There’s been a lot of attention on Bitcoin’s shocking environmental impact in recent months, and while efforts are being made to minimize the carbon footprint of the cryptocurrency, some investors are jumping ship in favor of greener options. With more than 4,500 mineable coins and tokens in existence, which, if any, are the most sustainable cryptocurrencies?
How we compiled this list
Truth be told, it’s incredibly difficult to point to any one currency as being ‘greener’ than others. This is because there are so many parameters at play. Many much smaller cryptocurrencies, for instance, naturally have a far lower energy footprint because they involve far fewer daily transactions compared to Bitcoin. Scale them up, however, and they may be just as bad, if not worse than the cryptocurrency we currently love to hate.
That said, some cryptocurrencies are inherently more energy efficient than Bitcoin. Why? Because Bitcoin relies on a ‘Proof of Work’ system that involves huge amounts of calculations (and, thus, processing power) to produce a single token. Cryptocurrencies that instead use a ‘Proof of Storage’ or ‘Proof of Stake’ system use far less energy, as do currencies using a technology called block lattice, which doesn’t require mining.
Even among ‘Proof of Work’ cryptocurrencies, however, some are more energy intensive than others. This is primarily because these currencies use ASIC-resistant algorithms that consume significantly more energy than should be expected relative to how much of the cryptocurrency market they represent. A good example of this is RavenCoin which, by one calculation, accounts for 4.32% of the total rated power of the top 20 cryptocurrencies but has a market capitalization of just 0.06%. Interestingly, Bitcoin uses an algorithm that does allow for mining ASIC-based devices, and these devices are considerably more energy efficient than conventional graphic processing units (GPUs).
As Bitcoin rises in value, the climate suffers
Market dynamics also play a big role in the energy consumption of cryptocurrencies. In numerous cases, market slides or crashes that drop the price of Bitcoin, Ethereum, or other big players in this area lead to miners slowing down or turning off their devices as it’s no longer profitable to run the machines at that price.
In November 2018, for instance, the Digiconomist estimates that Ethereum’s miners more than halved their energy consumption (from around 20 TWh to 10 TWh) in under 20 days because the price tanked. As the price of Ethereum has once again risen in 2021, so too has the energy consumption associated with the cryptocurrency. As of March 31st, 2021, Digiconomist estimates Ethereum as using more than 31 TWh annually, an all-time high.
So, which cryptocurrencies have a shot at being more sustainable than Bitcoin? Here are a few of the main contenders, presented with the caveat that this is absolutely not investment advice. At the time of writing, I have no investments in or ties to these or any other cryptocurrencies.
#1. SolarCoin (SLR)
SolarCoin has a novel approach to cryptocurrency, creating 1 Solarcoin for every Megawatt hour generated from solar technology. Currently, this network mostly relies on users uploading documentation to prove energy generation, but the Internet of Things may one day streamline this process with automatic updates from solar arrays.
SolarCoin is global, decentralized, and independent of any government. You can spend and trade SolarCoin just like other cryptocurrencies, but the key difference is that the platform aims to incentivize real-world environmental activity: verifiably produced solar energy.
Consider SolarCoin as a helpful way to more quickly offset the cost of installing a solar array!
#2. BitGreen (BITG)
BitGreen was founded in late 2017 as a response to the environmental impact of Bitcoin. It is a community-driven initiative and energy-efficient alternative to Proof of Work consensus cryptocurrencies. The company created a non-profit foundation to oversee the maintenance of the BitGreen project and uses a low-energy Proof of Stake algorithm with segwit and deterministic masternodes as part of their proprietary protocol.
BitGreen is intended to incentivize eco-friendly actions, with users able to earn BITG by, for example, carpooling on a ride-hailing app, buying sustainable coffee, and volunteering. You can also earn BITG by ‘staking’, using a desktop wallet or building a masternode. BitGreen can be spent on goods and services through BitGreen’s partners or traded on ProBit Exchange, Mercatox, STEX, and Crex24 exchanges.
#3. Cardano (ADA)
Cardano is inherently more energy efficient than Bitcoin as it uses a ‘Proof of Stake’ consensus mechanism where those participating in the currency buy tokens to join the network. This helps save a staggering amount of energy, with the founder of Cardano claiming that the cryptocurrency network consumes only 6 GWh of power.
Cardano is similar in some ways to Ethereum, but without a lot of the bloat associated with the latter token. This enables Cardano to scale up to meet increased demands for the cryptocurrency, without compromising on speed or efficiency.
Cardano was actually developed by the co-founder of Ethereum, Charles Hoskinson, and was tested by academics and scientists as the world’s first peer-reviewed blockchain. It functions mainly as a digital currency but can also be used for digital contracts, DApps, and other purposes. Compared to Bitcoin’s 7 transactions a second, Cardano can achieve 1000 per second.
