Why they’re calling Cardano ‘the green blockchain’

Ever since Satoshi Nakamoto published the Bitcoin whitepaper in 2008, Bitcoin has had its fair share of controversy, often being in the limelight for the wrong reasons. The biggest criticism is how much the mining activities of Bitcoin’s protocol, based on proof of useless work, are damaging the environment. Turns out, well, a lot.

At the time of writing, Digicomist estimates that mining consumes 99.37 terawatt hours (TWh) of electricity annually. To put this figure into perspective, that’s 0.55% of the electricity produced in the world each year, enough to run a country such as Malaysia or Sweden.

In recent months, the environmental impact of proof-of-work mining has come to the forefront. Mining algorithms require massive amounts of energy. Concerns about energy consumption led to the shutting down of a mining hub in Mongolia in March 2021, for example.

Profiting from cryptocurrency mining is not restricted by geography or motivation. British police swooped on a building in 2021 expecting to find a cannabis farm. Instead, they found 100 computer boards mining Bitcoin with an illegal connection to the electricity grid. It was later reported that ‘three nerds’ had stolen power worth £16,000 a month to make £8,000 in crypto.

The greener crypto road

While fundamental to its function, Bitcoin’s proof-of-work algorithm is its Achilles’ heel. Powerful, state-of-the-art mining rigs produce better yields, but the faster the rigs are, the more electricity they require. This poses the question of long-term sustainability.

But what makes proof of stake, as used by Cardano, a more environmentally friendly consensus mechanism?

Proof of work is resource-intensive because miners must solve ever-more-complex mathematical problems to create blocks. They are in an energy-intensive global race to solve meaningless, randomly generated puzzles. This massive amount of computational power could be used to map the stars or search for alien life This wasted digital effort leads to real-world consequences.

The need for powerful hardware leads to a secondary problem: e-waste. Miners always need to keep up with rivals, which means buying more powerful mining rigs. The ‘old’ equipment – often suitable only for mining – quickly becomes obsolete. It is discarded, and according to the Digiconomist, Bitcoin’s e-waste is shockingly high. Only 20% of the world’s electronic waste is recycled, so the plastics and poisonous materials such as heavy metals in the rigs can end up in a landfill. According to predictions by the United Nations, the world will produce up to 120 million tonnes of e-waste annually by 2050.

So why have commentators in newspapers and investing blogs such as the Motley Fool called Cardano the ‘green blockchain’? Regarding sustainability and environment-friendly cryptocurrencies, Cardano has two clear advantages: far less energy consumption, and staking.

In proof of stake, network participants run nodes, and the chain selects a node to add the next block, based on the node’s stake and other parameters. So the main difference between these two algorithms (and therefore, in their energy requirements) is that in proof of stake, block producers do not need to spend excessive amounts of time and computer power to solve random puzzles. IOHK chief Charles Hoskinson has estimated that Cardano’s energy use is just 0.01% of Bitcoin’s.

Proof-of-work cryptos need computer power to produce blocks in a pointless, energy-intensive arms race. A Cardano node, in contrast, can be run on a very low-powered processor, such as a Raspberry Pi. More than 40 million of these have been produced, many for schools in developing countries because they cost just $40-$70. This simplicity also reduces plastic and e-waste.

Carbon-neutral blockchains

The extreme weather events and forest fires of recent years, along with the UN’s landmark (and chilling) study into global warming and climate change, have thrown this into even-sharper relief. Deforestation, ice-shelf depletion, and global warming are all in the public eye. Heat waves in many parts of the world damage the environment, and forest fires devastate many areas. Consequently, anything that contributes to the sustainability problem comes under scrutiny. This includes the growing cryptocurrency industry.

On December 12, 2015, 196 countries signed up to the Paris Agreement, a legally binding treaty to limit global warming to 2C. A ‘net-zero emissions’ race is now underway, aiming to cut carbon dioxide emissions sharply by 2050.

When it comes to addressing environmental problems, there are no easy answers. Cardano is a decentralized platform that can replace the inefficiencies of older and legacy systems. With its sustainability credentials, Cardano, and other proof-of-stake protocols, are seen as part of the solution, rather than contributing to the problem caused by Bitcoin.