Blockchain Has the Potential to Be Green
Almost every article written about blockchain’s potential environmental impact is one of impending doom. The power needed to ensure that Proof of Work protocols function as they should, for example, is vast and will only continue to grow. Bitcoin, which runs a Proof of Work model, now consumes more energy in mining processes than the entire nation of Switzerland, according to a report from July of this year.
As new blockchain protocols and solutions are developed, energy efficiency is often a key consideration, which is positive. Of course, the last thing a warming planet needs is a breakthrough technology that is as energy-intensive as it is ubiquitous. What often gets lost in the noise when we talk about the development of blockchain, though, is the technology’s potential to improve conservation efforts.
The World Economic Forum published a report in September 2018 titled Building Block(chains) for a Better Planet, which highlighted 65 already existing use-cases for blockchain that could have a net positive impact on the environment. These projects span a variety of different use-cases, but blockchain’s potential impact is huge. Areas like sustainability monitoring and reporting, in verification, in the transferral of relief funds, in geospatial platforms — there are myriad ways blockchain can support environmental work.
Decentralised Environmentalism
One such solution comes in the form of GEAR, a blockchain built as a platform on which to trade environmental credits. These tokenised environmental assets include carbon credits, which are gaining significant popularity globally as a concept. In 2018, a World Bank report suggested that 88 countries worldwide are planning to use or are considering using carbon pricing as an environmental measure. There are, however, very limited platforms for trading these assets, which is holding them back. GEAR could be that platform — the company is minting digital representations of these credits on its blockchain, enabling global trading in place of emissions tariffs or taxes.
Blockchain for Climate is another organisation committed to harnessing blockchain for environmental projects. It plans to ‘put the Paris Agreement on the blockchain’. The organisation plans to harness the many opportunities available worldwide to reduce greenhouse gas emissions, using blockchain as a public and universal ledger and as a medium of exchange for emissions reductions outcomes. This will, it is hoped, facilitate cross-border collaboration and investment in green ventures.
Making Sustainability the Norm
On a broader level, there are a number of startups already using blockchain to make energy grids more accessible for the consumer, utilising its ability to share data in real-time. These blockchain-enabled smart-grids will allow users to compare where they get their energy from, with an emphasis on promoting sustainable energy.
One example is Australian startup Power Ledger. If there’s one thing Australia has in abundance, it is natural sunlight. This, coupled with its vast expanses of unspoiled land, mean it has long been seen as a potential leader in clean energy. Power Ledger has created a blockchain ecosystem which connects those generating solar power with those who need it, often at cheaper rates than fossil fuel-guzzling power plants. As the supply of solar power in the country grows to meet demand, this blockchain-enabled ecosystem could change the way Australians think about their energy needs.
In Spain, we have seen two of the country’s largest energy companies implementing blockchain to certify the origins of its energy to its customers. This level of transparency is good for both the environment and the business. From an environmental perspective, the business is encouraged to provide energy from sustainable sources, as this is what consumers will naturally prefer. For the business, it provides an opportunity to project its green image in a way that won’t cost thousands in marketing bills.
A Double-Edged Sword
Another argument is that, as the energy requirements of mining increasingly large blocks goes up, so too do the costs for those mining them. If the cost of mining the blocks becomes prohibitively expensive, reducing the incentive to mine, blockchains based on this system will slow right down. One of the secondary positives to clean energy is that, generally, it tends to be a much cheaper option. Miners looking for cheaper ways to run their operations may well turn to renewable energy sources to keep costs down — an indirect boon to an industry set to grow rapidly in the near future.
This will need to come, in part, from the blockchain companies themselves. Those building the blockchains that will underpin decentralised projects will need to commit to doing so in an environmentally conscious way. It may be optimistic to expect consumers to adopt blockchain products based on their environmental credentials. The less they ask of the chain’s participants in terms of personal energy consumption, though, the more likely they will be to attract those without a huge mining budget.
Blockchain’s potential is such that environmental concerns need to be paramount in its development. Any technology that may eventually be felt across so many aspects of our lives needs to be built as environmentally neutral as possible, at the very least. Whether blockchain has the potential to help solve what is easily the world’s most pressing issue is impossible to say, but those building it certainly have a responsibility to ensure it doesn’t add to the problem.
