• The focus of the blockchain climate debate is off the mark

  • As the nonfungible token craze exploded at the start of the year, many environmentally conscious artists expressed their displeasure with Ethereum’s energy consumption. Elon Musk then derailed Bitcoin (BTC) in May, citing the energy consumed by Bitcoin as the reason for Tesla’s decision to withdraw its plans to accept BTC as payment for its electric vehicles.

    Both of these events have sparked heated debate both within and outside the blockchain community. The arguments tend to focus on two areas in particular: Bitcoin’s energy consumption and reliance on climate-damaging fossil fuels versus renewables, and, secondly, the advantages of one blockchain platform over another — generally focusing on consensus models and promoting proof-of-stake as the greener option.

    Each debate is chock-full of arguments on both sides. If the IPCC is correct, the need for immediate action to mitigate some of the damage cannot be overstated. To do so, the emphasis should be on the positive applications of blockchain.

    Taking advantage of blockchain’s advantages

    The ability of blockchain to crowdsource large amounts of otherwise wasted energy — which is aggregated and reignited for further utility — is one significant way that blockchain’s impact is already significant. Crowdsourcing wasted energy adheres to the principles of a circular economy, which eliminates the throwaway culture in favor of recirculating available resources to the greatest extent possible. One example is computing power.

    Whether it’s on a personal laptop or a commercial server after hours, there’s a lot of idle computing power lying around on hardware, especially when it’s not in use. At the same time, there is a high demand for computing power, which is being met by companies such as Amazon Web Services, which is constantly building new data centers to meet this demand.

    Blockchain networks, such as Cudos’ decentralized cloud computing platform, redirect idle computing power and put it to better use, reducing waste. Other networks, such as Filecoin and Bluzelle, focus on storage services, but the principle is the same.

    Energy grid decentralization

    This concept is also being used in other projects to decentralize energy networks. Brooklyn Microgrid is a hyper-local initiative that allows “prosumers” (solar energy producers and consumers) to sell their excess by funneling it into a microgrid where other participants can buy it. It’s the type of “think local, act global” project that demonstrates that anything is possible if you’re willing to start from scratch.

    In Vienna, the government previously funded an initiative that allowed citizens to earn token-based rewards for locating sources of heat waste that could be recycled back into the energy grid. A slightly different take on the same decentralized theme, but with the same underlying principles of leveraging blockchain technology for the greater good.

    Green credentials that are untrustworthy

    Blockchain technology also plays a critical role in increasing transparency and accountability for governments and corporations in the fight against climate change. Following the implementation of the EU Sustainable Finance Disclosure Regulation earlier this year, transparency in ESG (environmental, social, and governance) matters is now high on the agenda for chief financial officers. In its broadest sense, the regulation requires banks and financial institutions to classify their investment products based on their environmental credentials.

    Using blockchain to store and verify this information would greatly increase visibility and the level of trust that investors can place in products with ESG credentials. It is becoming increasingly easy to envision a future in which consumers and businesses can make decisions based on the algorithmic ESG ranking of any type of organization on the blockchain.

    Being the “least bad” blockchain platform is no longer enough, and the community is far from helpless in the face of the climate crisis. It has access to cutting-edge technology as well as some of the world’s best, brightest, and most innovative thought leaders.

    Clearly, blockchain technology can be applied to a plethora of positive use cases that contribute more to the environmental cause than they detract. In doing so, blockchain technology makes a stronger case for its environmental applications than against them.

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