Can Cryptocurrency Ever Be Environmentally Friendly?

The environmental impact of cryptocurrencies made headlines in 2021 when Bitcoin investor and business magnate, Elon Musk, declared that his company Tesla would no longer accept payments in Bitcoin due to the environmental impact of Bitcoin mining. It brought to the fore a slew of conversations in the open domain that explored the high carbon footprint of crypto, and in particular Bitcoin. Some hardcore digital currency advocates jumped ship to support “greener” currencies as more and more companies stopped Bitcoin payments because of company policies of environmental sustainability. Bitcoin is not likely to change its consensus algorithm, so investors and users are now looking at alternative currencies.

With more than 4,500 mineable coins and tokens, how practical is the idea of enforcing sustainable cryptocurrencies?

To understand the viability of sustainable currencies, learn what mining Bitcoins mean and how Bitcoin differs from other cryptocurrencies.

Cryptocurrency and Bitcoins

At the outset, cryptocurrency is a digital currency used as a medium for transactions: and designed to get around the bureaucratic limitations of the traditional banking system. Network nodes verify currencies through cryptography and transfer on peer-to-peer networks. These transactions are recorded in a public distributed ledger called a blockchain that forms the underpinning technology. 

One of the first decentralized digital currencies was Bitcoin. Bitcoin and other proof-of-work  (POW) cryptocurrencies are energy guzzlers as they perform high-intensity computations associated with crypto mining. The US alone accounts for 42.7 % of Bitcoin mining activities, accounting for more than 36 kilotons of electronic waste produced annually because of the complex algorithms of mining operations.

A Primer on Crypto Mining

Crypto mining is the process of producing cryptocurrencies using specialized computers or mining systems known as nodes or mining rigs. Participants compete to solve math puzzles and validate transactions on the blockchain network for a specific crypto coin and receive a mining reward for their computational effort.

The energy-guzzling feature of crypto mining is common to Bitcoin and other PoW cryptocurrencies, making it very expensive for a crypto stakeholder to command an entire crypto network. However, the decentralized nature has an advantage over centralized currency systems backed by a central bank or authority, as it can ensure the security of the blockchain network.

All cryptocurrencies do not use mining. So how are new coins created?

Several sustainable cryptocurrencies have come up in recent years. They use various mechanisms to reduce energy consumption and be eco-friendly. 

Can Crypto ever be environmentally friendly?

Cryptocurrency mining can indeed use less energy, as we have seen with the shift in mining processes. In response to climate change conversations and increasing consciousness about the energy use of crypto, blockchain projects have begun migrating to less energy-guzzling validation systems. Ethereum is a leading example, where the project transitioned from PoW to a proof-of-stake (PoS) system, almost cutting down its energy consumption by 99.95%! It has led the way for further exploration into environmental-friendly ecosystems.

Historically, most cryptocurrency mining communities were in regions of energy surplus and lost costs. However, with the expansion of the network and increased computing power, the crypto community is exploring innovative methods of mining new coins.

The PoS system of validating transactions is a low computing substitute for traditional crypto mining that is less energy-intensive. Here, the validation of transactions is based on the amount of cryptocurrency "staked" or agreed not to trade. Validators receive newly minted tokens as a reward for their efforts, thus cutting down hardware requirements. With more miners becoming validators, the network decentralization receives a boost improving the security. At the same time, the computing and energy required to power the network are significantly lesser.

Proof of history, proof of time elapsed, proof of capacity, and proof of burn, are other sustainable methods of validating transactions. These time-proven methods have shown the way. Even without compromising on speed, coins can be compliant with eco-friendly standards.

Sustainable cryptocurrencies: The new kids on the block

A sustainable currency refers to a digital currency that consumes low energy to power its transactions and has a minimal carbon footprint.

However, there are more factors to consider when deciding whether a cryptocurrency is sustainable.

Measuring the Environmental Impact

Measuring the carbon footprint of cryptocurrencies is complex, as the network spreads across thousands to millions of computers globally. In some countries, wind power or solar energy is the source of energy, while in others, it is fossil fuels or hydel power.

It is indisputable that the environmental impact of mining new coins is significant. However, considering anyone currency as being more sustainable than others poses various challenges. 

For instance, several smaller cryptocurrencies have a lower energy footprint as the daily transactions are much lesser when compared to Bitcoin. But if they were to scale them up, the energy consumption would naturally increase.

So besides using the various energy-saving methods like ‘proof of history’, or ‘proof of time elapsed’, many cryptos use an algorithm that works on energy-efficient devices like ASIC-based devices instead of conventional graphic processing units (GPUs). Some digital currencies use block-lattice technology that does away with mining.

Cryptocurrencies using a ‘proof of storage’ or ‘proof of stake’ system also have a lower carbon footprint.

To measure the environmental impact of any cryptocurrency, developers, digital currency platforms, and industry bodies have begun compiling data in the shift towards greener methods of mining coins and a sustainable blockchain and crypto ecosystem. 

Organizations like Crypto Climate Accord advocate the powering of blockchains by renewable energy by 2025. The Bitcoin Mining Council published a report stating that 32% of its network and users were mining with a mix of 67% renewable energy.

However, in the shift towards greener methods of mining coins, some specific criteria are considered to measure the environmental impact of mining cryptocurrencies.

Here are the key considerations:

A. Energy Consumption

In crypto mining with low computing, you have low energy consumption. 

For instance, the new coin, nano, consumes 0.000112 kWh to create 10,000 nano transactions, significantly lower than a single Ethereum transaction that consumes 178 kWh! And a single Bitcoin transaction consumes 1997.16 kWh, which is a very high amount of electricity.

B. Carbon Footprint

The total carbon footprint incurred by crypto transactions is due to the massive infrastructure. For instance, only a few hundred machines power the nano network, compared to about 70,000 computers on the Bitcoin blockchain software.

C. Eco Initiatives

Initiatives by the foundation and the crypto community are increasingly committed to sustainability by organizing green initiatives like tree planting to offset the carbon footprint.

Some newer cryptocurrencies have incorporated renewable energy into their operational model, pairing it with alternative validation methods to create a token that consumes lesser power than others.


The digital currency is here to stay, as the underlying blockchain technology applies to various industries' applications for security and permanency. Cryptocurrency is also a popular method of financial transaction.

What we need is to make ethical choices and mine environmentally friendly cryptocurrencies. A way forward is to explore sustainable cryptocurrencies or eco-friendly digital money, which can help harness the benefits of the technology while ensuring its sustainability.

Disruptions in mining methods like consensus mechanisms and renewable energy sources can lower the environmental impact and the cost of cryptocurrencies. Best practices like non-PoW can cut down the demand to construct new and large mining rigs, thus lessening the problem of e-waste. 

So yes, cryptocurrency has already proven that it can be environmentally friendly.