In the coming 2022, European Central Bank (ECB) will stress-test European banks on climate-related and environmental risks. Based on newly developed analytical and analysis models, ECB will design the benchmarks to test financial organizations in a course of ‘green’, including their carbon footprint and climate-related risks liability. All this info will then be disclosed to the public. It may significantly influence the companies similar to an ESG routine these days.
Environmental, Social, and Corporate Governance (ESG) is a set of factors where the first may become truly crucial for some of the companies. Governments are now actively enforcing the ESG initiatives across many spheres of business. There are ESG ratings, such as the MSCI ESG Rating. It measures a company’s resilience based on those 3 and influences the investors’ will.
Crypto and Blockchain vs Electricity
Needless to say, that crypto with its underlying blockchain technology consumes in numerous amounts of electric energy. In fact, it keeps on increasing. Say, everyone’s favorite bitcoin or BTC uses more electric power a year than the whole of Sweden. In comparison with VISA, a single BTC transaction consumes electrical energy as 821,419 transactions of VISA and its carbon footprint is equal to the same of 1,285,295.
A major reason for that is the so-called proof-of-work (PoW) mechanism that requires huge mathematical computations, growing with the size of the network. Such massive calculations obviously require solid energy sources currently found among the nonrenewable resources.
Recent Eco Catastrophes
So, is there’re any bad in such effective power sources as nuclear or fossil fuel? Let’s have a closer look.
A nuclear accident occurred on 26.04.1986 near the city of Pripyat, Ukrainian SSR. This was the worst nuclear disaster in terms of cost and causalities that involved more than 500,000 personnel and cost roughly US$ 68B as estimated in 2019, adjusted for inflation.
Deepwater Horizon Oil Spill
An industrial disaster that began on 20.04.2012 in the Gulf of Mexico on BP oil platform and was the largest marine spill in the history of the petroleum industry. Total oil discharge became estimated at 780,000 m3 and cost BP more than $65B in fines, fees, and charges.
As a result of the earthquake and tsunami, the most severe nuclear accident since the Chernobyl disaster had happened on 11.03.2011 in Okuma, Japan. An ongoing intensive cleanup program will take 30 to 40 years. Moreover, costs of decontamination, compensation, and radioactive waste storage already exceeded $187B.
Thus, using nonrenewable resources can not only cost people’s lives and harm our living environment but also cause outstanding financial and reputation losses.
Eco-Friendly Energy Sources
Ecological sources of energy are primarily found within renewable, naturally replenished resources such as sunlight, wind, water, and geothermal heat. In contrast to fossil fuels, these are non-only far more quickly replenished but also carbon-neutral and sustainable.
Someone may have heard and someone had already visited some of the hot springs such as Travertine in California, Pamukkale in Turkey, or Banjar in Bali. From ancient times such springs were used for space heating and nowadays – for generating electricity. Currently, 26 countries actively use Geothermal electricity. In 2020 the worldwide geothermal power capacity was expected to reach up to 17,6GW.
Guys from Genesis Mining set their mining facility on top of geothermal energy in Iceland and successfully mine bitcoins as well as other cryptos with the use of that eco-friendly electrical source.
We all love the sun whenever it shines. However, not only does it provide light and heat, but also can be converted into electricity. In countries with high annual solar irradiance, solar thermal power stations could generate more than 2,000MW.
Kumamoto Electric, located on a Kyushu island in Japan, has established its cryptocurrency-mining subsidiary called OZ Mining. It keeps on using solar energy for mining keeping the electricity net cost as low as $0,09/kWh.
While traveling around Greece or China, we can see many proofs that humanity started using water power a long time ago. Waterwheels and watermills became broadly used for irrigation and processing the grain. Nowadays water power, also known as hydropower, produces electricity from falling or fast-running water. Additionally, it provides some 50% of total electricity for more than 35 countries.
Obviously, such a power source can be hardly hidden from a crypto community that resulted in establishing an Ocean Falls Blockchain company in Canada on an eponymous water-power plant basis. They currently have a mining capacity of 2MW with plans to hit 6MW the next year.
When the wind blows energy generates. The wind is another powerful source of energy providing electricity by turning the electric generators through the wind turbines. A wind farm itself includes a set of individual turbines connected into a single network that generates up to 651GW globally.
These days Brookstone Partners, a New York-based private equity firm, is building a 900GW crypto mining wind farm in Dakhla, Morocco. This will become the largest solar mining facility in the world.
As we have seen with PoW mechanism, blockchain tech itself can be a threshold. In fact, it can indirectly harm the living environment making the software solution non-sustainable. However, this can be solved by optimizing the technology first off.
These days its popularity gains the alternative protocols that not only improve the performance but also minimize the energy consumption of the blockchain. Say, instead of massive computation, PoS uses the proportion validation consensus, so-called Proof-of-History (PoH) requests proof of transaction occurrence in time, and so on.
Even Ethereum started a switch to PoS this year that makes it greener in this sense.
The new era is coming. So the way we had it with 486 computers we hopefully soon will have quantum computers at our disposal. These guys should significantly improve the computation speed that will result in solid energy savings.
All current blockchain transactions occur within the blockchain (on-chain) which brings in solid energy consumption especially with PoW routine. Moving such outside the blockchain, say to a sidechain, will not only improve the performance and minimize the processing cost but also significantly decrease the use of energy.
As we have seen, the abovementioned measures can minimize the climate impact. Additionally, it can significantly improve the effectiveness of the underlying software solution. As a result, such will not only mitigate the risk of possible sanctions from the central banks but also bring in a solid financial effect. So why not take a ride on the green side?!
Thanks for reading,
On Budget and Time
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