resolved as urgency, it could completely overwhelm bitcoin as corporations and governments Pledge concrete to take action and mitigate the effects of climate change. The COP26 Climate Summit is scheduled to be held in Glasgow and New York later this year Recently proposals to ban bitcoin mining were unveiled For three years in the state – politicians fear the cryptocurrency may make it miss environmental targets.

Speaking to CNN recently, Ethereum co-founder Vitalik Butirin acknowledged that Bitcoin’s energy consumption is “certainly too large” and has a “significant downside” in its quest for mass adoption. He also gave this stern warning: “If bitcoin stays with its technology exactly as it is today, there is a big risk that it will leave it behind.”

Right now, Ethereum is making a big change of its own. The blockchain is currently based on the Proof-of-Work consensus mechanism, but it is now making a concrete change to Proof-of-Stake. Some cynics would argue that the main motivation for this ambitious transition lies in the scalability issues that have plagued the network, as there is a firm belief that PoS will allow Eth2 to process significantly more transactions per second. There are also environmental benefits, however, research suggests that this algorithm would be Up to 99% more energy efficient.

As Butterin said during that CNN interview: “[We’ll] Go to consume the same energy as a village, to consume the same energy as a medium-sized country. “

Climate: a hot-button topic

Blackrock is the world’s largest asset holder – and in a recent forward-thinking letter to business leaders, CEO Larry Fink said climate change “presents a historic investment opportunity.” He said: “There is no more issue than climate change in our clients’ list of priorities. They ask us about it almost every day.”

This laser-like focus on environmental, social and governance (ES&G) projects helps change the story. Such initiatives are no longer regarded as a drain on profit margins, but rather an absolute necessity that the world’s largest businesses need to adopt. Like bitcoin, they also risk being left behind until they adapt … and faster.

Morningstar data shows that total assets under management in ES&G funds rose sharply in the last quarter of 2020, surpassing $ 2 trillion for the first time. This coincided with the election of Joe Biden as US President, with his administration choosing to make climate change the central theme of his presidency.

Carbon offsets, plastic offsets and other forms of climate credits have emerged as a new reality in the business world – meaning companies that fall below certain emission levels can effectively sell their excess capacity to others for profit . But this is not without challenges. Corporations cannot always be certain that what they are buying is real, and the real need for solid data has arisen.

what’s the answer?

Although blockchain is routinely instigated as part of the problem when it comes to the environment, an Albuquerque startup believes the technology has the power to be part of the solution.

Devavio Has developed an innovative blockchain initiative that advances sustainability efforts – with ES&G infrastructure that provides “bitcoin and Ethereum with net-zero emissions”. It has already accumulated a series of partnerships with companies focused on ES&G, including waste collectors, renewable energy producers and data analytics companies.

Company CEO Tom Anderson believes that blockchain’s core strength can establish trust when it comes to verifying ES&G ratings and assets. He stressed that although these networks are known as the home of cryptocurrency and NXT, these databases are particularly suitable for tracking the ownership of assets and records. Over time, it has the potential to become the ultimate destination for provable, auditable data – giving corporations a way to update their progress on ES&G that investors can verify.

“Blockchain and environmental sustainability can coexist,” Anderson says. “Distributed ledger technology is not intrinsically useless, and the blockchain can do far more good than harm to the environment. With Devvio’s efficiency at 1 / 1,000,000th of Bitcoin’s energy use, you will be without environmental costs Get all the benefits. “

He added: “Bitcoin was literally designed to waste energy in its consensus system, but there are other ways to run the blockchain. I don’t think anyone can realistically imagine that bitcoin in 2009 What will the energy use be. Although we have created a system that is dramatically more efficient, I think it is only the tip of the iceberg given the potential of blockchain. To be a reliable source of truth for all ES&G data and assets. for.”

Focusing strongly on enterprise customers, Devvio says the world can no longer ignore ES&G issues. Anderson said it is an “exciting time” for businesses, and “huge opportunities” have emerged as the world’s 1,000 largest companies evaluate their impact on the environment.

“It is rare to see such an opportunity in one’s lifetime where being able to do so much good in the world as well as create such a strong business,” he said.

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Avinash is a blogger, Enterprenuer, marketer and author. He is very good affiliate marketer and Product Reviewer.