By Erwin Voloder, Economist EBA
At the EBA, we have contributed to BeInCrypto’s new e-book: Sustainability and Cryptocurrencies: An Analysis. Those with an eye towards impact investing, industrial greening, and the role of blockchain in contributing to a more sustainable future will find this an excellent primer.
The carbon-footprint of the interconnected society
As the world grapples with record heat waves, the consequences of climate inaction continue to stay top of mind. By the same token, the interconnected society we have built over the course of the last century has culminated in a gargantuan web of data centers, fiber optic cables, and smart devices. Logistics operations traverse land, sea, and sky, while the need for ever faster delivery forces companies to weigh sustainability against profit margins.
It is also no secret that the base load energy needed to power those globally distributed data centers often comes from non-renewable sources like natural gas. Here too, blockchain technology has come under scrutiny for its potential role as a catalyst in contributing to the degradation of our planetary ecosystem. Recent overtures by governments have cast a shadow over Proof-of-Work cryptocurrencies which front-load energy requirements in mining as an example of crypto (and blockchain) being unsustainable. They argue that Bitcoin mining relies heavily on non-renewables and in doing so casts a long carbon-footprint for what it gives back to society.
How Blockchain and DLT can help face climate crisis
But are these claims firmly rooted in fact or are they over-stated? Furthermore, can blockchain technology play an active role in preventing climate catastrophe?
Cryptography is far more diverse than Proof-of-Work with the ecosystem boasting ‘native-green’ cryptos that are sustainable by design. As for Bitcoin, the de-facto poster child for PoW, miners are actively seeking ways for going green. Blockchain can also play a role in greening supply chains and promoting more ethical and sustainable food security. In a global energy transition that will require recalibrating across vertically and horizontally integrated means of production and distribution there exists a very real need for targeted funding that is aimed at boosting resilience and sustainability.
According to European Blockchain Association e.V. Chairman Dr. Michael Gebert,
“Green Climate Funds and the use of Blockchain, and Distributed Ledger Technologies (DLT) could actually help us face the climate crises since new financial technologies have the potential to boost international climate funding. DLT could support climate action in two ways. One, by making transactions more transparent and standardized, two, by making monitoring and accrediting processes more efficient. If we take for example the Green Climate Fund, DLT could help the fund’s work in areas like multi-stakeholder coordination and effect evaluation.”
Sustainability and Blockchain: An Analysis
At the EBA, we have contributed to BeInCrypto’s new e-book: Sustainability and Cryptocurrencies: An Analysis. Those with an eye towards impact investing, industrial greening, and the role of blockchain in contributing to a more sustainable future will find this an excellent primer.
The e-book covers the gamut of topical issues concerning blockchain including supply chain/logistics, food security, energy systems, harnessing resource waste, mining, native-green crypto’s and current initiatives being undertaken to incorporate blockchain into front-running sustainability.