Digital assets accused of having an impact on the climate

By VINCENT OWINO

Concerns are growing over energy consumption, environmental pollution and greenhouse gas emissions resulting from mining and digital asset trading.

Available statistics indicate that crypto assets gobble up between 120 and 240 billion kilowatt hours of electrical energy per year, far more than the total energy consumed in East Africa, currently estimated at 25.17 billion kilowatt hours (kWh) .

It is estimated that cryptocurrency activity consumes up to 0.9% of total global energy consumption and contributes around 0.3% of global greenhouse gas emissions, indicating how much could be saved if crypto activities were halted.

Therefore, total carbon dioxide (CO2) emissions from cryptocurrency mining and trading are estimated at 71.86 metric tons, according to Digiconomist, a platform that tracks the impacts of digital trends.

In East Africa, CO2 emissions, according to data aggregator WoldData, are estimated at around 45.85 metric tons.

Regulators who have recently only been concerned with the effect of cryptocurrencies on financial markets and their threat to the monetary sovereignty of countries are now questioning the extent of their contribution to global warming and how to prevent it. ‘mitigate.

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A report from the US Office of Science and Technology Policy in the White House recommended a number of regulations to ensure “responsible development of digital assets” in a way that is energy efficient and minimizes greenhouse gas emissions. .

Development of standards

The White House recommends that regulators develop environmental performance standards for the crypto industry to ensure minimal environmental impact.

In the meantime, several enthusiasts and entities in the crypto space are already beginning to turn to more environmentally friendly distributed ledger technologies in an effort to reduce their impact on the environment.

Ethereum, the second-largest distributed ledger technology, last month switched from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) mechanism, which is more environmentally friendly.

Tim Mungai, a Nairobi-based expert in distributed ledger technologies, told The EastAfrican that the PoS consensus mechanism is more energy-efficient because it involves a number of “validators” (or investors) who put money into the process. money on a network and “Whoever has the highest stake is more likely to have their set of transactions confirmed.

“On the contrary, in a PoW mechanism, a group of miners compete to solve a complex mathematical problem using a lot of electricity for the sole purpose of having their transactions confirmed and recorded on the network,” he said. .

Those who change

With the migration to the PoS consensus mechanism, Ethereum, which accounts for around 20% of crypto energy consumption, is expected to significantly reduce the amount of electricity consumed by digital assets and their resulting CO2 emissions.

There are also other distributed ledger technologies that have already adopted the proof-of-stake consensus mechanism to reduce power consumption. The most popular is Hedera Hashgraph, originally released in 2017.

According to Digiconomist, Hedera consumes only about 0.001 kWh of electricity per transaction, while Bitcoin – the largest cryptocurrency – consumes up to 1389.93 kWh of electrical energy per transaction.

Mungai, who is also a crypto enthusiast, told The EastAfrican that he migrated to Hedera as soon as he realized its energy efficiency and was already developing a digital wallet for his native Hbar coin.

“We only have one planet and we have to be wise about how we use our resources,” he said.

“Any crypto enthusiast, holder or developer who cares about the environment should be concerned about their energy consumption and environmental impact.”