Enterprise blockchain plays an important role in creating a sustainable future

Companies are turning to blockchain-based business solutions to meet both environmental sustainability goals and business needs.

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Bitcoin (BTC) is often used to criticize all blockchain-based projects. This is understandable as Bitcoin was the first project to use blockchain, arguably the most famous and largest cryptocurrency by market capitalization.

In the first half of this article, I’ll be using Bitcoin as a proxy for all blockchain-based projects, as most people associate blockchain with Bitcoin. Anything that can be said environmentally positive about Bitcoin is doubly true for the vast majority of newer blockchain-based projects, as Bitcoin uses the oldest version of blockchain technology.

Blockchain energy consumption

Bitcoin was hacked because of its high energy consumption. Headlines stating that Bitcoin’s electricity consumption is comparable to a country’s total consumption are often criticized. Comparisons are useful, but can create a deceptive framing effect. The statistics often cited in these attention-grabbing headlines come, for example, from the Cambridge Center for Alternative Finance (CCAF). The same organization also suggested that transmission and distribution power losses in the United States could power the entire Bitcoin network 2.2x. Always-on electronic devices in the US use 12.1 times more energy than the Bitcoin network.

So the Bitcoin network uses as much electricity as a small country or less than a fraction of the US energy budget. Is it much? It depends how you look at it.

Related: Is Bitcoin wasting energy? Pros and cons of Bitcoin mining

Another common criticism is that Bitcoin’s electricity consumption is growing so fast that Bitcoin’s emissions alone can drive global warming above 2 ° C or consume all of the world’s energy in 2020. Why? First, like most network-based technologies, Bitcoin follows an acceptance curve defined by the theory of innovation spillover – an “S-curve”.

The exponential, explosive growth in the first half of the curve slows significantly in the second half. Second, large and predictable improvements in computer performance will continue to lower the energy costs of computers even as Bitcoin’s growth slows. Third, such predictions don’t take into account Bitcoin’s growing energy mix.

Blockchain energy mix

Almost all of the energy used by blockchain projects comes from the electricity used by the computers that secure the network. Bitcoin calls these “miners”, but newer blockchain projects can use “validators” much more efficiently. Electricity is generated from a variety of sources such as coal, natural gas, and renewables such as solar and hydropower. These sources can produce very different CO2 emissions, which largely determine their environmental impact. The two most prominent estimates of Bitcoin’s renewable energy energy range from 39% in this report to 74% in this report. One of these two estimates is “cleaner” than the US energy mix, which is only 12% renewable.

There is evidence that public control of Bitcoin has most likely ensured that renewable energy will only increase in the future.

Blockchain is worth it

Bitcoin’s energy consumption and composition are not perfect, nor are they as terrible as is often reported. What is often lost in the conversation about Bitcoin’s energy consumption is whether or not Bitcoin’s energy consumption is worth it. Many industries use energy or generate large amounts of waste, but most people consider the environmental cost to be worthwhile. The agribusiness requires large amounts of fossil fuels to fertilize and power field equipment, not to mention creating harmful runoff. However, despite the negative impact on the environment, we recognize the unmatched importance of growing food. Instead of eliminating agriculture, we are trying to improve the agricultural environment.

Related: Green Bitcoin: Influence and Significance of Energy Consumption for PoW

Whether it’s providing the bankless 1.7 billion in financial inclusion or providing an alternative to previous international remittance services, I understand that Bitcoin is worth its power. What is even more obvious is that the enterprise blockchain is an undisturbed public good.

Newer, alternative blockchain technologies use at least 99.95% less energy than older technologies. Enterprise blockchain can use less energy as it can be tailored to specific use cases. The enterprise blockchain not only consumes significantly less energy, it also helps companies to achieve their sustainability goals.

Blockchain as an important driver for renewable energies

Solar and wind energy are now cheaper than fossil fuels such as coal and natural gas. Today, solar and wind power are comparable to geothermal and hydropower. Although it solves the cost problem, renewable energies have several problems that prevent mass adoption. Geothermal energy and hydropower are geographically bound. Solar, wind and, to a lesser extent, hydropower are disrupted and blocked. The possibility of interruptions currently makes them unreliable. At night there is no sun, the wind sometimes stops, it rains and the dry season prevails. Network congestion is similar to car traffic. Renewable energies are often built in rural areas due to geographic restrictions. Most of the energy, however, is needed in densely populated cities. Like a car in a traffic jam, the electricity is delivered to its destination with a delay.

There are solutions such as building battery storage systems and increasing transmission capacity, but these are costly infrastructure projects. This is where Bitcoin and blockchain in general can help. Unlike bitcoin miners and other blockchain projects that can be built anywhere. They are profitable companies that can essentially subsidize the construction of renewable infrastructure by always using the excess energy produced.

Related: No, Musk, don’t blame Bitcoin for dirty energy – the problem lies deeper

Another promising energy technology that goes well with the blockchain is person-to-person (P2P) electricity trading. These energy-sharing programs offer electricity providers and consumers the opportunity to buy and sell energy without the need for existing intermediaries, while increasing the level of renewable energies at the same time. Similar to renewable infrastructures, blockchain-based projects will fuel the growth of P2P energy networks.

Blockchain enables the purchase and origin of materials

Consumer demand for ethically sound products is growing steadily. Companies have to prove that their products are manufactured in an environmentally friendly, health-friendly and ethical manner. Consumers who shy away from green washing need to rely on information from companies. Blockchain-based projects are changing this dynamic.

Everledger has developed tools to improve consumer and business insights into where a specific audience comes from. By combining blockchain, AI and IoT, Everledger digitally streamlines compliance processes and enables companies to prove the true origin of their products.

Transparency and traceability will be critical to building consumer confidence in the food supply chain. Supermarket giant Carrefour and world’s largest brewer AB InBev have partnered with enterprise blockchain developer SettleMint to provide a digital traceability solution that uses dynamic QR codes embedded in products during packaging.

Green finance

Green finance is the use of credit to support sustainable companies and to finance their projects and investments. It is important to close the $ 2.5 trillion annual funding gap for the SDGs, which is estimated to grow even bigger. A good example of green finance is the UK green bond market. The Climate Bonds Initiative will spend 269.5 billion GB in 2020.

Indeed, UKs are not without problems such as confirming that sustainability metrics are authentic or that funds have been used to support sustainability. Blockchain can immutably store this data so that projects can be verified to meet sustainability requirements. Blockchain can also help in other ways, for example through encryption.

Related: How will blockchain technology help fight climate change? Experts answer

Oi Yee Choo, Chief Commercial Officer at iSTOX, a digital exchange based in Singapore, said in this interview: “Even in markets where there is high demand for green bonds because investors are motivated by ESG considerations, tokenization helps investors to diversify their portfolio. ”via various bonds due to the lower subscription volume. ”

The blockchain industry is no longer idealistic when it comes to environmental sustainability. However, if it stays on its current course, the blockchain industry will be not only a role model but also a promoter of environmental sustainability.