Recent discussions have focused on the environmental sustainability of blockchain technology and digital currencies, with critics quickly highlighting their potentially damaging impacts. Often these topics are out of context or without reference to the negative externalities that other financial services in the global economy have on the environment. At the same time, some of the most innovative solutions to environmental problems are rooted in blockchain technology; however, they are constantly neglected or misunderstood. Now, blockchain-based solutions are starting to be implemented that have the potential to reinvent the way clean energy is organized and produced.
New business models
As technology improves and devices become "smarter" in terms of their ability to monitor and transmit data, more precise measurements of clean energy production and carbon-based emissions can be achieved. A blockchain-based ecosystem can connect the recorded data to a digital token and quantify the energy created in a digitally transmissible form. This would involve connecting a blockchain to a windmill or solar farm and integrating the data streams collected in the distributed network.
This energy tokenization allows an unprecedented level of transparency in those who produce or emit the cleanest energy possible and carbon emissions, determining new business models and incentives between companies and governments. For example, governments could grant tax exemptions or credits in exchange for digital tokens linked to clean energy production, encouraging companies to use clean energy. Using distributed ledger technology, data becomes quantifiable and proof of production becomes reality.
Management of natural resources
Blockchain also makes it possible to make the extraction of natural resources, public land management and pollution levels easily visible to citizens and city officials. By registering the ownership of resources on a blockchain, the amount of resources extracted from the land at a given time, or the levels of air and water pollution can be integrated into a single, secure data stream that can be made visible to any interested party.
For city officials, this can improve the way in which resources are managed and for citizens it can offer the opportunity to make more educated or environmentally-friendly decisions. In the meantime, large-scale projects involving land registers and industrial resource extraction can be accurately measured and controlled to verify that no resources have been unduly extracted or that all legal restrictions on particular resources have been observed. and geographical areas.
Proactive decision-making process
Overall, blockchain offers the ability to digitize and monitor the production and consumption of clean energy so you can make more proactive decisions and create more sustainable and sustainable energy initiatives. With the arrival of a new digital age, blockchain-based solutions geared to clean energy management must be automated through intelligent contracts, with additional decision-making processes made from artificially intelligent and "big data" machines. In many ways, the tip of the iceberg has just been discovered.
Do not compare apples with apples
In light of these possibilities, there are now some factors to take into consideration regarding the overall environmental sustainability of blockchain-based ecosystems. The high amount of energy consumed on the Bitcoin network refers to the infrastructure of an entire decentralized payment ecosystem.
The experts erroneously compare this number with the energy cost of a single transaction in traditional finance, but the actual comparison must be made at a structural level for the current global system of payments of centralized banks, servers and ATMs. When the two payment systems are compared, it is clear that the physical and digital infrastructure of banks and servers all over the world requires more energy.
More importantly, the energy consumption of Bitcoin is due to its work acceptance consent mechanism. As many experts have noted (these include Ambrosus Solutions Architect, Professor Roger Wattenhofer), there was a clear shift from Proof-of-Work models to more efficient and less energy-consuming mechanisms. The true value of a technology or a system – especially as regards its environmental sustainability – must be considered in the light of its function and the effect it promises. Blockchain, as an original and widely applicable technology of general purpose, is nothing short of revolutionary in its ability to bring reliable, transparent and accessible data to environmental sustainability issues.
By Angel Versetti, CEO and global founder, Ambrosus