Low Energy Cryptocurrencies

by Sandip Das from
Low Energy Cryptocurrencies

In recent years, crypto investors’ focus has shifted to low-energy cryptocurrencies because of rising environmental concerns. Despite the astounding technological innovations, the overall crypto-industry got a bad reputation because of its huge energy needs. This has led to the development of many energy-efficient cryptocurrencies or green cryptocurrencies. In this post on low-energy cryptocurrencies, we are going to touch on a number of topics:

  • Crypto’s climate impact
  • Why is energy-efficient crypto important?
  • How the crypto industry is shifting to greener technologies
  • Consensus mechanisms and energy efficiency
  • How can blockchain help in the environmental crisis
  • The most popular energy-efficient cryptocurrencies

Eco-friendly cryptocurrencies have a significantly lower energy needs. This means they have lower emissions and an overall lower carbon footprint. As investors, the general population, non-government bodies, and government agencies are increasingly becoming more environment conscious (which is a positive sign), the crypto industry is also adapting to this change.

1. What is the environmental impact of cryptocurrencies?

The short answer is that the global crypto industry has a huge environmental impact. Now, let’s look at these alarming numbers:

  • Bitcoin has emitted a whopping 200 million tonnes of CO2 since its launch.
  • The estimated average annual electricity consumption of BTC is about 128 terawatt hours (TWh). This is equivalent to the annual energy needs of countries like Norway, Sweden, Argentina, and Ukraine.
  • Bitcoin mining accounts for about 0.5% of global energy consumption.
  • In the US alone, cryptocurrency activities emit 25-50 million tons of CO2 each year. This is at par with the emission from diesel fuel used in the US railroads.
  • A single Bitcoin transaction requires about 1,455.8 kilowatt-hours of electricity. In comparison, an average American household consumes this much electricity in about 49.9 days!

Since Bitcoin (BTC) is the most valued and most popular crypto, a lion’s share of the entire crypto industry’s environmental impact is attributed to Bitcoins. The primary reason Bitcoin needs so much energy (and emits a large amount of CO2) is energy-intensive Bitcoin mining. Let’s see how Bitcoin’s consensus mechanism is the root of the problem.

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2. Why do cryptos, especially Bitcoin, consume so much energy?

Cryptocurrencies require mining for their operations. In crypto mining, transactions are validated by network participants by solving complex mathematical puzzles. Dealing with these sophisticated maths problems requires specialized computer hardware that can make quintillions of calculations in a second. Just to give you the right perspective, 1 followed by 18 zeros makes a quintillion!

To cut a long story short, you need power-guzzling computers to mine cryptocurrencies. For instance, according to an estimate, a solo miner requires about 266,000 kilowatt-hours (kWh) to mine a single Bitcoin. For more details on how to mine Bitcoin, read our article following the link. This takes us to the other half of the problem - that is emission. Since electricity comes at a significant cost, cryptocurrency mining is likely to pick up in countries where electricity is relatively cheap, and they come from highly polluting sources like coal.

For instance, until recently China (where about 61% of electricity comes from coal) accounted for about 75% of all Bitcoin mining activities. After China’s severe crypto crackdown in mid-2021, a large share of its Bitcoin mining activities shifted to Kazakhstan, where about 60% of electricity comes from coal. So, cryptos need a lot of energy, and a big share of the energy need is fulfilled by highly polluting energy sources. But, things are changing pretty fast. Many crypto platforms have recognized the problem for long and are taking measures to become greener.

There are mainly two ways through which a crypto platform can be more environment-friendly. One is by using cleaner energy. And the other way is to shift to a more energy-efficient technology or consensus mechanism. The second option seems to be easier than the first.

3. Consensus mechanism and energy efficiency of a crypto

Since crypto mining is the primary source of a crypto’s harmful environmental effects, many cryptos are shifting to a different consensus mechanism that doesn’t need mining. A consensus mechanism is kind of a majority voting system for validating transactions on the blockchain. The most common consensus mechanism is Proof of Work (PoW). Most cryptocurrencies, including Bitcoin, use PoW. Since PoW requires crypto mining, it’s also extremely energy-intensive.

This is a reason many cryptos are now shiting to less energy-intensive consensus mechanisms like Proof-of-Stake (PoS). PoS doesn’t require any mining. Under PoS, transactions are validated through a staking mechanism instead of solving mathematical puzzles. In staking, network participants need to deposit (or stake) a certain amount of cryptos in the blockchain platform to validate transactions. Also, stakers are rewarded for successfully validating transactions and completing blocks. On the other side, they also stand a chance to lose their stakes for validating wrong transactions.

