Enterprise blockchain to play a pivotal role in creating a sustainable future

All blockchain-based initiatives are frequently criticized for using Bitcoin (BTC). This is reasonable given that Bitcoin was the first project to use a blockchain, is perhaps the most well-known, and has the greatest market capitalization of any cryptocurrency.

Because most people equate blockchain with Bitcoin, I’ll use Bitcoin as a proxy for all blockchain-based initiatives in the first part of this essay. Because Bitcoin employs the earliest form of blockchain technology, everything beneficial that can be stated about Bitcoin in terms of the environment would be doubly true for the vast majority of subsequent blockchain-based initiatives.

Blockchain energy consumption

Bitcoin has been chastised for its excessive energy usage. A common criticism is that Bitcoin’s power use is similar to a country’s overall consumption. While comparisons are informative, they can sometimes be misleading in their presentation. The most often referenced numbers in these attention-getting headlines, for example, are from the Cambridge Center for Alternative Finance (CCAF). According to the same company, transmission and distribution electricity losses in the United States could power the Bitcoin network 2.2 times. In the United States, always-on electrical gadgets use 12.1 times more energy than the Bitcoin network.

As a result, the Bitcoin network consumes roughly the same amount of electricity as a small country or a fraction of America’s energy budget. Is that a lot of money? It all depends on your perspective.

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Blockchain energy mixture

Another common criticism is that Bitcoin’s electricity usage is increasing at such a rapid rate that Bitcoin emissions alone might push global warming past 2°C by 2020, or use all of the world’s energy. The latter did not occur. Why? To begin with, Bitcoin, like most network-based technologies, follows an “S curve” outlined by the theory of diffusion of innovations.

The curve’s spectacular, exponential-like expansion in the first half declines dramatically in the second half. Second, even if Bitcoin’s growth slows, huge and predictable advancements in computer efficiency will continue to cut the energy cost of computing. Third, such forecasts do not take into consideration Bitcoin’s changing energy mix.

Blockchain energy mixture

The electricity utilized by computers that protect the network accounts for nearly all of the energy consumed by blockchain initiatives. These are referred to as “miners” in Bitcoin, although newer blockchain projects can make use of considerably more efficient “validators.” Electricity is generated from a variety of sources, including coal, natural gas, and renewables such as solar and hydroelectric power. These sources can emit a wide range of carbon emissions, which affects their environmental effect to a considerable extent. In this research, the two most famous estimations of Bitcoin’s energy from renewables range from 39 percent to 74 percent. Both of these figures are “cleaner” than America’s energy mix, which contains just 12% renewable energy.

In the second half, the curve’s spectacular, exponential-like expansion slows dramatically. Second, even if Bitcoin’s growth slows, massive and predictable improvements in computer efficiency will continue to reduce computing’s energy costs. Third, such estimates fail to account for Bitcoin’s shifting energy mix.

Blockchain is Worth it

There is evidence that the public attention that Bitcoin has received has likely ensured that renewable energy will continue to grow in the future.

Bitcoin’s energy usage and composition aren’t ideal, but they’re not as bad as they’re made out to be. The question of whether Bitcoin’s energy consumption is worthwhile is frequently overlooked in the debate. Many companies use a lot of energy or create a lot of garbage, yet most people think the environmental costs are worth it. The agricultural business uses a lot of fossil fuels for fertilizers and field equipment, and it also produces a lot of damaging runoff. Despite the detrimental effects on the environment, we realize the critical significance of food production. Rather than abandoning agriculture, we work to enhance its environmental conditions.

Whether it’s helping the 1.7 billion unbanked to acquire financial inclusion or providing a viable alternative to exploitative international remittance systems, I believe Bitcoin is worth the effort. It’s becoming increasingly evident that business blockchain is pure public good.

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Alternative blockchain technology consumes 99.95 percent less energy than previous blockchain technology. Because it can be customized for specific use cases, enterprise blockchain can consume even less energy. Enterprise blockchain is helping firms meet environmental goals in addition to utilizing much less energy.

Whether it’s helping the 1.7 billion unbanked to acquire financial inclusion or providing a viable alternative to exploitative international remittance systems, I believe Bitcoin is worth the effort. It’s becoming increasingly evident that business blockchain is pure public good.

Alternative blockchain technology consumes 99.95 percent less energy than previous blockchain technology. Because it can be customized for specific use cases, enterprise blockchain can consume even less energy. Enterprise blockchain is helping firms meet environmental goals in addition to utilizing much less energy.

Green financing

The utilization of loans to promote sustainable businesses and fund their initiatives and investments is known as green financing. Closing the $2.5 trillion annual SDG budget gap, which is expected to widen, would be critical. The green bond (GB) market is a good example of green finance. The Climate Bonds Initiative estimates that $269.5 billion in green bonds will be issued in 2020.

Unfortunately, there are several issues with GBs, such as verifying that sustainability measures are accurate or that money was utilized to assist sustainability. Because blockchain can record this data in an immutable manner, projects may be validated to meet sustainability standards. Tokenization, for example, is one method that blockchain may assist.

“Even in markets where demand for green bonds is high because investors are motivated by ESG considerations, tokenization helps investors diversify their portfolio across different bonds because of smaller subscription sizes,” Oi Yee Choo, chief commercial officer at iSTOX, a Singapore-based digital securities exchange, said in this interview.

In terms of environmental sustainability, the blockchain business is now far from ideal. However, if it continues on its present path, the blockchain sector will not only be an example of environmental sustainability, but also a facilitator of it.