Traditional cryptocurrency projects like Bitcoin rely on a Proof of Work system that consumes an extraordinary amount of energy per transaction. As a result of this growing scrutiny, several blockchain projects are contemplating less energy-intensive mining models as they explore more sustainable options. One prominent example is Ethereum, which is transitioning from the standard Proof of Work system to a Proof of Stake system, which has fewer hardware requirements and requires far less energy to power transactions.
The crypto industry is not just examining how much energy its platforms consume, but also where that energy is sourced from. The Crypto Climate Accord is an organization aimed at shifting the blockchain industry to rely fully on renewable energy sources by 2024. In an effort to accomplish this, some tech companies are investing in solar and wind-powered Bitcoin mines in 2022. In order to heed investors’ and regulators’ demands for sustainability, it is likely that blockchain projects will continue to explore alternative models and mechanisms for reducing the industry’s impact on the environment.