https://ift.tt/3ziaQHW Blockchain To Play Integral Role In Creation Of A Sustainable Future – Cryptovibes.com – Daily Cryptocurrency and FX News

Firms are now turning to enterprise blockchain-based solutions to meet environmental sustainability goals and business demands. In most cases, Bitcoin (BTC) is used to criticize all blockchain-based projects. That criticism is quite understandable because BTC was the first project to use a blockchain. It is the most recognizable and biggest crypto by market capitalization.

Bitcoin is used as a proxy for all blockchain-based projects since most people associate blockchain with bitcoin. Anything that is environmentally positive that can be said about BTC will be wholly true for most of the newer blockchain-based projects because bitcoin utilizes the oldest version of blockchain technology.

Blockchain Energy Consumption

Bitcoin has been attacked for its high rate of energy consumption. Many headlines pointing out that BTC’s electricity usage is compared to a nation’s total consumption is a major critique. Comparisons are useful, although they can have a deceptive framing effect. For instance, the statistics mainly cited in these attention-seeking headlines are taken from the Cambridge Center for Alternative Finance (CCAF).

This same organization also points out that distribution and transmission electricity losses in the US can power the whole Bitcoin network 2.2 times. The always-on electrical devices in America consume 12.1x more energy than the Bitcoin network. Thus, Bitcoin’s network uses as much electricity as a small nation or less than one sliver of America’s energy budget.

Another normally used critique is that BTC’s electricity consumption is growing so speedily that Bitcoin emissions alone may push global warming above 2°C, or consume all of the world’s energy by 2021. The latter never happened because just like most of the network-based technologies, BTC is going on an adoption curve that is defined by the theory of diffusion of innovations; an “S curve.”

This explosive, exponential-like growth in the first half of the curve slows down significantly in the latter half. Secondly, big and predictable improvements in computer efficiency will continue to lower computing energy costs even as Bitcoin’s growth slows. Thirdly, these predictions do not take into consideration the evolving energy mixture of BTC.

Blockchain Energy Mixture

Nearly all of the energy that is consumed by blockchain projects come from the electricity consumed by computers that secure the network. Bitcoin calls them ‘miners’ although newer blockchain projects can use a lot more efficient “validators.” Electricity is produced from various sources, such as natural gas, coal, and renewables like hydroelectric and solar.

These sources emit different levels of carbon gases that mostly determine their environmental impact. The most famous estimates of BTC’s energy from renewable range greatly from 39% in this report to around 74% in this report. Each of these estimates is significantly “cleaner” than America’s energy mixture that is just 12% from renewables.

There is compelling evidence that the public scrutiny to which BTC has been subjected has most probably guaranteed that energy from renewables will just increase in the future.

Is Blockchain Worth It?

BTC’s energy consumption and composition are not ideal, nor is it as detrimental as is mostly reported. What is normally lost in the conversation over BTC’s energy usage is whether BTC’s use of energy is worthwhile.

Most industries need energy or produce huge amounts of waste, but most people deem the environmental costs to be highly worthwhile. The agricultural sector needs lots of outlays of fossil fuels for the fertilizers and to power field equipment while producing harmful runoff.

Yet, despite the existence of many environmental negatives, we see the overwhelming benefits of growing food. Instead of discarding agriculture, we aim to enhance the environment of agriculture. Whether enabling the 1.7 billion unbanked to gain financial inclusion or offering alternatives to predatory international remittance services, it appears clear that BTC is worth the energy usage.

It is clearer that enterprise blockchain is an unmitigated public good. The newer, alternative blockchain technology uses around 99.95% less energy than the older ones. Enterprise blockchain can use even less energy since it can be designed for particular use cases. Furthermore, apart from using less energy, Enterprise blockchain is helping organizations achieve sustainability goals.

Blockchain Is A Major Driver For Renewable Energy

Today, wind and solar are now cheaper than fossil fuels like coal and natural gas. Wind and solar are now comparable to hydroelectric and geothermal. Despite solving the cost challenge, renewables have many challenges preventing mass adoption. Hydroelectric and geothermal are geography bound. Wind, solar, and to a lesser extent, hydroelectric suffer some form of intermittency and grid congestion.

Intermittency means that they are currently highly unreliable. There is no sun at night, there are times when the wind stops, and there are dry and rainy seasons. Grid congestion is similar to car traffic. As a result of geographic limitations, renewables are normally built in rural areas. Nevertheless, most of the energy required is dense towns and cities. Just like a car in a traffic jam, the electricity is delayed getting to its destination.

There are other solutions like building battery storage and increasing transmission capacity, but they are expensive infrastructure projects. That is where blockchain and bitcoin, in general, can help. Unlike the bitcoin miners and other blockchain projects can be set up anywhere. They are quite profitable businesses so that they can eventually subsidize the building of renewables network by always using excess energy produced.

The other promising energy technology that is well suited to blockchain is person-to-person (P2P) electricity trading. The energy sharing schemes offer electricity suppliers and consumers the opportunity to trade energy without requiring any third-party intermediaries while simultaneously increasing the levels of renewable energy. Just like renewable infrastructure, blockchain-powered projects will incentivize the development of P2P energy grids.

Blockchain Supports Material Procurement And Provenance

The consumer demand for more ethically sourced products is growing continuously. Firms have to prove that their product is developed in a manner that protects the environment and public health and is made ethically. The clients wary of green-washing have had to rely primarily on information provided by companies.

Most blockchain-based projects are already changing this dynamic. Everledger has developed tools to increase the amount of consumer and enterprise insight into the provenance of a particular object.

By integrating artificial intelligence, blockchain, and the internet of things (IoT), Everledger manages to digitally streamline compliance processes and enables firms to demonstrate the real origin of their products.

Traceability and transparency will be critical to boosting consumer trust in the food supply chains. Supermarket giant Carrefour together with the biggest brewer in the world AB InBev partnered with an excellent enterprise blockchain developer SettleMint to create a digital traceability solution that uses dynamic QR codes that are attached to a product during the packaging process.

Green Financing

Green financing refers to the use of loans to support sustainable firms and fund the projects and investments that they make. It will be critical to close the $2.5 trillion yearly SDG funding gap that is estimated to grow bigger in the coming years. A perfect example of green financing is the green bond (GB) market. Based on the Climate Bonds Initiative, $269.5 billion in GBs were issued in 2021.

However, GBs are not without issues like confirming that sustainability metrics are authentic, or that the funds were used to support sustainability. Blockchain can immutably store the data, therefore, projects can be validated to satisfy sustainability needs. Interestingly, blockchain can also help in other ways, such as tokenization.

The chief commercial officer at iSTOX, Oi Yee Choo, said in an interview:

“Even in markets where the 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.”

The blockchain sector is, for now, far from perfect in terms of environmental sustainability. Nonetheless, if it manages to maintain its current trajectory, the blockchain sector will become an exemplar and an enabler of environmental sustainability.