Has crypto really solved its carbon problem?
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Loading... - Nicholas Leos
- 14 Oct 2022
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Cryptocurrencies have long been fairytale climate villains using ever-increasing amounts of power, seemingly only to make a few people rich. Now the story has taken a new turn. The world’s second biggest cryptocurrency, Ethereum, has announced a change to its multi-billion dollar business that should reduce its total energy use by over 99%. Could this mean that crypto is starting to become what its proponents have always promised: a decentralized system that will revolutionize finance, economics, and possibly environmental policy? Or will everything go back to normal when the clock strikes twelve?
Crypto Is Sprouting Some Green Shoots
1. Fewer calculations, fewer emissions. Traditional crypto could have been designed by the fossil fuel industry; to mine new coins, users have to solve increasingly difficult mathematical problems, requiring ever larger server farms. Ethereum stops that runaway train with some fearsomely complex mathematics that rely on far fewer computers constantly crunching numbers. That means that instead of consuming as much electricity annually as the whole of the Netherlands, Ethereum should use less than a thousand typical US homes, worldwide.
2. A more sustainable ecosystem? Ethereum isn’t just a cryptocurrency, it’s a blockchain system that also underpins digital artwork NFTs worth hundreds of millions of dollars, and potentially smart contracts offering security and transparency. Academics have long argued that blockchain technologies could enable cheaper, smarter emissions trading schemes, the tracking of recycled goods, and green financing—if only their energy usage could be controlled. This Financial Times podcast has a great discussion of the possibilities. Read More...
