With the environmental burden of clean energy infrastructure, Bitcoin's energy consumption problem has drawn public attention, expressing concerns about the cryptocurrency industry. As for ways to make cryptocurrency greener, we look at the perspective of advocates of proof of work.
Web3 and crypto space from Etherisc and IXO.com
Jan Stockhausen, Chief Legal Architect at Etherisc, claimed that companies have an incredible scope of applications that can be deployed using blockchain technology to combat the effects of climate change.
These may include tracking supply chains to reduce consumption, pollution and emissions, automating and authenticating rewards programs for reforestation initiatives, and even validating the authenticity of carbon credits.
In addition, the tech has already been harnessed in several emerging economies to provide cover for people impacted by increasingly frequent natural disasters using decentralized insurance solutions. Traditionally left uninsured, those within emerging economies are at the greatest risk of climate change-induced extreme weather events, with automated blockchain-backed insurance products offering a new lifeline for vulnerable communities.
Blockchain technology harbors the immense potential to mitigate the impact of climate change, while also offering organizations a chance to identify and phase out unsustainable practices
To highlight some specific examples, Etherisc’s collaboration with the Global Innovation Lab for Climate Finance aims to incorporate blockchain technology to provide climate risk crop insurance for vulnerable, underinsured farmers in Africa. The programme has been introduced in the pilot phase in Kenya and will be expanded across sub-Saharan Africa, South Asia, and South-East Asia in the near future.
The objective is to increase farmers' resilience to climate change-induced damage by offering customized insurance products with automated payouts and reduced transaction costs and claim cycles.
In addition, last year, Etherisc partnered with ACRE Africa to offer a blockchain-backed crop insurance product to 17,000 farmers in Kenya, with 6,000 already receiving payouts mid-farming season as the country experiences extreme droughts. Only about 3% of smallholder farmers in sub-Saharan Africa are covered by agricultural insurance, despite extensive climate-related risks and the importance of farming to millions of livelihoods in the region. Through Etherisc and its partners, farmers can access weather index insurance policies, which are far more affordable, fairer, and transparent than traditional insurance solutions.”
On the other hand, Shaun Conway, Co-Founder of ixo argued that A number of industry-wide initiatives have been formed, such as the Blockchain Infrastructure Carbon Offset Working Group (BICOWG) that is developing practical tools and methods for calculating and offsetting the carbon costs of the infrastructure - both for PoW and PoS chains. In 2021, a group of more than 150 crypto companies signed the Crypto Climate Accord, in which they promised to reach net-zero emissions by 2030 through both switching over to renewables and purchasing offsets. Regulators in the EU and elsewhere have formally debated the need for regulatory oversight and new rules for operating PoW chains. The debate has become more nuanced, focusing not only on offsets and where they come from but also on using renewable energy to power green infrastructure.
From an economic perspective, the WEF argues that we must look at the broader societal benefits of blockchain technologies, not only the energy consumption. It is technologically feasible to trace the provenance of digital assets in a similar way to how we can trace the provenance of physical commodities, such as gold and food products. For example, it is now possible to purchase a certified "green" gold from refiners that provide environmental, social and governance (ESG) credentials.There should be economic incentives for miners to produce "green" digital assets that achieve a price or brand premium, and this should include not only the energy consumption, but also demonstrate good practices in recycling electronic waste, compliance with regulations, etc.
The Interchain Zero Carbon Commitment is an initiative for all Cosmos blockchains to offset their carbon emissions. The first chains on the Internet of Blockchains: ixo Impact Hub and the Osmosis Network have voted to fully offset (or more) their historical and future carbon emissions. To do so, they will use tokenized carbon credits sourced from nature-based carbon capture projects using the Regen Ledger, Cosmos Proof-of-Stake networks consume only a fraction of the energy that is required for Proof-of-Work networks, such as Bitcoin and Ethereum.
