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Can Blockchain Pave the Way Towards Environmental Sustainability?


Environmental awareness has been a growing issue across all sectors of the economy in the 21st century. The exponential growth of the global economy has resulted in a larger carbon footprint at the expense of the environment, and projections by scientists regarding climate change appear bleak. To forestall dire outcomes, it is crucial that an increased environmental consciousness be integrated into technological advances.

The advent of blockchain technology in the past decade has fuelled much optimism about the wide-ranging applications of a decentralized network. Kick-started by the creation of Bitcoin in 2009, the first digital peer-to-peer decentralized currency, blockchain and the cryptocurrency market have grown at a speedy pace. While many people applaud the technological development of blockchain and crypto, a major element often overlooked is the intensive energy consumption required to maintain a blockchain network.

Need for Eco-Friendly Solutions

Bitcoin’s creation sparked a global technological revolution . However, the proof-of-work (PoW) consensus mechanism – a codified method to facilitate consensus across users in a distributed network – conceived by Bitcoin and employed by other cryptocurrencies, requires a tremendous amount of energy. The consensus mechanism rewards computing power and the use of resources as blockchain miners solve digital mathematical challenges to validate transactions and earn rewards in the form of cryptocurrencies. This constant competition to solve the problems quickly encourages miners to acquire greater computer power in the form of the latest hardware – to increase their mining power in the pursuit of attaining the rewards.

In order to understand the scale of the energy intensiveness of the PoW process, it is estimated that Bitcoin’s energy consumption in 2018 amounted to 70 terawatt hours per year; this is the same amount of energy that Austria consumed. In fact, a single Bitcoin transaction could essentially power 1.5 homes in USA for up to a day.

Categories of Environmental Sustainability in Blockchain

The importance of balancing the requirements needed to power a ground-breaking technology and minimizing environmental destruction is a delicate debate. It is important to delineate cryptocurrency and blockchain before moving further; blockchain is the underlying technology that powers cryptocurrency universe. A cryptocurrency coin or token represents the manifestation of blockchain towards a wide array of applications across many sectors.

The integration of environmental considerations in blockchain technology is represented in three distinct topography.

Eco-Friendly Cryptocurrency Coins

This represents the most common classification that comes in mind when merging environmental considerations and cryptocurrencies. Eco-friendly cryptocurrencies are projects that places the environment at the pedestal of their vision.


A project from the National Agricultural Technologies based in Dublin, Ireland, Nagricoin is a solution that has conceived several agricultural products. Its flagship product, called Nagri-HL, represents the newest organic composite soil that stimulates plant growth, with the ability to significantly increase the quality and yield of virtually any crop. In development for the past decade, Nagricoin’s products have been actively tested in more than 10 countries with positive results. Nagricoin tokens provide holders with a right to future dividends derived from corporate sales.


Branded as Europe’s first eco-cryptocurrency, Cryptoleaf is a tokenized crowdfunding platform for green initiatives, projects and technology. Cryptoleaf tokens (CLF) facilitates liquidity and allows holders to participate and benefit from existing, approved and listed ecological projects. Several biogas plants have been developed through the Cryptoleaf platform, which functions to generate clean electricity, heat and fertilizer from organic waste. Holder of CLF would receive dividends from the generated revenue of the energy plants created through the platform.


Solarcoin is a cryptocurrency that is designed to support solar electricity generation. Touted as a ‘reward for solar energy producers’, Solarcoin provide rewards to solar energy producers at a rate of one SolarCoin (SLR) per Megawatt-Hour (MWh) of solar energy produced. The project is analogized as an air miles program for solar electricity generation, which represents the cleanest form of energy around. Solarcoin is free to acquire and its distribution is expected to last approximately 40 years.

