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UN says cryptocurrencies can help fight climate crisis despite global environmental concerns

bitcoin futureThe UN report said the amount of energy needed for each transaction is 980 kWh in comparison to just 0.0006 kWh for each Mastercard transaction. Representative image/Pixabay

Despite global concerns about the negative environmental impact of cryptocurrencies such as Bitcoin’s rising carbon footprint, the United Nations said cryptocurrencies and Blockchain technology powering them could be of great benefit to those fighting the climate crisis and help bring about a more sustainable global economy. In its recent report analyzing the dangers and promise of cryptocurrency technology, it said, “UN experts believe that cryptocurrencies and the technology that powers them (Blockchain) can play an important role in sustainable development, and actually improving our stewardship of the environment.”

The report reasoned that there are three main areas where Blockchain can accelerate climate action: transparency, climate finance, and clean energy markets. For instance, ‘Data on harmful greenhouse gas emissions in many countries, says the UN Environment Programme-Technical University of Denmark (UNEP-DTU) Partnership, is incomplete and unreliable. Blockchain solutions could provide a transparent, trustworthy way to show how nations are taking action to reduce their impact on the climate.” 

“With the continuous development of Blockchain research, there are constant innovations happening in this industry. The main reason for the heavy energy consumption of crypto is its complex nature and unbeatable resistance to scams and tampering. Furthermore, a lot of innovations like adding a lightning layer to Blockchain by companies like Square Crypto, which is owned by Jack Dorsey, will ensure its sustainability in coming future,” Gaurav Dahake, Founder & CEO, Bitbns told Financial Express Online.

Also read: Bitcoin slips below $30,000 again; around $90 billion wiped off entire cryptocurrency market in 24 hours

Bitcoins are mined through a process involving powerful computers to solve complex mathematical problems that require tremendous energy, to an extent that it is estimated to consume more energy than several countries such as Kazakhstan and the Netherlands. Moreover, the UN report said the amount of energy needed for each transaction is 980 kWh in comparison to just 0.0006 kWh for each Mastercard transaction. 

With respect to climate financing, the UN said “Investments that contribute to slowing the rate of climate change could be boosted, if carbon markets are scaled up, allowing businesses and industries to transition to low carbon technologies.” Further, Blockchain could be an important part of accelerating the use of renewable energy sources such as wind and solar. As these sources are, by their nature, intermittent and decentralized, new forms of energy markets are needed, the UN noted. 

Elon Musk’s Tesla had earlier this year bought $1.5 billion in Bitcoin to accept it as a payment method for its electric vehicles. However, Musk in May had deciding to halt payments in Bitcoin due to the “insane” amount of energy required to produce Bitcoin amid environmental concerns.

The suggestions/recommendations around cryptocurrencies in this story are by the respective commentator. Financial Express Online does not bear any responsibility for their advice. Please consult your financial advisor before dealing/investing in cryptocurrencies.

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