There is no doubt that cryptocurrencies have had a huge impact on the world economy.
There is no doubt that they have had an impact on the environment. Currently, Bitcoin consumes about 150 terawatt hours of electricity per year, more than the entire Argentine country.
As the world becomes increasingly digitized, it’s important to consider the environmental impact of the choices we make. When it comes to cryptocurrencies, eco-friendly options are often overlooked in favor of more popular coins like Bitcoin and Ethereum.
However, eco-friendly cryptocurrencies offer an attractive alternative for those looking to make sustainable or eco-friendly digital investments.
Unlike Bitcoin and Ethereum, which require large amounts of energy to power their networks, eco-friendly cryptocurrencies only need a few hundred machines.
As the world becomes more aware of the need to reduce our impact on the environment, eco-friendly cryptocurrencies are likely to become more popular.
In this article, we will rank eco-friendly cryptocurrencies based on the lowest amount of energy consumed by each. And explore how you can determine the sustainable nature of a cryptocurrency and what to do when investing in them.
So let’s dig…
The Best Sustainable Cryptocurrencies to Invest in
We have researched and analyzed some of the best sustainable cryptocurrencies you should consider investing in. We have classified them according to the lowest energy consumption. These are:
#1 Dwarf
Nano is a relatively new low-energy cryptocurrency that does not use mining, instead using “blockchain lattice” technology to generate user blockchain for everyone on the Nano network, so that each user can control their account.
Transactions are verified by Open Representative Voting (ORV), with network members acting as validators.
Users can make peer-to-peer transactions using their own blockchains, which saves time and energy because they don’t have to use the core network blockchain.
It hasn’t reached the same level of acclaim as the other cryptocurrencies on this list, which certainly raises some concerns. But it also indicates that Nano has more room to grow as it is already at the top of our list as the least energy-intensive cryptocurrency with only 0.000112 kWh.
#2 Hedera
Hedera is a cryptocurrency that runs on a Proof-of-stake consensus mechanism, with an energy consumption of almost 0.001 kWh and that is why we have ranked it number 2 on our list.
In theory, it could compete with major payment processors like Visa in terms of transaction per second using much less energy than bitcoin. Instead of processing everything one after the other, transactions are processed at the same time, making Hedera faster than previous cryptocurrencies like bitcoin.
The creators of Hedera are using their network to build sustainability projects such as their Power Transition energy monitoring software.
It is a highly scalable digital energy platform that allows customers and companies to manage their energy consumption on a scale of micro networks up to national networks.
It can help reduce costs and accelerate the shift to a zero-carbon economy by enabling network actors of any size to communicate more effectively, resulting in improved energy efficiency.
#3 Algorand
Algorand exists on a proof-of-stake (PoS) consensus mechanism with great transaction speeds, low fees, and accessibility. It allows the network to execute smart contracts, through which it drives most of its value, making it one of Ethereum’s many competitors.
Algorand does not use mining, and the network is attempting to be a pioneer in blockchain sustainability by generating a carbon-negative network.
In April 2021, they announced that their network is completely carbon neutral. It was created to be energy efficient from the outset and is committed to offsetting any emission gaps in order to further reduce its environmental effect.
Ranking 3rd on our list, the grid becomes more accessible, scalable and energy efficient with 0.0002 kWh of energy consumption.
Algorand has also partnered with ClimateTrade, a nonprofit organization dedicated to assisting companies in improving their sustainability relationships. It will use a portion of its network fees to purchase carbon credits through ClimateTrade.
#4 Cardan
Cardano uses a Proof-of-Stake (PoS) consensus mechanism, built on a peer-reviewed blockchain. It was developed by one of the co-founders of Ethereum and was among the best cryptocurrencies in the world by market capitalization.
What makes Cardano different from Ethereum is that when people buy Cardano, they become members of the network instead of mining new coins. This same reduces energy consumption per transaction to almost 0.5 kWh.
Cardano’s network is designed to be flexible and efficient, allowing it to scale as needed without a significant increase in energy consumption.
Read our complete guide on What is Cardano? And find out more about this amazing ecological network.
#5 Chia
At the bottom of our list, The Chia Network is a blockchain and smart transaction platform that allows users to take advantage of the available hard drive space to run the decentralized network.
It puts their desktop to work by providing downloadable software that pays users in Chia tokens to run the platform on their hard drives. While Chia’s hard drive-based “farming” process isn’t as environmentally friendly as some of the other cryptocurrencies on this list, it’s far less energy-intensive than the proof-of-work blockchain mining process.
Instead of proof-of-work, the Chia network relies on proof-of-space-time. So, storing a certain amount of data over a certain period of time can earn you XCH, Chia’s token.
Chia’s agriculture was designed to be accessible, without the need for specialized equipment, nor huge amounts of energy. Currently, the Chia network consumes 2kWh.
What makes cryptocurrencies sustainable and environmentally friendly?
A sustainable cryptocurrency has an environmentally friendly design and works with low energy consumption. It doesn’t require much power, so it’s constantly looking for new ways to reduce its environmental impact while being fully functional!
The community behind such a currency is dedicated to carrying out various initiatives that will make our land better by returning what we take from it.
There are three important questions you need to find answers to before determining whether a cryptocurrency is sustainable or not.
- How much energy does it consume?
- Does it have a carbon footprint?
- What ecological initiatives have they undertaken?
A single Ethereum transaction consumes about 178 kWh. In comparison, Nano transactions use about 0.000112 kWh, and the amount of energy needed to process that transaction is so low that it doesn’t actually exist. This is what makes Nano the most environmentally friendly and sustainable cryptocurrency, to date.
Compared to other options, it is clear that cryptocurrencies with the lowest energy consumption have a much smaller carbon footprint. Not only is it greener, but it is also more efficient and faster than other cryptocurrencies.
The Nano Foundation, is a community behind eco-friendly cryptocurrency and is dedicated to environmentally friendly initiatives. For example, they have an initiative where people collaborate with trees through tree planting campaigns so that we can all have greener land!
These are just some of the significant aspects that can really help you understand how sustainable some eco-friendly cryptocurrencies are, while being fully functional.
Future cryptocurrencies will be more sustainable and environmentally friendly
Cryptocurrencies are here to stay, and therefore ethical choices must be made to ensure a sustainable future environment.
To offer a sustainable future, many analysts predict that eco-friendly cryptocurrencies will soon flood the market. This is because they offer a number of advantages over traditional cryptocurrencies.
For example, they are more environmentally friendly and easier to use. They can be used in a variety of ways, including online payments and money transfers. This makes them a viable option for everyday transactions.
They don’t require as much energy to produce and use, which means they’re less harmful to the environment. This is a great strength for many people, especially for those who care about sustainability.
According to the Ethereum Roadmap Update, the network will soon move to a POS system. This is when Ethereum will consume 99.98% less energy than it is consuming right now, which is a lot!
So, by 2023, we could see Ethereum as one of the best sustainable and eco-friendly cryptocurrencies.
With the growing popularity of the proof-of-stake mechanism rather than proof-of-work and not relying on energy-intensive mining operations, it seems that the future of eco-friendly cryptocurrencies is bright and inevitable.
Final Thoughts
If you’re looking to invest in eco-friendly cryptocurrencies, here are a few things to keep in mind:
- Look at the goals of a project, what makes it unique, and the problems it aims to solve.
- Consider the team behind the project. Do they have experience in the crypto space?
- Be cautious about how much you invest. Cryptocurrency is a volatile market, and prices can fluctuate rapidly. So always invest 1% to 5% of your portfolio.
- Keep an eye on your energy consumption. Projects that do not use proof of work will consume less energy.