In recent years, climate change has gradually become one of the most talked about topics in media. According to a majority of professionals in the field of environmental science, we are at a crucial point in time. The future of our global climate depends entirely on the actions we take now. It can lead to better – or at the very least sustainable – results or something completely irreversible. For better or worse, this is an issue that will not be going away anytime soon.
Another topic that, while not popular yet still notable, is cryptocurrency. This innovation of virtual currency has seen massive development since its rise to prominence in the 2000s. It has Bitcoin to thank, as it is arguably the first cryptocurrency to become universally popular. Over time, this digital creation has paved the way for other currencies to come to life. In doing so, it has led to a new era of technology, finances, and everything in between.
Why do I bring up cryptocurrency alongside a hot-button issue like climate change? Well, this is because not too long ago, Bitcoin suddenly became a contributing factor to climate change. Unfortunately, it is apparently not doing the environment any favours.
According to a report by the Nature Climate Change journal:
“Bitcoin emissions alone could push global warming above 2°C.”
The excessive emissions from this cryptocurrency could potentially push global temperatures over the catastrophic threshold. This is not an occurrence that many predict to happen far into the future, either. This is something that is predicted to happen by the year 2034.
The report has its critics, which is a topic of discussion for later in the article. Regardless, the idea still stands that something needs to be done.
What powers Bitcoin mining?
Christian Stoll is an energy researcher at the Technical University of Munich. In a paper for the journal, Joule, his team analyzed the energy consumption of mining bitcoin. They draw from the location of the miners, as well as the types of machines they use. Stoll pinpoints the main cause of Bitcoin’s association with climate change as being coal.
“The question is how to prevent it,” he says upon mentioning coal as fuel, “and that’s up to local regulators.”
Bitcoin and other similar digital currencies have incredibly high energy demands. There is no central banking authority, and transactions go through verification by way of ‘miners.’ This procedure is computationally demanding, which takes up a lot of electricity.
Bitcoin mining is a process that goes by the name ‘proof-of-work’ (PoW). Proof-of-work describes a system that requires a feasible amount of effort. This is so that it can deter any trivial or malicious uses of computing power. Such malicious applications include sending spam emails or launching ‘denial of service attacks.’ While this PoW system is indeed popular with Bitcoin, it has its fair share of drawbacks. This led to the creation of its counterpart, ‘proof-of-stake’ (PoS), which aims to fix those existing issues.
In any case, PoW involves a global network of machines that are rushing to solve complex mathematical problems. As a reward for helping to keep the network stable and secure, the solver will receive bitcoin. Now, when it comes to calculating energy usage, global nature regularly makes it a tricky thing to study. It’s difficult to tell what types of machines are running. Moreover, it is not easy to determine what their location is and what the fuel supplying the electricity is.
These unknown factors are what result in an array of varying estimations. One of them is the report from Nature Climate Change.
Report critics on computing power usage
As dire as the results of the study appear to be, it has some critics who argue with its conclusions. Many point out the difficulty of calculating power usage because due to the scattered Bitcoin network. They also mention that the IT sector makes efforts in the shrinkage of its footprint.
Another flaw critics draw from this study is that it seems to ignore future energy-efficient advances in how Bitcoin functions.
Camillo Mora, the controversial study’s lead author, is steadfast in the results, stating that:
“It is certainly very possible that tomorrow we create a new technology that will produce electricity without emissions. But it is just as possible that we do not. Are we willing to take a gamble when at stake is the viability of our planet? According to The International Energy Agency’s World Energy Outlook (WEO) between 55-65% of the electricity by 2040 may still be produced by coal, gas, and oil. So decarbonatiozation of electricity is something that we should push harder, but the full conversion is still far.”
ThinkProgress writer, Joe Romm, had this to say on the dividing issue:
“Keeping total global warming below 2°C (3.6°F) requires a laser-like focus on the big sources of carbon pollution, like transportation, buildings, and industry. So it’s dangerous and irresponsible to create the impression that it’s even harder than we thought, and that we will have to devote vast resources to a new area of focus — especially when that impression is built around very misleading analysis.”
In spite of the criticisms, and whether you agree with the study or not, it does raise some interesting inquiries surrounding Bitcoin. Moreover, it makes people wonder about how environmentally friendly it – and by extension other cryptocurrencies – is in the long-run.
A possible solution
In response to these worries about climate change, experts are scrambling to find a potential solution. Similarly, experts in the cryptocurrency field are aiming to find a way to placate the damage virtual currency may cause. Over time, experts have said that blockchain could play a major part in dealing with climate change.
Blockchain is an intricate piece of technology, though you wouldn’t be able to guess that by its general design. In essence, it is simply a chain consisting of blocks. The “blocks” are indicative of digital information and the “chain” is the public database that the blocks go to. Users continuously update and verify it. Each block that goes on the chain becomes part of a growing list of records. This is all under the close observation of the network members.
Blockchain technology is primarily notable for the part it plays in facilitating the rise of digital currencies. There are, however, other non-cryptocurrency uses for this specific technology. In fact, several blockchain advocates are of the belief that it could surpass cryptocurrencies in general regarding its overall impact.