Energy Efficient Consensus Algorithm

This classification goes deeper into the technical layer of the technology to understand the implications of its inner workings to the environment. Given the extensive amount of resources needed to maintain a Bitcoin network – as explained above in the preceding sections – there was a natural discussion on conceiving a foundational base that moves away from the resource-intensive methodology of cryptocurrency mining as manifested through Bitcoin’s PoW consensus mechanism.
This was the primary motivation of many projects; to reduce the carbon footprint of their technological solution whilst ensuring that the network maintains high levels of security. This can only be achieved by choosing a consensus algorithm that does not consume tremendous amounts of energy to operate. There are several consensus mechanisms that are deemed environmentally friendly, which are listed below.


The resource intensive nature of Bitcoin’s PoW verification process became a cause of concern for the community and an environmentally friendly solution had to be conceived. Proof-of-Stake (POS) is a consensus mechanism that aims to reduce the carbon footprint of a secure blockchain network. PoS aims to simplify the mining process by allowing users to verify transactions on the blockchain by ‘staking’ their cryptocurrency; a user with a higher amount of staked (collateralized) coins would possess a higher probability of mining transactions and thereafter receiving rewards based on their hard work. This approach significantly reduces the degree of complexity of the verification process and would therefore actualize tremendous hardware, operational and energy cost savings.
Cryptocurrencies that leverage on PoS consensus mechanism include Stellar (XLM), NEO, Cosmos (ATOM) and Dash. Ethereum is looking to transit from PoW to PoS in the near future.

Delegated Proof-of-Stake

A variant of the PoS system, the delegated proof-of-stake (DPoS) system operates similar to a democracy. Holders of the native coin within the DPoS system are entitled to vote (prorated to their holdings) for the nodes or servers that would validate the transactions on the blockchain. Therefore, only a select group of miners chosen by the community would be able to validate transactions and earn a reward by doing so. It is much more efficient in processing transactions as compared to the PoS system, at the cost of greater centralization. Given that only a select amount of nodes are tasked to validate transactions, the energy requirement to maintain those servers are much lesser than the PoS system.

Blockchain Applications for the Environment

According to a report by the World Economic Forum, there are six key areas to which blockchain can be harnessed to address environmental challenges.

(Source: PwC)

There are currently more than 65 existing and emerging blockchain-based projects that aims to address the aforementioned key challenges above. We will take a look at some prominent projects based on their classified areas of interest.

Transparent Supply Chain

Supply-chain transparency is emerging as a popular blockchain application since a transparent and traceable chain of records can optimize supply and demand management, as well as forecast sustainable production for food items. Confidence can also be instilled in the end product if the provenance (point of origin) can be established with transparency.

A UK technology firm called Provenance has partnered with the International Pole and Line Association (IPLA) to pilot a blockchain-based tuna tracking system from Indonesia to consumers in the UK back in 2016. In the agriculture space, The Instituto BVRio has developed a platform to verifiably track the authenticity of resource harvesting of timber, in order to ensure sustainable practices. The platform, called the Responsible Timer Exchange, increases efficiency, transparency and reduce fraud and corruption in the timber trading industry.

Decentralized Resource Management Systems

The fragility of a centralized architecture has sparked a renewed interest in global distributed utility systems for effective resource management. Decentralized systems in this context could significantly reduce information asymmetry and result in optimal resource balancing. Key movers in this area are decentralized energy grids and water management systems.

LO3 Energy, a New York start-up, partnered with Siemens Digital Grid to establish the Brooklyn Microgrid project, an open source energy platform that allows anyone to produce, sell and purchase energy within their respective communities. On the solar front, The Sun Exchange has launched a distributed ledger platform that connects those who want to invest in solar energy and those who wants to access it. This crowdfunding solution facilitates the financing of solar projects in sub-Saharan Africa.


The integration of environmental consciousness into the ground-breaking evolution of blockchain technology has already begun to gain traction. Across the industry, many projects are looking to absorb the best practices surrounding environmental sustainability. Although it is currently at the infant stages, the developments are further proof of blockchain’s malleability towards addressing global environmental needs.

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