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Cryptocurrency Could Help Transition the World to Green Energy – Part 1

According to the CEO of BlackRock, Larry Fink, the next 1,000 unicorns will not be search engines or social media companies; instead, they will be sustainable, scalable innovators – startups that help the globe decarbonize while making the energy transition affordable to all consumers. He believes that we must be open and honest about the fact that green products are sometimes more expensive nowadays. For a smooth and equitable transition, lowering the green premium will be critical. The total value of sustainable investments has already surpassed $4 trillion. BloombergNEF’s (BNEF) New Energy Outlook 2021 (NEO) in its yearly long-term scenario analysis of the future of the energy economy, carrying through net-zero carbon emissions by 2050 will demand as much as $173 trillion in energy transition expenditure. A paradigm shift is important, and such a transition is required in energy to migrate to a future-proof grid that is increasingly reliant on natural resources. Bitcoin and crypto mining could help the world transition to green energy. How? In part 1 of this article, we will look at the state of affairs and capture some really cool ideas on how cryptocurrency can help augment the shift towards sustainable energy.

Wait, What Shift?

“At some point Bitcoin mining will look like a utility, and it’s going to be a part of critical infrastructure for countries,” said the Foundry Digital CEO. Bitcoin is a great stabilizer for the power grid. You may maximize your power generation potential by supplying adjustable baseload demand directly from the Bitcoin network. Companies like Melanin Solar and Blockstream are changing how energy production takes place by incentivizing the adoption of renewable mining. Galaxy Digital states a significant portion of the world’s energy production is squandered; roughly 2,205 TWh per year is wasted, which is 19.4 times the Bitcoin network. A Galaxy Digital research found that Bitcoin consumes 113.89 terawatt-hours (TWh) per year, while the banking industry consumes 263.72 TWh per year. Melanin Solar uses solar energy to CPU-mine $WHIVE, a cryptocurrency by the Whive Protocol that fuels the proliferation of sustainable energy.

That’s why Ripple is pledging $100 million to help modernize and grow carbon markets, as well as speed the availability of new, long-term, first-rate carbon removal. This initiative intends to adapt global carbon markets to handle growing production and demand while attaining internationally accepted climate objectives, building on sustainability efforts.

Ripple’s CEO, Brad Garlinghouse says “Our $100 million commitment is a direct response to the global call to action for companies to help address climate change by deploying resources including innovative technology, strategic capital, and talent. While reducing emissions and transitioning to a low-carbon future are paramount, carbon markets are important for meeting climate goals. Blockchain and crypto can play a catalytic role in allowing carbon markets to reach their full potential bringing more liquidity and traceability to a fragmented, complex market.” 

The question then becomes what elements are needed to ensure the growth of green energy. Green energy crypto mining and the proliferation of distributed energy solutions is a crucial starting point. A company such as Melanin Solar for instance makes this even easier by deploying CPU-mining, and a protocol optimized for regions with high Solar Reliability Indices (SRIs), not to mention sustainability-led NFTs. Melanin Solar, a startup using the Whive Protocol, is building crowd-grid systems that leverage decentralized technologies such as the blockchain to improve energy access, therefore, energy security.

With 940 million people, 13% of the global population lacking electricity, the use of open-source, decentralized technologies might hasten progress toward decarbonization programs for the benefit of the environment, resulting in unprecedented levels of creativity and transparency. Bitcoin mining, and in essence, cryptocurrency mining, has the ability to power a shared vision and provide market-driven solutions in terms of decarbonization. It’s a team effort to ensure that the industry doesn’t exacerbate any and all negative impacts on the earth’s ecosystem. That said, it is important to note that power consumption does not as-a-matter-of-course equal CO2 emissions.

The Crypto Climate Accord

More than 250 firms and individuals from the crypto and financial, technology, non-profit, energy, and climate change sectors have signed on as Supporters of the Crypto Climate Accord. The CCA is a private sector-led project for the whole crypto community, inspired by the Paris Climate Agreement, with the goal of decarbonizing the cryptocurrency and blockchain industries at record speed. Members agree with the goals of the Accord and are actively involved in advising, developing, and scaling solutions in support of the CCA. Joining the CCA does not guarantee that a Supporter organization has already been decarbonized. Signatories to the Crypto Climate Accord are crypto market participants who pledge to achieve net-zero emissions from electricity consumption associated with all of their various crypto-related operations by 2030 and to report progress toward this goal using best industry practices. Every Signatory also serves as a Supporter.

