“A useless way to use energy”?
The amount of energy needed to power the Bitcoin network is staggering: Tim Berners-Lee, who is credited as the inventor of the World Wide Web, has gone so far as to describe “bitcoin mining” as “one of the most fundamentally useless ways to use energy.”
Bitcoins do not exist as physical objects, but new currencies are “mined” or put into circulation through a process that involves the use of powerful computers to solve complex mathematical problems. This process requires a lot of power, as it is estimated that the Bitcoin network consumes more power than many countries, including Kazakhstan and the Netherlands. And since fossil fuel power plants still make up a large part of the global energy mix, it can be argued that bitcoin mining is partly responsible for producing the greenhouse gases that cause climate change (although the impact on climate is much less than that of heavy hitters such as the agriculture and construction sectors). energy and transportation).
Another issue is the amount of power needed per transaction, which is enormous compared to traditional credit cards: for example, each Mastercard transaction is estimated to use 0.0006 kilowatt-hours (kilowatt-hours), while each Bitcoin transaction consumes 980 kilowatt-hours. , enough to power an average Canadian home for more than three weeks, according to some commentators.
An important driver of sustainable development?
Despite these issues, UN experts believe that cryptocurrencies and the technology they support (blockchain) can play an important role in sustainable development, and in fact improve our stewardship of the environment.
Transparency is one of the most beneficial aspects of cryptocurrencies, as far as the UN is concerned.
Because the technology is tamper- and fraud-resistant, it can provide a reliable and transparent record of transactions. This is especially important in regions with weak institutions and high levels of corruption.
world food program (World Food Program), the largest United Nations agency providing humanitarian cash, which can help ensure that money reaches those who need it most.
a pilot program in pakistan It showed that it was possible for WFP to get cash directly to beneficiaries, securely and quickly, without having to go through a local bank. The project, Building Blocks, has also been successfully piloted in refugee camps in Jordan, ensuring that WFP can create a reliable online record of each individual transaction.
If this can work with refugees, it can also work with other vulnerable and disadvantaged groups. The authors of the UN Environment Agency report, United Nations Environment Program, suggests that technology can improve the livelihoods of waste pickers, who make a living in the informal economy.
The report says a transparent monitoring system can accurately track where and how recovered waste is used, as well as identify who picked it up, ensuring that the right people are rewarded for their efforts.
prevent environmental degradationتدهور
The potential of blockchain in protecting the environment has been tested in a number of other projects, by the United Nations and other organizations. These tools range from a tool to eliminate illegal fishing in the tuna industry, developed for the World Wide Fund for Nature (WWF), to a platform (CarbonX) that turns reductions in greenhouse gas emissions into a cryptocurrency that can be bought and sold. Manufacturers and consumers have a financial incentive to make choices. more sustainable.
For the UNEP DTU Partnership (a collaboration between UNEP, the Technical University of Denmark and the Danish Ministry of Foreign Affairs), there Three main areas Where blockchain can accelerate climate action: in transparency, climate finance, and clean energy markets.
The partnership says data on harmful greenhouse gas emissions in many countries is incomplete and unreliable. Blockchain solutions can provide a transparent and trustworthy way to show how countries are taking action to reduce their impact on the climate.
Climate finance—investments that slow the rate of climate change—could be boosted if carbon markets were expanded, allowing businesses and industries to transition to low-carbon technologies.
And blockchain could be an important part of accelerating the intake of renewable energy sources such as wind and solar. Since these sources are, by their nature, discontinuous and decentralized, new forms of energy markets are needed.
Tools that use blockchain technology can help create these markets, and end our dependence on fossil fuels.
Finding Low Energy Solutions
Despite all these potential benefits, the massive energy consumption associated with the technology is one of the major obstacles to overcome, and many players in the industry are working on ways to tackle this problem.
For example, the Ethereum Foundation, the organization behind the cryptocurrency Ethereum, is working on a new method for verifying transactions. By switching to a different method (called Proof of Stake, or PoS), the organization says the energy cost per transaction can be reduced by 99.95 percent.
At the same time, many players in the industry want to ensure that any energy consumed by the industry is completely carbon-neutral.
In April 2021, three important organizations (the Energy Web Foundation, the Rocky Mountain Institute, and the Coalition for Innovative Regulations) formed the Crypto Climate Accord, which is supported by organizations spanning the climate, finance, NGO, and energy sectors.
The goal of the agreement is to “decarbonize the industry in record time,” and achieve net zero emissions in the global crypto industry by 2030.
The ups and downs of cryptocurrency
Cryptocurrency is still in its infancy, and there are still many technical and political challenges to overcome, as evidenced by the volatile nature of some of the more famous releases.
One Tweet From Tech Billionaire Elon Musk, Could Cause Bitcoin to Increase or Decrease in Value; El Salvador announced plans to launch a legal tender for bitcoin in June, a month after Beijing announced a crackdown on bitcoin mining; While another cryptocurrency, Dogecoin, has been widely circulated, huge jumps and drops in its value have been reported (again, thanks in part to Mr. Musk’s comments), despite the fact that it was created as a joke.
However, many financial experts believe that these emerging problems will eventually be resolved, allowing cryptocurrencies and other blockchain-based financial instruments to cross into the mainstream: a number of central banks are planning their own digital currencies, and so-called “stablecoins” could become ”, which can be associated with precious metals such as gold or national currencies, as the name implies, stable and reliable investment opportunities.
If the most vulnerable groups are to benefit from the promises of blockchain technology, and if it will truly make a positive impact on the climate crisis, more technical research is needed, as well as more international dialogue, involving experts, scientists and policy makers.
Says Minang Acharya, one of the authors of UNEP’s latest outlook summary on blockchain applications. “The more we experiment, the more we learn about the technology. This will likely improve our UN-wide knowledge of blockchain, our understanding of the environmental and social impacts of mining operations, and improve our chances of dealing with any problems that technology may bring in the future.”