You may have heard that crypto is bad for the environment.
But why?
It’s simple, crypto uses a lot of energy.
Cryptocurrencies use energy to, putting it simply, mine blocks, which validates transactions and keeps its blockchain secure.
However, there are actually cryptocurrencies that were made specifically with cutting energy use. And then there are those cryptos that use as much energy as some countries, and, well, aren’t good for the environment at all.
Let’s find out what the best and worst cryptocurrencies for the environment are.
Worst Cryptocurrencies For The Environment
First, we are going to look at the worst cryptocurrencies for the environment.
Bitcoin ($BTC)
Bitcoin is a decentralized digital currency, which can be sent between users over its network. Bitcoin is the first and largest cryptocurrency by market cap.
Bitcoin uses a lot of energy in its proof of work consensus method, otherwise known as mining. The reason it uses so much energy is because thousands of computers are competing to “guess” a complex code at the same time to mine a block. Only one computer can mine a block, which means that all of the rest of the computers on the network just wasted energy by accomplishing nothing.
Since most countries are still running on mostly fossil fuels, the energy that Bitcoin uses is also mostly from fossil fuels. Bitcoin dumps something like 114 million tons of carbon dioxide into the air per year.
Bitcoin uses about 150,000 GWh of electricity per year, which probably means nothing to you. Here’s a better comparison: it uses about the same amount of energy as the country of Malaysia, which is the 26th country by energy usage.
Bitcoin also creates about 37,000 tons of electric waste due to mining hardware quickly becoming obsolete.
We wrote an article about
Bitcoin and its impact on the environment.
Dogecoin ($DOGE)
Dogecoin is a memecoin created as a parody of Bitcoin, but rose in popularity. Due to a dedicated community, DOGE found itself within the top crypto and even got a spot on Saturday Night Live. It’s basically the same as Bitcoin, where it's a peer-to-peer payment system, but is mostly used to tip users on the internet.
Dogecoin, like Bitcoin and Ethereum, uses a proof of work consensus method to validate and introduce new crypto into the network. Because it’s the third most popular proof of work cryptocurrency, naturally it’s also very popular to mine.
Dogecoin uses around 6,600 GWh per year, as much as El Salvador, or Mongolia. At its peak it was using about 600 kWh per transaction, which could power the average house for 200 days! However, that was at its peak and usually uses about 0.12 kWh per transaction.
DOGE still uses far less energy than Bitcoin or Ethereum, but was definitely not made with the environment in mind, and there don’t seem to be any plans to switch to a proof of stake consensus method. It really wasn’t made with anything in mind, except to be funny.
DOGE is still cool, though.
Best Cryptocurrencies For The Environment
Now, let’s look at the best crypto for the environment and why they are the best compared to the coins above.
Cardano ($ADA)
Cardano is a platform that lets developers build apps on. It makes use of smart contracts, which are self-executing once certain conditions are met. Cardano is one of the largest cryptos by market cap.
Cardano was designed to not use a lot of energy and to be environmentally friendly. It uses a proof of stake consensus method, which is when holders lock their crypto as a stake, and are able to be "randomly" picked to validate blocks. This requires very little computing power and is therefore using a lot less energy.
Cardano uses about 6 GWh per year, which is nowhere near the amount of electricity that any country uses because it's such a small amount. It is about how much energy is used in a year by 550 American households. Per transaction, Cardano only uses about 0.55 kWh, which can only drive a Tesla about 1 and a half miles.
It is a great cryptocurrency to use if you are looking to stake Cardano for passive income.
Nano
Nano is a feeless, fast digital currency that’s able to be sent and received by users. Since 100% of the value is transferred you can think of it as digital cash that can be sent to anyone with a nano wallet.
One of Nano’s main selling points is that it is environmentally friendly because it doesn’t rely on mining, which is extremely energy-intensive and terrible for the environment. According to Nano’s website they use “an innovative voting system where no mining is required.”
Nano only uses about .111 Wh (.000111 kWh), which is extremely small. This means that you could send 270,270 transactions before it reaches the amount of electricity that just one American household uses in a day. In fact, the entire time Nano has been running it’s done about 118 million transactions and only used about 13,100 kWh of energy, equivalent to the energy that 436 households use in a day.
Nano was definitely built with the environment in mind.
Algorand ($ALGO)
Algorand is both a digital currency and a platform which developers can use to build decentralized apps. The main idea behind ALGO is security, speed, and scalability.
Algorand is good for the environment because of its unique consensus method called pure proof of stake. Here, any user who holds ALGO can be randomly selected to validate a block.
Algorand uses roughly 0.008 Wh (0.000008 kWh). This is extremely negligible and would require about 3,750,000 transactions before hitting the same amount of energy as an average house in the U.S. uses in a day.
Since there is no mining involved, ALGO hardly uses any energy, and has little impact on the environment. In fact, it wants to be the first blockchain to be completely carbon neutral.
Summary
Cryptocurrency can use a lot of energy keeping their blockchains alive. There are cryptos that use a lot of energy and then there are crypto that use a massive amount of energy. Obviously, the less energy used, the less of a negative impact on the environment the crypto has.
The worst cryptocurrencies for the environment are Bitcoin and Dogecoin. They use a lot of energy due to their proof of work mining process. Bitcoin and Dogecoin are digital currencies.
The cryptocurrencies that use a minimal amount of energy, and therefore have a good impact on the environment are Cardano, Nano, and Algorand. Cardano and Algorand are both platforms that allow developers to build apps, and Nano is a feeless payment system.