Unlike PoW, PoS doesn’t involve solving complex mathematical puzzles. This is why the PoS system doesn’t need energy-guzzling computers or costly hardware components. So, cryptos based on the PoS system are enormously more energy-efficient than PoW-based cryptos. Therefore, make sure to understand the difference between proof of stake and proof of work systems as it is key to understand how to determine a low energy crypto.

For instance, when Etherem shifted to the PoS mechanism in September 2022, its energy needs fell by a whopping 99.98%. In addition to PoS, some other energy-efficient consensus mechanisms are Delegated Proof-of-Stake (DPoS), Practical Byzantine Fault Tolerance (PBFT), and Proof-of-Spacetime (PoSt).

4. Why look for energy-efficient cryptos?

The main reason you need to look for energy-efficient cryptos is that they are the future of this innovative technology called blockchain. Rising concerns about rapid global warming and climate change mean we cannot afford to keep harming the environment anymore. The stakes are pretty high. So, we are likely to see a rapid transition towards energy-efficient technologies and systems in the crypto world.

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What this means for crypto investors is that green cryptos or low-energy cryptos are likely to see more demand in the future, leading to a rise in their price. We believe that the the lowest energy cryptocurrency projects are going to create the maximum amount of value for investors. So, early investors in low-energy cryptocurrencies like Ethereum (ETH) are set to benefit more than the late entrants - investors who are late to cash in on this opportunity. Now, let’s look at the the most energy-efficient cryptos in 2024. And for those who already have a list in mind of cryptos they would like to trade, we suggest having a look at the available on our page crypto trading bonuses, like the referral code for BTSE, which will give you access a wide range of trading benefits.

5. Shift towards energy efficiency - the most popular energy-efficient cryptocurrencies

In recent years, there has been a significant buzz in popular media on blockchain and sustainability practices or blockchain’s role in sustainability. Clearly, there is a blockchain for sustainability movement underway to drastically lower the energy needs and carbon footprint of the industry. This also means smart investors are switching to green cryptos. So, if you are looking for answers to questions like what crypto uses the least energy or which cryptocurrencies are energy-efficient, here are the top green cryptos that are leading from the front:

  • Ethereum (ETH)
  • Solana (SOL)
  • Cardano (ADA)
  • Polkadot (DOT)
  • Cosmos (ATOM)
  • Avalanche (AVAX)
  • Tezos (XTZ)
  • Hedara (HBR)
  • Stellar (XLM)
  • Nano (NANO)

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6. Why is energy-efficient crypto important?

We need more low-energy cryptocurrencies for a number of good reasons. Here are the top ones:

  • Energy-efficiency cryptos will ensure environmental sustainability.
  • Energy-efficient cryptos will have wide applications and use cases.
  • Green cryptos will help in the promotion and growth of the overall blockchain industry.
  • Crypto’s energy efficiency will ensure less criticism and a more favorable regulatory environment.
  • Low energy demand from the crypto industry will help lower energy prices by cutting energy demand.

The good thing is that given the crucial need for low-energy cryptos, the crypto industry is moving towards more sustainable solutions like low-energy crypto mining, and eco-friendly crypto ecosystems. Investors have also become more conscious of asking what is the environmental impact of a crypto platform before investing in crypto. Overall, a shift towards cleaner and greener crypto is beneficial for all stakeholders - investors, developers, and end-users. Don't forget to check our main page where we have a list of articles about the best bonuses for crypto casinos online available.

7. Low energy cryptocurrencies - FAQs

7.1 🌿 Which consensus mechanism is more energy efficient - PoS or PoW?

Since the PoS consensus mechanism does not involve mining, it’s much more energy efficient than PoW.

7.2 🌿 What are some leading cryptocurrencies based on the PoS consensus mechanism?

Some of the PoS-based cryptos are Ethereum (ETH), Cardano (ADA), and Avalanche (AVAX).

7.3 🌿 What are some of the best low-energy cryptocurrencies?

There are many cryptocurrencies like Ethereum (ETH) and Avalanche (AVAX) with an increasingly energy-efficient ecosystem. This post on low-energy cryptocurrencies mentions the top 10 cryptocurrencies with ultra-low energy needs.

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Comments (2)
Polly the dragon
Polly the dragon 3 months ago
I would recommend looking into more of the PoS chains for crpto that uses <1% Less energy than Bitcoin
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