The Bitcoin industry has the chance to light the path for other industries by demonstrating how to achieve industry-wide decarbonization. Is crypto ever going to be green? A question largely left to the idealism of yesteryears, until recently where it is the talk of the town. The crypto scions of a decade long were hell-bent on propagating a financial révolution in true Rousseauesque fashion that they rarely considered carbon emissions.

Building on the forward progress of current technologies and policies, the CCA intends to provide an open-source toolbox for the decarbonization of the crypto industry.

What Are Carbon Offsets?

Although the phrases “carbon offset” and “carbon offset credit” (or plain “offset credit”) are interchangeable, they might represent slightly different things. A carbon offset is a reduction in greenhouse gas emissions – or an increase in carbon storage that is used to counteract emissions that happen elsewhere. For example, the planting of trees or restoration of land. As the globe works toward a more sustainable future, carbon offsets are predicted to soar to $550 billion by 2050. Today’s carbon markets, on the other hand, are straining to keep up with the expanding demand for superior, transparent, and effective carbon-removal solutions. Supply bottlenecks, a long time to market, obfuscation, a lack of fair and equitable price discovery, and even fraud plague the existing carbon market infrastructure. Enter blockchain and cryptocurrency, two new technologies positioned to help scale carbon markets by tackling many of the market’s most pressing issues.

How Crypto and Blockchain Can Help Carbon Markets Become More Valuable

By allowing for new forms of value that are more scalable, transparent, traceable, and verifiable, blockchain and crypto can help to free carbon markets. Suppliers can use blockchain’s tokenization capabilities and open, decentralized governance to more readily originate and validate new products and bring them to market, whether they are individual farmers, farming groups, enterprises, or non-governmental organizations (NGOs). Tokenization can also provide additional value to customers by allowing for more precise pricing and a more equitable return to suppliers. Using blockchain and crypto, successful models can then be duplicated and extended to hasten progress toward climate targets.

Ripple’s $100 million investment will go toward major environmental initiatives, such as

  • To leverage the most impactful and adaptable carbon removal technologies, Ripple is building a stockpile of high-quality carbon credits.
  • Betting on carbon-removal technology firms and market makers like CarbonCure,  Xange.com, and Invert to use blockchain and cryptocurrency to capture value for customers and suppliers.
  • Pushing new developer tools and functionality centered on certified carbon credit NFTs to ensure an offset on the XRP Ledger
  • Continuing to collaborate with the world’s top climate and conservation organizations to develop new climate solutions.
  • Engaging with standards groups and carbon offset projects to streamline carbon credit metadata on blockchains like the carbon-neutral XRP Ledger, such as project origin, region, and methodology utilized by carbon credit NFTs (XRP Ledger).

The tokenization of carbon credits can help scale carbon markets to meet rising demand while also guaranteeing the legitimacy, integrity, and openness of existing markets. The XRP Ledger is already being used by a number of carbon removal initiatives and fintech to introduce novel climate products to market. By incorporating blockchain technology into earth’s climate programs, the industry will be able to validate and approve NFT carbon credits more swiftly, minimize the risk of fraud, and even ensure that the offset truly eliminates carbon over time. 

Ripple’s contribution strengthens its commitment to long-term sustainability. Ripple said in 2020 that it intends to be carbon net-zero by 2030 or sooner. XRP Ledger Foundation and Energy Web came together to decarbonize the XRP Ledger, making it the first mainstream blockchain to do so. Ripple is also collaborating with important climate stakeholders, such as the Rocky Mountain Institute and the Alliance for Innovative Regulation, having co-founded the Crypto Climate Accord, which, as stated above,  aims to bring the crypto industry toward 100% renewable energy use and net-zero emissions. Ripple is also an establishing member of the World Economic Forum’s Crypto Impact and Sustainability Accelerator.

The idea behind offset credits is that they are used to transfer a net climate benefit from one business to another. It makes little difference where GHGs are lowered because they mix globally in the atmosphere. The consequences of an organization ceasing an emission-causing activity or enabling an equivalent emission-reducing activity someplace else in the world on climate change are the same. Carbon offsets make the second choice easier and more cost-effective for businesses.

What About Green Energy Mining?

There is no doubt that Bitcoin mining uses a substantial amount of energy; it makes no apologies for that. This feature has been treated like a bug that needs to be squashed, sorry, fixed. Bitcoin’s proof-of-work (POW) algorithm is intended to strengthen the concept of hard money by enforcing the laws of thermodynamics in its generation and maintenance. It adds 40 million tons of carbon dioxide to the atmosphere a year.