#4. Ripple (XRP)
Using the Ripple Protocol Consensus Algorithm (RPCA), Ripple has been around since 2012 as a private platform that constitutes a voting system reliant on validators worldwide. At least 80% of these global validators have to approve a transaction before it gets added to the XRP ledger. The result is a secure, efficient network that allows users to move money around currencies with relative ease, little expense, and great speed (around 3-5 seconds per transaction!). XRP is not a currency in itself. Instead, it is a pre-mined token used to bridge asset transfers, with the network able to manage more than 1500 transactions per second.
#5. EOSIO (EOS)
EOSIO is another ‘Proof of Stake’ platform that uses pre-mined EOS tokens that can be traded on standard cryptocurrency exchanges such as Coinbase, Binance, and Kraken. This public blockchain is beloved by developers because it is simple to set up and write applications in several programming languages, is highly scalable, and costs nothing.
#6. TRON (TRX)
Based in Singapore, TRON is a non-profit organization and public blockchain supporting almost every programming language. It operates using decentralized governance based on a two-tier model of Super Representatives (SR) and Super Representative Partners, with every account able to become an SR and able to vote for SRs.
The peer-to-peer platform allows creators to share applications directly on the blockchain, making the whole process more energy efficient. The TRON currency, Tronix, is pre-mined and can be traded on Binance and other exchanges, with big plans afoot for TRON’s future, including using it to create decentralized gaming platforms.
#7. Burstcoin (BURST)
Burstcoin is possibly one of the most environmentally friendly, sustainable cryptocurrencies as it has been using ‘Proof of Capacity’ rather than ‘Proof of Work’ since 2014. Essentially, miners are rewarded for using storage space for mining. Meaning that a computer with a 1 terabyte harddrive barely uses more energy to mine Burst than an idling computer. This makes it far more efficient than ASIC mining or GPU mining on a ‘Proof of Work’ algorithm.
Burst is also seemingly the first blockchain to use Turing-complete smart contracts which allow for the creation of non-fungible tokens (NFTs) and use in on-chain games. The network is driven by volunteers and you can trade Burst on Bittrex, STEX, and other cryptocurrency exchanges.
#8. Ethereum (ETH)
Ethereum has been making a big song and dance about going green for many years, but there’s been little follow through on all that promise. The cryptocurrency still uses enough energy every year to power a major country and as much electricity per transaction as could power an average U.S. household for a day. Still, Ethereum is more energy efficient than Bitcoin and they’re at least trying to make things better.
The founder of Ethereum has long admitted the wastefulness of the bloated cryptocurrency and in 2014 began a lofty project to overhaul Ethereum’s code with the help of the open-source movement. The plan is to replace the current Proof of Work model with a Proof of Stake mechanism, but progress has been slow. As of 2019, the developers scrapped their original strategy of rebuilding the plane while it is in the air and instead adopted a two-chain approach where Proof of Work and Proof of Stake temporarily run alongside each other. They dubbed this Ethereum 2.0.
In December 2020, Ethereum launched Beacon Chain as the first step in this shift of the network. Under Beacon Chain, Ethereum 2.0 stores and manages the registry of validators and deploys the Proof of Stake consensus mechanism. It is currently running alongside the original chain, however, with full implementation not planned until 2022. This means that the touted one hundredfold reduction in energy per transaction is yet to be realized.
#9. Nano (NANO)
Nano is free, fast, and uses considerably less energy than Bitcoin and many other cryptocurrencies. It is also scalable and lightweight as it doesn’t rely on mining. Instead, it uses block lattice technology, which is energy efficient. Digiconomist estimates that compared to 950 kWh for each Bitcoin transaction, Nano uses just 0.112 Wh.
Nano has been around since the end of 2015 and has a relatively small carbon footprint even now. It is still reliant on a Proof of Work mechanism, but the block lattice goes beyond blockchain to create an account-chain for each user on the network. The Nano platform uses a system called Open Representative Voting (ORV), where account holders vote for their chosen representative, who then work to securely confirm blocks of transactions.
On the Nano platform, user accounts can be updated asynchronously, rather than needing to involve an entire linear blockchain as is the case with Bitcoin and others. Instead of competition and delays, then, Nano involves just the sender and receiver account-chains and can handle as many as 125 transactions per second.
With more than 4,500 tokens out there, I’m sure I’ve missed a few excellent options for sustainable cryptocurrencies. Given the exponential growth in this area of digital finance, chances are the best is yet to come anyway. If you know of an eco-friendly cryptocurrency, please leave a comment or send us an email and we’ll take a look.
In the meantime, if you’re an investor who has already reapportioned your assets from fossil fuel companies and so forth into more sustainable investments, consider doing the same with any cryptocurrencies you hold. And if you already have a solar array set up, or are living a sustainable lifestyle, there’s basically nothing to lose by signing up to SolarCoin and/or BitGreen.