In the past few years, investing in cryptocurrencies has become increasingly popular, but there are growing worries about how the business affects the environment. Despite these reservations, a new type of cryptocurrency has emerged: energy-efficient cryptocurrencies.
These cryptocurrencies use less energy but still benefit from blockchain’s decentralized ledger. These digital currencies use as little energy as possible, which could help solve the environmental problems that their predecessors caused.
In this article, we’ll explore the most energy-efficient cryptocurrencies and discuss why we need them in today’s society.
Overview of Energy Consumption in Cryptocurrency
Most people know that cryptocurrencies use a lot of energy, especially those that use the proof-of-work (PoW) consensus method. Mining requires a lot of energy since miners compete to solve complex mathematical quizzes to verify transactions and build new blocks in the blockchain.
The first and most widely used cryptocurrency, Bitcoin, is a prime example of a PoW-based digital asset with extremely high energy needs. The difficulty of the puzzles rises as the network expands and more miners join the race, resulting in even greater energy consumption.
It is important to note that PoW mining’s excessive energy usage is a source of environmental worry. Using fossil fuels in mining operations produces substantial carbon emissions and contributes to global warming in some locations.
Proof-of-stake (PoS) and other consensus processes use much less power than previous mining methods.
Thus some cryptocurrencies, like Ethereum, are switching. In PoS, testers are selected to generate new blocks depending on the amount of cryptocurrency they own and are prepared to “stake” as collateral.
Compared to PoW, PoS is more efficient in terms of energy usage. Nowadays, new digital currencies have adopted PoS and other energy-efficient strategies to combat environmental damage caused by cryptocurrency mining.
List of The Most Energy-Efficient Cryptocurrencies
Here are some of the most popular energy-efficient cryptocurrencies:
- Cardano(ADA)
- Hedera(HBAR)
- Ripple(XRP)
- IOTA(MIOTA)
- Algorand(MIOTA)
- Avalanche(AVAX)
- Chia(XCH)
- SolarCoin(SLR)
Cardano(ADA)
Cardano is a cryptocurrency that uses a Proof-of-Stake (PoS) consensus process to lower the network’s power needs drastically. It was made with a focus on scientific study, academic principles, and peer-reviewed development to ensure it was solid and reliable.
Cardano’s blockchain also uses a unique layering method to keep transactions separate. It has two main layers: the settlement layer and the processing layer. The settlement layer and the processing layer make up the bulk of it.
The settlement layer processes ADA transactions, while the computation layer controls smart contracts and dApps. The company is estimated to consume less energy than five typical American homes yearly, or 48,851 kWh.
Hedera (HBAR)
This is a public, decentralized network and cryptocurrency designed to facilitate the creation of trustworthy dApps and the transfer of small amounts of money at low transaction fees.
Since Hedera’s network does not employ blockchain technology, it stands out from the crowd of digital currencies. Instead, Hedera relies on a novel ‘hashgraph’ consensus process developed by co-founder Leemon Baird.
There are many advantages to using the Hedera Hashgraph consensus algorithm. It provides organizations of all sizes with quick, safe, and equitable services for their digital assets and apps. Hedera’s energy efficiency is so great that it can handle 10,000 times as many transactions as the Bitcoin network with the same amount of power.
Ripple (XRP)
This cryptocurrency does not require energy-intensive mining activities like Proof-of-Work for consensus. Instead, it relies on a distributed system of trusted computers called validators to verify and settle on the legality of transactions.
These validators work together to reach an agreement that uses much less energy than Proof-of-Work (PoW) mining.
When using Ripple, people don’t have to compete to solve complicated math puzzles to make new blocks and verify transactions. Because mining no longer takes place, less energy is needed to do the same amount of computational work.
The fact that the Ripple blockchain is for international transfers makes it a favorite among financial institutions. With a transactional energy consumption of only 0.0079 kWh, Ripple has proven to be one of the most efficient cryptocurrency initiatives in the financial industry.
IOTA(MIOTA)
IOTA is a digital currency using a unique consensus process called Tangle. The Tangle is a Directed Acyclic Graph (DAG) that can function without miners, saving resources.
