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Polkadot and Tezos have been singled out for praise in a recent report into the environmental credentials of layer-1 blockchains. “The Regenerative Finance Movement” report by blockchain analysis firm Messari examines the energy footprint of various PoW and PoS chains and considers the role of carbon offsets within the industry. It notes how many crypto projects are now going green in a bid to enhance their image.
Proof of Stake Networks Up the Ante
Proof of Stake chains already have a low carbon footprint compared to Proof of Work networks such as Bitcoin. This has made PoS layer-1s the preferred choice for environmentally conscious artists looking to release NFTs as well as crypto projects that espouse ESG. In fact, the opprobrium heaped upon major artists who launch their work on Ethereum has prompted some to seek out green chains as an alternative.
British modern artist Damien Hirst, for example, chose to reveal his collection The Currency on the obscure Palm blockchain which is claimed to be “99% more energy efficient than proof of work systems such as Ethereum or Bitcoin.” However, many buyers then elected to bridge their NFTs to Ethereum in order to trade them on OpenSea, which arguably undid the whole point of the exercise.
For environmentally minded artists, the logical solution for launching a green NFT collection is to choose a layer-1 that offers similar features and network effects to Ethereum. This includes smart contract capabilities, an established developer ecosystem, deep liquidity, and an array of third party dApps. By this benchmark, the best candidates are probably Polkadot, Tezos, Avalanche, and Solana. All four networks were highlighted in Messari’s Regenerative Finance report.
Crypto Embraces Green Energy
Messari records Bitcoin’s annual energy consumption as being 89k GWh – roughly equivalent to that of the entire nation of Argentina. Ethereum, meanwhile, comes in at an estimated 17k Gwh, although this number will reduce significantly following the transition to Proof of Stake.
Of the leading PoS chains, the least efficient in terms of energy consumption is Solana, according to Messari, at 1.9 GWh. While multiples less than Ethereum’s footprint, it’s still multiples more than the best in test. With estimated annual energy consumption of 0.1 GWh each, Polkadot and Tezos are the clear winners. That’s just the figure for the energy their consensus mechanisms use, incidentally. As Messari notes,
“Through drastic programming overhauls and funding carbon offset projects, protocols are actively breaking down the stigma that crypto is harming the planet.”
The assertion that Bitcoin is environmentally harmful has long been contentious and deeply polarising. Its defenders believe that bitcoin miners are incentivized to use renewables and to capture energy that would otherwise go to waste such as flared gas. Regardless, the growth of green PoS chains can only be a good thing, giving crypto detractors one less stick with which to beat the industry.
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