One blockchain is making waves as an eco-friendly alternative to traditional crypto mining methods.
Celo is a cryptocurrency that allows people to send money around the world instantly and free of charge, making it a popular choice for people sending remittances to their home countries, as Yahoo Finance reported. It also promises to cause less carbon pollution than its peers in the crypto space.
Cryptocurrencies use a process called mining to produce new coins and verify transactions. Most cryptocurrencies, including Bitcoin, mine coins through “proof of work,” in which huge computers solve complex mathematical equations to generate transaction codes.
These processes use a lot of electricity. Since most electric grids rely on dirty energy sources, they also contribute to planet-warming pollution. One study warned that crypto mining has caused a “substantial carbon footprint and broad environmental repercussions.”
However, Celo mines crypto differently. It relies on “proof of stake,” in which miners validate transactions based on the amount of crypto they have. Because it does not involve the same complex calculations as proof of work, it is far less energy-intensive.
Celo touts itself as a “carbon negative blockchain” that offsets more carbon than it produces. Carbon offsets are controversial because they do not limit the amount of pollution a company causes — instead, they involve companies financing activities that decrease the amount of carbon in the atmosphere, such as reforestation initiatives.
Still, there are other ways for cryptocurrencies to reduce their pollution. For example, mining operations are increasingly relying on clean sources of electricity. Other projects have directly linked crypto transactions to climate action.
“Very simply, the Celo network’s Proof-of-Stake (POS) consensus algorithm naturally requires a tiny fraction of the energy usage of Proof-of-Work (POW) algorithms as used by Bitcoin and Ethereum,” Celo wrote on its blog. “And at capacity, the Celo network could process up to 7 million transactions per ton of CO2 emitted by its infrastructure.”