Each new transaction in the Tangle needs to validate two previous ones. This creates a network where transactions are connected.
This drastically reduces energy usage because miners no longer need to solve complex mathematical challenges. Because of this, the annual node energy needs for IOTA are lower than those of most other cryptocurrencies.
Algorand(ALGO)
Algorand is a blockchain platform and cryptocurrency made to facilitate the development of dApps and the backing of financial apps while maintaining security, scalability, and decentralization.
It was developed by the Turing Award–winning computer scientist Silvio Micali. Additionally, the platform seeks to solve some of the most pressing problems facing existing blockchain systems. The platform uses a pure proof-of-stake (PoS) consensus known as the Algorand consensus algorithm.
This consensus process eliminates the need for energy-intensive mining and competitive validators by having a new block submitted and agreed upon in a decentralized manner.
This method speeds up the confirmation of blocks while maintaining efficiency, allowing for rapid processing and scalability. Since Algorand is committed to reducing its environmental impact, it now buys carbon credits through blockchain-based smart contracts.
Avalanche(AVAX)
Avalanche (AVAX) is one of the energy-efficient cryptocurrencies that promises to facilitate the development of dApps and underlying financial systems by providing a fast, scalable, and decentralized infrastructure. Avalanche is highly scalable because it performs thousands of transactions per second.
Its consensus technique facilitates rapid transaction confirmation, allowing the network to support a high volume of simultaneous transactions. Additionally, it uses a multi-chain strategy, which significantly improves its scalability.
This multi-chain strategy promotes cooperation by allowing people to transfer assets between the Avalanche network and other blockchains. A recent Coin Carbon Ratings Institute (CCRI) research report confirms that Avalanche is an energy coin with a low carbon footprint.
According to this study, the Avalanche blockchain consumes only 0.0005 percent of the power the Bitcoin network needs.
Chia(XCH)
Chia employs a novel consensus mechanism called proof-of-space and time (PoST), making it a low-energy cryptocurrency. Instead of relying on processing power, PoST has its participants contribute spare space on their hard drives (proof of space) to the network.
The network then uses this area to check and validate transactions, promoting safety and decentralization. Instead of standard mining, Chia users engage in “farming.” Farmers provide storage space for the Chia network and earn XCH tokens for their contributions and space maintenance.
SolarCoin(SLR)
SolarCoin (SLR) is a digital currency that provides rewards for solar power generators. As one of the most energy-efficient cryptocurrencies out there, SolarCoin advocates for the widespread adoption of renewable energy.
Solar energy generators are recognized and rewarded for participating in the renewable energy market with SolarCoins. Solar energy producers can accumulate SolarCoins by generating solar electricity.
The amount of SolarCoins a solar power generator can earn depends on how much solar electricity (measured in megawatt-hours) they generate.
Why Energy-Efficient Cryptocurrencies Are Important
The following are just some of the reasons we need to adopt energy-efficient cryptocurrencies:
- Effect on the Environment
- Sustainability
- Scalability
Effect on the Environment
The energy requirements and environmental impact of PoW cryptocurrencies like Bitcoin have been controversial for the cryptocurrency community.
Proof-of-stake (PoS) and other environmentally friendly consensus mechanism-based cryptocurrencies can lessen blockchain technology’s carbon footprint.
Energy-efficient cryptocurrencies help slow global warming and environmental deterioration by encouraging ethical habits.
Sustainability
As the need for cryptocurrencies and blockchain apps grows, ensuring these technologies will be around for a long time is essential.
Cryptocurrencies designed to conserve energy make it possible for the blockchain sector to develop in a way that doesn’t harm the environment.
This allows the technology to thrive without putting pressure on the world’s limited energy supplies.
Scalability
Most of the time, consensus methods that use less energy also have more transactions and faster confirmation times.
Because of this improved scalability, blockchain networks can accommodate more transactions and users, making them more practical for widespread use.
Conclusion
Several scientists stress sustainability and environmental responsibility you can find while looking into energy-efficient cryptocurrencies.
The cryptocurrency sector must place a premium on sustainability and eco-friendly practices as it continues to develop to secure a more environmentally responsible future.
