Both investors and academics with an interest in cryptocurrency often wonder which crypto is environmentally friendly. In this article, we will tell you about the Top 5 eco-friendly crypto coins for 2022.
In terms of energy consumption, Bitcoin and Ethereum are the two biggest offenders. As a result of the development and success of many Bitcoin alternatives – ‘altcoins’ – that use less electricity and are not reliant on mining – the environmental impact of crypto has lessened in recent years.
Top 5 Eco Friendly Crypto Coins – Overview
Check out cryptocurrencies that are leading the way towards sustainability if you want to invest in digital currency in an eco-conscious manner.
- Hedera Hashgraph (HBAR) – UCL Research’s Most Environmentally Friendly Crypto
- Algorand (ALGO) – Partnered with ClimateTrade
- Tezos (XTZ) – Pioneer of Proof of Stake Blockchains
- Polkadot (DOT) – Lowest Carbon Footprint Cryptocurrency
- Cardano (ADA) – Partnered with Veritree in Reforestation Campaign
1. Hedera Hashgraph (HBAR) – The Most Environmentally Friendly Cryptocurrency from UCL Research
In its study published by the UCL Centre for Blockchain Technologies, Hedera Hashgraph is rated the most green proof-of-stake coin with a transaction energy consumption of 0.020 Watt Hours (Wh/tx).
Unlike other crypto coins, even eco-friendly ones, Hedera isn’t based on a blockchain – it uses a distributed ledger technology (DLT) called a hashgraph instead. In terms of scalability, speed, efficiency, and transaction costs, this novel technology outperforms blockchain-based cryptos.
According to a blog post published by the company:
“With environmental sustainability as a core value, Hedera is committed to carbon-negative network operations. Real-time third-party assessments are used to determine the amount of carbon offsets Hedera will buy.”
A large portion of Hedera’s network operations is offset by green-e climate-certified credits measured in metric tons. Furthermore, its native token HBAR may be a good buy-the-dip opportunity since it is currently 87% off its all-time high.
2. Algorand (ALGO) – Partnered with ClimateTrade
ClimateTrade, a company that uses blockchain technology to assist companies in becoming carbon neutral or negative, partnered with Algorand in 2021. So far, they have helped over 500 companies offset over three million metric tons of carbon emissions.
For each epoch (a specific period of time on the blockchain), Algorand notarized its carbon footprint on-chain. For its protocol to remain carbon-negative, Algorand Foundation pledged to lock an equal amount of carbon credits into a green treasury as an ASA (Algorand Standard Asset).
Algorand announced it was carbon neutral following that partnership. In addition to being the greenest blockchain, Algorand Foundation works on energy efficiency, climate change, and clean energy.
As a response to Elon Musk’s concern over bitcoin’s environmental impact, Algorand’s founder Silvio Micali tweeted ‘That Algorand was designed to be environmentally friendly.
As a result of Bitcoin mining using fossil fuels, including coal, which has the worst emissions of all fossil fuels, Musk suspended the use of Bitcoin for Tesla car purchases in 2021.
3. Tezos (XTZ) – Blockchain pioneer with a Proof of Stake approach
Launched in 2018, Tezos is one of the first proof-of-stake blockchains with the advantage of being an environmentally friendly cryptocurrency network that is self-upgradable without hard forking.
Due to the fact that it never has to fork its blockchain, amendments and upgrades are far less expensive and energy-intensive. Tezos has recently become one of the most energy-efficient cryptos after increasing its eco-friendliness over the years.
There was a 30% reduction in Tezos’ electricity consumption per transaction in 2021 compared to 2020. In the 2022 bear market, XTZ has been impacted more than other altcoins, dropping under the 2021 lows – making XTZ a volatile cryptocurrency.
The NFT platform Tezos has established itself as being more eco-friendly than Ethereum in terms of NFTs. When Rarible pushed for carbon neutrality, it announced a partnership with Tezos.
4. Polkadot – Lowest Carbon Footprint Cryptocurrency
Polkadot, according to a Crypto Carbon Ratings Institute (CCRI) report, has the lowest carbon footprint of any crypto asset, with lower carbon emissions than Cardano, Tezos, Avalanche, and Algorand – also among the most environmentally friendly cryptos. As far as total electricity consumption is concerned, Polkadot also had the lowest total consumption when measured in kWh per year.
As far as electricity usage per transaction is concerned, Solana had the lowest (although Hedera Hashgraph was not included in the report or UCL Research’s analysis of Solana).
The DigitalArt4Climate initiative, a United Nations-related non-profit, decided to build an NFT project on Polkadot in 2021.
Despite the controversy surrounding the environmental impact of NFTs, Polkadot NFTs emit a mere .05 grams of carbon dioxide, the equivalent of breathing for four seconds, according to Unique Network, the first NFT chain based on Polkadot and Kusama, according to Unique Network.
5. Cardano (ADA) – Partnered with Veritree in Reforestation Campaign
Cardano is another pure proof-of-stake blockchain launched in late 2017 that is 37,500 times more energy efficient than Bitcoin, along with Tezos.
Today, Cardano is one of the largest cryptos by market capitalization. With a market cap exceeding $15 billion, it is in the top ten coins on CoinMarketCap. As one of those top ten cryptos, ADA joins Binance Coin as one of the most eco-friendly.
Cardano is more than just an eco-friendly cryptocurrency. Its business practices and aims include climate change advocacy, digital IDs, and helping underbanked populations around the world.
As part of a reforestation drive in partnership with Veritree, Cardano planted one million trees. Africa has also been tasked with becoming the leader in Web3 adoption.
What Makes A Crypto Eco-Friendly?
The following are some ways to determine which cryptocurrencies are environmentally friendly from a technical standpoint:
- Each blockchain node’s annual electricity consumption – Cardano does well on that metric
- All nodes’ annual electricity consumption – on which Polkadot leads
- Calculation of Watt-hours per transaction – of which Hedera Hashgraph and Solana have the lowest
- Crypto tokens running on a Proof-of-Stake blockchain
- The partnerships they have in the industry – Algorand’s work with ClimateTrade is an example
As well as those more academic points, many crypto projects and foundations have taken part in combating climate change and deforestation, such as Cardano, Near Protocol, and Tezos. The Red Cross is one of the charities that some projects choose to donate to.
Crypto mining: Is it eco-friendly?
Besides our list of eco-friendly cryptos above, it should also be noted that there is no consensus on whether Bitcoin mining is environmentally friendly or not.
Bitcoin mining is not environmentally unfriendly, as Coinbase claims in its own fact-check blog post:
Bitcoin’s energy consumption is significant, but that doesn’t mean it’s a significant contributor to climate change. The majority of global crypto mining takes place in China’s Sichuan province, where excess hydroelectric power makes mining 95% renewable. Renewable energy is already used by 75% of miners.
According to Coinbase, Bitcoin’s environmental impact is marginal at best, based on the Cambridge Bitcoin Electricity Consumption Index.
Cato.org concluded that ecological criticism of crypto is ‘much ado about nothing in a report titled ‘Why Bitcoin is Not an Environmental Disaster’.
Conclusion
Some other eco-friendly cryptos that did not make our top 10 list include Avalanche (AVAX), Solana (SOL), Flow (FLOW), Harmony (ONE), and Powerledger (POWR).
Although some cryptos aren’t a good investment right now (e.g. Hedera Hashgraph, IOTA, Tezos, Nano) as their charts are currently in a bearish downtrend – eco-friendly cryptocurrencies don’t usually generate that much hype from retail investors.
As with other industries and payment systems, there is also debate over whether cryptocurrencies, including Bitcoin, are harmful to the planet’s climate.
