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The claim that mining new currencies such as Bitcoin is bad for the environment and contributes to climate change is a significant issue that continues to plague the crypto industry. Protocol Labs, the company behind Filecoin, announced today that it has joined the Crypto Climate Accord, which should alleviate some of those concerns.
According to a 2021 report by Digiconomist, the amount of energy required to mine Bitcoin is comparable to that required to power the entire country of Poland for a year. The watchdog group also claims that combined, Bitcoin and Ethereum mining consumes more energy annually than Iran, South Africa, and Australia.
Protocol Labs, launched in 2014 as an open-source resource and development lab, says it is committed to driving the development of Web3 initiatives toward net-zero emissions.
“Numerous projects in the ecosystem are already attempting to address the environmental impact of the blockchain space,” said Angie Maguire of Protocol Labs in a statement. “We are committed to developing solutions that support and encourage the use of renewable energy sources, while also setting the standard for energy consumption transparency.”
The Crypto Climate Accord, a private-sector initiative, currently has 150 supporters. It is modelled after the Paris Climate Agreement and seeks signatories to achieve net-zero emissions from electricity consumption by 2030. If this goal is met, the signatories to the agreement will produce almost no emissions from mining.
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The worthy goal would require a significant investment in renewable energy and a change in how many cryptocurrencies are mined. CoinMarketCap.com list 163 coins that classify as Proof of Work (energy-intensive) compared to 69 that classify as Proof of Stake.
The most prominent and valuable cryptocurrency networks in the industry, Bitcoin and Ethereum, currently use the more energy-intensive proof-of-work consensus mechanism to verify transactions and mint new coins. Proof of work essentially involves high-end computers racing to solve mathematical problems, which is how new BTC and ETH are currently created.
Other cryptocurrencies, such as Cardano, Solana, Algorand, and Tezos, employ a proof-of-stake algorithm by default, in which validators “stake,” or lock up large amounts of the blockchain network’s native coin. Ethereum is currently transitioning to proof-of-stake via its ETH 2.0 upgrade, which developers expect to be completed in late 2021 or 2022.
Protocol Labs collaborated with Energy Web in September to demonstrate one of the Climate Accord’s solutions. It showed how six Filecoin providers used Energy Web’s Energy Web Zero application to purchase verified renewable energy certificates. Protocol Lab’s Filecoin mainnet is set to go live in October 2020.
The Crypto Climate Accord says its mission is to develop standards, tools, and technologies to accelerate the adoption of and verify the progress towards 100% renewable-powered blockchains by 2025.