Because of the rising potential, it’s likely that financial advisors and other investment groups will encounter blockchain more in the future. This is regardless if it is with a specific cryptocurrency or if other applications are employing it.
Alexandre Gellert Paris is an associate programme officer at the United Nations Framework Convention on Climate Change (UNFCCC). Concerning blockchain, he states the following:
“As countries, regions, cities and businesses work to rapidly implement the Paris Climate Change Agreement, they need to make use of all innovative and cutting-edge technologies available. Blockchain could contribute to greater stakeholder involvement, transparency and engagement and help bring trust and further innovative solutions in the fight against climate change, leading to enhanced climate actions.”
Now, in regards to climate change, there are a variety of ways that it can be useful:
- Improving the trade of carbon emissions. Blockchain can improve the transactions of carbon assets. Currently, IBM and Energy Blockchain Lab are collaborating to create a Blockchain platform for exchanging carbon assets in China. By documenting carbon assets on a public Blockchain, it ensures transparency. It also guarantees that transactions are authentic.
- Simplify the trading of clean energy. This technology would permit the development of platforms for peer-to-peer renewable energy exchange. Consumers can purchase, sell or trade renewable energy with one another. They can do this by utilizing tokens or digital assets that illustrate a specific quantity of energy construction.
- Improve the flow of climate finance. Blockchain could aid in the development of both crowdfunding and peer-to-peer financial transactions, which can provide support for climate action. All this happens while simultaneously guaranteeing that financing goes to projects in a transparent manner.
- A better system for tracking and reporting the reduction of greenhouse gas emissions, as well as avoiding double counting. Blockchain could administer more transparency concerning greenhouse gas emissions. Moreover, it simplifies the tracking and reporting of emission reductions. Thus, it addresses any double counting issues. It can be a tool to monitor the implementation of the Nationally Determined Contributions (NDCs) under the Paris Agreement. This also includes company targets.
Blockchain ecosystem, VeChain, recently launched its blockchain-enabled sustainability solution that ties to climate change. Its focuses primarily on companies that are looking into ways that would allow them digitize their sustainable practices. Acting as part of its blockchain-as-a-service platform, ToolChain, VeChain ensures that the solution can streamline sustainable practices. Specifically, during the supply chain and manufacturing process. What’s more, it can also demonstrate these practices to third parties, such as regulators.
VeChain states that the tool offers immutable proof of a green supply chain. It says that it is capable of covering different manufacturing stages. What’s more, it can store information pertaining to recycling, processing, and reusing, as well as inspection. It effectively allows brands to track down the original sources of goods and raw materials alike.
Because it is on the blockchain, VeChain claims that all data would be credible and consistent across the entire supply chain. In fact, it can cut costs on reporting for government regulations and rating services for sustainability. Likewise, it can generate a green brand image and build attestation services for responsible financing.
VeChain states that research by the World Economic Forum shows risks that companies face. That is to say, as demands grow for transparency on sustainable activities and the impact of climate change, the higher the risks.
Updated on August 26, 2020
Not quite there yet
We shouldn’t become too eager about blockchain technology being the possible solution too soon. While there are a lot of potential uses for blockchain to combat climate change, it is not ready for that.
Blockchain naturally operates on distribution, so it could improve control and sustainability in support of taking action against climate change. Unlike networks that are centralized or decentralized, blockchain restricts monopolistic authority of the system. This technology can also document transactions openly and permanently. Therefore, it will promote both better transparency and better traceability.
There is a frequent expansion on researching methods of blockchain integration into different sectors that closely relate to viable development. Furthermore, innovation in regards to the blockchain and climate change crossroads will develop more in the near future.
According to the United Nations Framework Convention on Climate Change (UNFCCC) website:
“The United Nations Climate Change (UNFCCC) secretariat recognizes the general potential of Blockchain technology. In particular, transparency, cost-effectiveness and efficiency advantages, which in turn may lead to greater stakeholder integration and enhanced creation of global public goods are currently viewed as the main potential benefits. The secretariat, therefore, specifically supports initiatives that lead to innovation at the intersection of Blockchain and climate. One of such initiatives is the ‘Blockchain for Climate’ hackathon to be organized by the government of Liechtenstein, Cleantech21, INFRAS and ETH Zürich, in the margin of COP23.”
Time will tell
In the case of climate change, time is not exactly something we have an abundance of. Once again, experts claim that we are at a crucial point in time; one that determines our future. However, when it comes to blockchain technology, all we can do is wait and see. Its potential to tackle climate change is indeed noticeable, but it still needs to properly develop before it’s fully ready.
Eric Masanet, a researcher at Northwestern University, counteracts Mora’s contentious report in a statement to The Scientist. He writes that “While the future growth of cryptocurrencies like Bitcoin is highly unpredictable, we do know that the global electric power sector is decarbonizing and that information technologies—including cryptocurrency mining rigs—are becoming much more energy efficient.”
Whether you are on Mora’s side or on the side of the critics – or somewhere in the middle – it’s apparent that action needs to be taken. Fortunately, we have a potential solution in blockchain technology, but unfortunately, we cannot say for certain. From an optimistic standpoint, we can at least take comfort in knowing that blockchain provides a number of uses for battling climate change.