Introduction
Climate change and the challenges of more unpredictable weather systems are fuelled in no small part by carbon emissions. With companies and governments taking ‘net-zero’ pledges to prevent the situation from getting worse, we are faced with one of humanity’s more serious threats.
Bitcoin, being the proof of concept that a decentralized financial system was possible, came with an energy safeguard. The security of the system relied on decentralization, and participation took the form of solving energy-intensive, complex, mathematical equations. As the network gained popularity, its energy requirement to mine new bitcoin increased to ensure that the currency emission rates stayed stable. Articles comparing Bitcoin’s power consumption to small countries frequently do the rounds. The numbers in question, while significant, often need to be put in context.
One should consider Bitcoin’s energy use when compared with the banking system. While electricity required to change numbers in an account is negligible, looking at the consumption for maintaining climate-controlled offices and bank branches around the world is another matter entirely. According to a research paper by IT engineer and consultant Michel Kazzaka, the energy use of bitcoin is quantified, and pales in comparison to the banking network.
Jumping to the conclusion of Bitcoin being a threat to the environment, especially when one considers the wasteful supply chains of other stores of value, are premature at best. Gold, the most enduring form of ‘hard money’ on earth, is also not immune to criticism. By ravaging indigenous lands and exposing the people who live nearby to mercury poisoning, protecting mining operations while vilifying a new solution like bitcoin is a distraction.
Bitcoin as an Arbitrage of EnergyBlaming bitcoin for a strain on power grids is like criticizing a Formula One for not performing at its peak in a cross-country rally. Being power-efficient is not its purpose, providing a digital alternative to hard money is. We still have a long way to go when it comes to providing electricity to every individual on the planet. While many urban and industrial clusters globally have constant power availability, billions in Asia and Africa do not have this luxury. Even Bengaluru, India’s Silicon Valley, does not have the guarantee of 24/7 electricity and businesses require generators in order to ensure functionality during the work day.
The ever-falling price of solar panels, while expected to be a catalyst not for meeting current demands, should be the beginning of a decentralized renewable energy grid. A 2018 article by The Atlantic talks about Bitcoin’s essential value proposition, how we can create value in unassuming places. We can transform desert regions that have plenty of sunlight, coupled with low energy demands and even less economic productivity. By turning excess energy into money that can then be deployed elsewhere, we can create value locally and stimulate development.
Cryptocurrency for Financial & Energy Independence
Setting up solar panels on one’s property not only provides a cushion against fluctuating local supply, but also creates the opportunity to sell any excess back to the grid. Government schemes of this kind, especially when paired with subsidies to encourage adoption, make it a simple choice to choose the environmentally-conscious option.
When several parties in a geographical area adopt renewable energy generation methods, the possibility of creating a micro-grid arises. Using technology to create a peer-to-peer trading system, energy can be utilized wherever on the grid it is required. Integrating other means of generation like windmills, hydro-electric and tidal power are also possible, with producers earning in proportion to what they generate. How do we ensure that people are paid a fair market rate for what they produce? With blockchains, of course. Being public by design, they are ready-made for this application of accounting.
Environmentally-conscious Cryptocurrency of the FutureThe cryptocurrency sector is only 14 years old, yet the community has explored ways to transition away from this power-hungry Proof of Work feature that keeps bitcoin secure. Our energy transition away from polluting sources can be helped if we simply consume less. As cryptocurrency amasses a larger following, the scrutiny on this space, and the need for further innovation within it, increases.
Ethereum, the world’s second largest cryptocurrency by market capitalization, has recently completed The Merge. Part of a series of planned reforms and improvements to the platform, the central focus is to enhance its scalability while reducing its energy footprint. By adopting a Proof of Stake module, the goal is to reduce the energy consumption of its consensus algorithm by over 99%.
Being a key foundation in the deployment of decentralized services, an improvement in Ethereum is a significant win for the entire cryptocurrency ecosystem. Energy-efficiency, seen as a novel idea when projects like Solana and Polkadot emerged onto the market, is now an industry standard. Any new projects or services in this space will now need to adopt these features or risk being branded obsolete right out the gate.
WAHED Coin and Sustainable FutureReducing emissions while maintaining growth is a complex challenge with no single magic bullet answer. A range of solutions will need to be deployed, at scale. With the effects of climate change being felt in a more pronounced manner with each passing year, incremental steps that slowly improve efficiency seem insufficient. If the global banking system takes note of and integrates the innovation in the cryptocurrency space into their sprawling network, we can take significant strikes towards a more efficient future.
Realizing this green future though, is an expensive ordeal. The rate of deployment of renewable energy, especially in places that have an energy shortage, is on the rise thanks to an increase in available capital to invest. WAHED’s platform crypto platform, powered by WAHED coin, stands to provide a further boost to our shift away from fossil fuels.
By creating a next-generation investment platform, WAHED enables investors to get involved with innovative companies in high-growth sectors all over the world. With a central focus on climate action, WAHED will connect backers with companies looking to make our transition to a renewable future a reality. Become a part of the WAHED ecosystem today. Visit our website to learn more about how the blockchain will accelerate innovation, and how you can be a part of the new decentralized world.