Notwithstanding the ingenuity of this technique, many people outside of the crypto field have a poor picture of Bitcoin mining, as seen by the large number of opinion articles published by mainstream media outlets with that viewpoint. Remember the days of Amazon where such outrageous articles and pundit debates would rent the air with “throw another lump of coal on the power station fire, someone just ordered a book on Amazon”? Most of us born in that generation would now sneer and scoff at such a statement, yet this is what is happening to Bitcoin, and as a whole, to crypto mining.

Curiously, there are those within the industry who would make similar allegations. People who want to shill “their coin” as the “new Bitcoin” or folks who wish to repackage the hardness of money utilizing less power-hungry alternative solutions such as Proof-of-Stake (PoS). Melanin Solar’s use of the Whive Protocol’s PoW and CPU-mined algorithm refactors the equation by going back to the basics while adding a layer of sophistication.

Granted, when it comes to how that power is generated, distributed, and diverted from other resources, all Bitcoiners and Bitcoin miners have imposing moral and environmental responsibilities, just like any other industry. Crypto mining at its core should accelerate sustainable energy in both its form factor and philosophical foundations.

Currently, renewable energy accounts for around 39% of Bitcoin mining. The most recent CoinShares research report, released in January 2022, highlights that bitcoin mining consumes 0.05 percent of all energy produced on the earth, while the complete industry creates only 0.08 percent of global CO2 emissions. The Bitcoin algorithm is constantly seeking to enhance efficiency and reduce expenses. Now that it’s built-in, there’s no stopping it. Every Bitcoin miner on the planet is trying to figure out strategies to lower the cost of mining Bitcoin. The most cost-effective energy source is renewable energy. Crypto mining can help the development of renewable energy technology by providing a faster return on green investments.

What About NFTs Can They Be Sustainable?

What do NFTs got to do with it? Well, everything. NFTs make it possible to address underfunded or even disregarded challenges in a participatory and incentive-motivated manner. Adoption of open-source, decentralized technology has the potential to accelerate decarbonization efforts, resulting in unprecedented levels of innovation and transparency for the good of the world.

By funding new technologies and community-led sustainable projects, “Green NFTs”, which is driving energy transition through thematic sustainable impact and inventing for the net-zero world. It is undeniably the kind of vision required for the 13% of the global census to avoid being left behind in the race to zero. Through a combination of financing, direct action, and gamification, the goal is to boost global participation in sustainable concerns. NFTs achieve this through encouraging and facilitating collaborative and inclusive activities.

And in answer to your implicit question- according to analysts, the average NFT consumes 75 kWh over its lifespan (with all transactions taken into account). The Ethereum blockchain is the most often used to create NFTs; each Ethereum transaction takes about 48 kWh due to the proof of work consensus algorithm.

The SUN is the most powerful BANK, using 430 quintillion Joules. That’s 430 followed by 18 zeros! The total amount of energy consumed by all humans in a year is 410 quintillion Joules. How prepared is the world to receive and utilize this quantity of energy? Crypto mining, and NFTs, appear to be the solution. 

Renewable energy is quickly expanding throughout the world, owing to economics, environmental concerns, and the need for energy security. Every hour, the sun sends out enough energy to power the entire earth for a year. How prepared is the world to receive and utilize this quantity of energy? Solar energy mining is the energization of money. 

Energization of Money?

If you want to find the secrets of the universe, consider it in terms of energy, frequency, and vibration, or so said Nikola Tesla more than a century ago. As a corollary, if you want to create a “perfect” economy, you’ll need a feedback loop between the economy and nature. This study looks at the possibility for energy-related monetary instruments – currencies and accounting standards – to provide such feedback. Energy is an interesting candidate for such an input since it is as important to the economy as it is to research. 

Conclusion

When the technology reaches a point of equilibrium, regulators will be forced to fuse it with existing monetary systems. We could be on the verge of increasing cryptocurrency’s usage of green energy with just a few regulation changes. These events just serve to highlight the need for crypto to be stable. Regulations will increase the efficiency of cryptocurrency mining and eventually lead to the use of renewable energy, bringing it closer to legal tender adoption.

The world is at a tipping point. Amidst the increase of human activity, the economical uncertainty wrought by the ravage of the pandemic, the Anthropocene, or what Donna Haraway calls Chthulucene, presents interesting complexities in the race to zero- arguably the most defining human commitment of the 21st century. Among these complexities, the most crucial one is the state of energy systems. As such, the energy outlook of the planet involves the understanding of certain forces that will reshape how the world interacts with energy.

Stefan Muriuki
Stefan Muriuki