Cardano, Polkadot, and Algorand are the most “environment friendly” cryptocurrencies, a new study by Traders of Crypto revealed. The study evaluated the annual electricity consumption, energy use per transaction, and CO2 emissions of cryptocurrencies.
Cardano (ADA) accounted for 48,851 KWh of energy usage every year, while Algorand (ALGO) consumed 70,237 KWh of energy.
The other Cryptos with lowest energy usage in the top ten include Avalanche (113,249), Flow (180,000), Tezos (489,311), Polkadot (512,671), Stellar (598,755), Terra (790,000), Fantom (1,137,776), and Solana (3,186,000).
In terms of lowest Co2 emissions, Fantom is the most eco-friendly with 7 tons of annual Co2 emission, followed by Terra (20), Stellar (37), Polkadot (50), Tezos (80), Ripple (300), Avalanche (340), Algorand (360), Cardano (400), and Polygon (700).
IOTA was found to be the most energy-efficient cryptocurrency-based on energy use per transaction. The researchers said this was due to IOTA’s innovative distributed ledger technology, called Tangle.
The low energy consumption of these cryptos can be attributed to the proof-of-stake (PoS) consensus mechanism they use. In PoS, validators also known as miners stake their cryptocurrencies to join a network and to validate a transaction, unlike proof-of-work (PoW)-based cryptos such as Bitcoin where miners compete to mine new cryptos to validate transactions.
Mining cryptos requires a lot of computing power which in turn requires large amounts of electricity that is generated using fossil fuels in most countries. It is one of the reasons why crypto mining is often banned by governments when its enormous power consumption begins to threaten the power supply for other economic activities. Some of the popular crypto networks such as Ethereum (ETH) are in the process of shifting from PoW to PoS consensus protocol.
Though China banned crypto mining last year and was successful in bringing down the average monthly hash rate share from 34.3% in June 2021 to 0% in July 2021, a May report by Cambridge Centre for Alternative Finance (CCAF) shows that China’s average monthly hash rate share has gone from 0% in August 2021 to 21.11% this January due to growing underground mining activities.
The European Parliament also briefly wanted to ban certain PoW-based cryptos like Bitcoin to curb their harmful impact on the environment. One of the provisions in the EU’s Markets in Crypto Assets (MiCA) bill proposed a blanket ban on all POW cryptos. Though the bill was passed in March, the clause to ban cryptos was removed in the final draft.