The most environmentally friendly blockchain networks in 2022

In 2022, the development of green crypto projects continued as more industrial companies focused on sustainability to reduce carbon emissions. A number of elemental forces drove the paradigm shift, including user demands for faster and more energy-efficient blockchains, growing awareness of climate change among investors, and growing government concerns about energy consumption in the crypto sector.

Among the most notable green crypto developments of 2022 was the transition of the Ethereum blockchain from a proof-of-work (PoW) to proof-of-stake (PoS) consensus layer. The merger, completed in September, joined the original execution layer of Ethereum with the new PoS consensus layer, the Beacon Chain. It eliminated the need for energy-intensive mining by making it possible to secure the network using staked Ether (ETH). The conversion instantly reduced the Ethereum network’s energy consumption by 99.9%. Ethereum’s position as a leading programmable blockchain signaled industry-wide progress towards low-carbon solutions.

Mohammed AlKaff AlHashmi, the co-founder of the Islamic Coin cryptocurrency, spoke to Cointelegraph about how the sector is evolving to accommodate new demands.

“In 2022, green projects follow three main vectors. The first is to cut their energy consumption and emissions – such as Ethereum reducing consumption by 99.9% and Polygon presenting itself as carbon neutral. The other is ReFi – a new trend of regenerative finance that experiments with financial incentives to reduce carbon emissions.”

AlHashmi mentioned that his network had adopted a new emissions reduction model to achieve its eco-friendly goals: “In the case of Haqq [the blockchain that issues Islamic Coin]the protocol automatically deposits 10% of the issued amount into a special Evergreen DAO, a non-profit virtual foundation focused on long-term sustainability and community impact.”

Dimitry Mihaylov, scientific director at blockchain gaming metaverse Farcana, told Cointelegraph that reducing emissions and transaction costs on the chain was good for the industry in the long term, as it would attract users, investors and governments.

“Today, a normal bank transaction uses an order of magnitude less electricity than a blockchain-based transaction, but we are investing in the development of more energy-efficient mining equipment and faster blockchain protocols. If successful, ‘green’ crypto projects are likely to receive strong support from both authorities and potential users.”

That said, 2022 saw the emergence of some unique, innovative, eco-friendly cryptocurrency projects that contributed to a greener world.

Chia network

Chia Network takes a unique approach to lower carbon emissions by using a proof-of-space-and-time protocol that differs greatly from early energy-intensive cryptomining mechanisms that require powerful GPUs and processors. The network performs efficient transaction validations, also known as farming, and allocates users’ empty computer storage space to plots.

The process works through a decentralized network of nodes that act as clients and servers that connect to their peers. The low processing power requirements allow anyone with a decent spec computer to use Chia (XCH) tokens.

Related: How to Farm Chia: A Guide to XCH Token Farming Using a Hard Drive

The network relies on farmers providing storage space and then assigns mining privileges to each miner based on randomly generated numbers assigned to each space. The repository whose stored numbers closely match those generated by the network wins mining rights.

This algorithmic formula rewards a larger allocation of random numbers to farmers with the most storage space, creating more chances to win.

XCH can be grown using a variety of infrastructures, including cloud computing and data storage platforms such as Amazon Web Services. Chia Network’s use cases include support for decentralized finance projects, asset tokenization platforms, and decentralized exchanges.

On the energy front, Chia Network claims to use about 0.12% of the annual energy used by the Bitcoin network. Although the concept is inventive, it has drawbacks. Additional demand for hard drives and solid state drives has emerged in countries such as China because mining of XCH wears out hard drives in as little as 40 days.

Despite this drawback, the network has presented opportunities to make money for data storage vendors with unused space and companies with worn but operational data storage hardware that is no longer in active use.

Algorand

The Algorand blockchain network is built with an environmental focus and has made great strides towards becoming carbon negative over the past two years.

In 2021, Algorand partnered with ClimateTrade, a company that uses blockchain technology to help businesses offset their carbon footprints, allowing them to track their emissions in pursuit of broad sustainability goals.

Related: What is the Algorand blockchain and how does it work?

The partnership enabled a portion of Algorand’s transaction fees to be set aside to purchase the necessary carbon credits to offset the network’s carbon footprint. Algorand is a proof-of-stake blockchain, making it more energy efficient than Bitcoin’s (BTC) proof-of-work consensus mechanism.

For perspective, a Bitcoin transaction uses approximately 1,206.52 kilowatt-hours of electricity, while Algorand claims only one transaction consumer approx. 0.000008 kWh of energy.

Solana

Solana is a blockchain platform designed to host decentralized applications. It uses the PoS consensus mechanism to validate transactions and embodies the principles of green token generation. The platform can theoretically process over 60,000 transactions per second. This eclipses the Bitcoin network, which processes seven transactions per second.

Transactions on the chain are settled with SOL (SOL) – the platform’s native cryptocurrency. Since its inception, the network has worked to achieve carbon neutrality, and it reached the milestone for the first time in 2021 by joining a carbon offset program.

Earlier this year, Solana received a favorable carbon rating from the Crypto Carbon Ratings Institute (CCRI) for consuming the lowest energy at a rate of 0.166 watt-hours per transaction.

While many blockchain networks use the energy-efficient PoS consensus mechanism, Solana’s efficiency is enhanced by another new mechanism called proof-of-history (PoH). With PoH, a timestamp creates a historical record to prove that an event occurred at a specific time. The smart, cutting-edge solution allows the network to focus on validating current transactions without having to reference past temporal claims from nodes.

This enables consistency, as nodes must adhere to set transaction order. The process means that the protocol is fast and energy efficient.

Avalanche

Avalanche is a blockchain platform that aims to address the blockchain trilemma of scalability, efficiency and security using its unique proof-of-stake consensus mechanism. The platform uses its native AVAX (AVAX) token to facilitate transactions and distribute system rewards.

Related: What is Avalanche Network (AVAX) and how does it work?

Avalanche has been hailed as one of the most energy efficient chains in 2022. According to a research study by CCRI, the public blockchain Avalanche consumed about 0.0005% of the amount of energy used by the Bitcoin network, which is quite impressive.

These and other high-efficiency properties have made Avalanche the platform of choice for projects with environmental concerns.

The future of eco-friendly crypto projects

Eco-friendly cryptocurrency projects are here to stay. They are designed to be more environmentally sustainable and are becoming increasingly popular with users due to their scalability and lower gas charges.

The benefits they provide are likely to lead to the development of more environmentally friendly blockchains while encouraging the improvement of existing ones. That said, 2022 is on the brink of a new era where green crypto projects become more prevalent.