Blockchain technology helping to fight climate change is an idea that would seem rather far-fetched considering the fact that decentralized blockchain networks consume a lot of energy when verifying and validating transactions. In fact, Proof of Work blockchains like Bitcoin and Ethereum are currently utilizing enormous volumes of energy. Bitcoin alone has carbon emission estimated to equal more than 500kg of carbon dioxide per transaction.
Ethereum is more efficient. Each Ethereum transaction results in around 35kg of carbon dioxide emissions. Comparatively, a Visa card transaction has a CO2 footprint over 200,000 times smaller. The levels of carbon emissions for crypto transactions are not earth-friendly which is why one Singapore-based company is developing a solution to eliminate cryptocurrency carbon footprint emissions using blockchain.
New Era Energy has developed a blockchain-based platform called Carbon Grid Protocol that aims to offset the rapidly growing carbon footprint created by other blockchain applications. The project intends to leverage blockchain technology to create a carbon credit system that acts as a transparent record and globally-accepted standard for the record-keeping and reporting of carbon emissions. This initiative will make the carbon credit markets more transparent and accountable but will also streamline them by removing the need for brokers and investment funds. New Era Energy has received support from the United Nations Framework Convention on Climate Change. The UN sees their platform as a novel solution to a global problem.
The ultimate goal of the project is to minimize the environmental impact of the growing energy consumption required to sustain and drive the blockchain revolution. To achieve this goal, Carbon Grid Protocol is designed to enable blockchain networks and developers working with decentralized apps to monitor their estimated carbon footprint, enabling them to lower carbon footprint at a per transaction level.
New Era Energy will first target blockchain firms since each transaction is easy to track and tends to have a relatively high footprint.
The cryptocurrency carbon footprint has been a major point of contention when it comes to large-scale adoption and use of cryptocurrencies across the globe. According to one Bitcoin Energy Consumption Index, every bitcoin transaction is estimated to use over one MWh of power. To put it in perspective, the estimated annual electricity consumption for bitcoin mining is roughly the same as Chile’s annual electricity usage.
Carbon Grid Protocol is a project that could prove the difference in making use of blockchain technology to finally achieve consensus to fight climate change. The company hopes to convince other blockchain platforms to implement its protocol and allow crypto users to cover the cost of carbon footprint when they make a transaction. If this is implemented, the environmental impact of blockchain will be neutralized at its very source.