Can blockchain be good for the climate? 🗻

Can blockchain be good for the climate? 🗻
Photo by Paul Earle

Those working in climate often associate blockchain with the excessive amounts of energy used by Bitcoin. Indeed, this issue continues to steal headlines and railroad conversations about the potential of blockchain to unlock new solutions for climate action.

There is however growing support for blockchain solutions amongst key global institutions. For example, the World Bank identify blockchain as key in developing effective climate markets, helping tackle issues of integrity, transparency, inclusiveness, cost effectiveness and scalability.

This post explores issues associated with blockchain energy use and how they can be overcome, enabling climate action and blockchain go hand-in-hand. We cover:

  • Why Bitcoin uses so much power ⚡
  • Low carbon blockchains 💚
  • Bringing climate action on-chain: Polygon and Celo 💡

Enjoy! 🌞

Why Bitcoin uses so much power ⚡

In a nutshell, a blockchain is a growing record of online data documented in blocks. The idea emerged back in 1991 as a way to timestamp digital documents. It wasn’t until 2008 when Satoshi Nakamoto’s anonymous white paper applied it to developing a decentralised, electronic cash system that the first blockchain application emerged- Bitcoin.

Being the first and most well known project to date, Bitcoin has caused blockchain to be associated with a speculative cryptocurrency that uses a large amount of power. Indeed, there's no denying that the Bitcoin blockchain is energy intensive. Estimates by Cambridge University place its electricity use at 94.5 terra-watt hours a year- equivalent to more than the annual electricity use of Portugal, Chile or Belgium. Total electricity consumption by Bitcoin continued to grow to over 360 TWh.

Total Bitcoin electricity consumption

Bitcoin uses so much energy as it uses a process called Proof of Work (PoW) to add blocks of data to its blockchain. This involves computers working in competition to solve a mathematical puzzle, known as mining. As more blocks are added, the puzzle becomes harder and so requires more and more computing power to solve over time.

It’s this activity that enables Bitcoin, which isn’t backed by any central bank or government, to be considered a trustworthy asset. Essentially, it’s too expensive to hack or defraud the blockchain network on which it’s based.

There are arguments that while the electricity use of Bitcoin mining is high, the industry is a leader in using low-carbon energy to meet its needs. For example, the Bitcoin Mining Council claim that mining uses 59.5% sustainable energy, comprised of hydroelectric, wind, solar, nuclear and geothermal power. Indeed, projects are emerging that enable mining to be powered 100% by renewables, such as Soluna in Morocco and Genesis Mining in Iceland.

There are also arguments that Bitcoin mining could act as a market to improve grid efficiency, by utilising curtailed renewables or waste flare gas that currently go unutilised, as well as creating renewables demand in new markets. The Crypto Climate Accord represents a consortium of organizations seeking to take these more sustainable approaches wherever possible.‌

Opportunities for Bitcoin mining to improve current grid efficiency

While Bitcoin is by far the most energy hungry blockchain and so captures the majority of media interest, Ethereum, the second largest blockchain project focused on smart-contract development, also uses PoW. As demonstrated by the diagram below, while requiring substantially less electricity per transaction than Bitcoin, it still uses a Leaning Tower of Pisa equivalent- not unsizable!‌

Imagining energy required per network transaction as building height

Low carbon options 💚

Beyond Bitcoin and Ethereum, there are MANY other blockchain networks and projects that use less energy by not using PoW to validate new blocks of data added to their chains.

One of the most popular alternative approaches is that of Proof of Stake (PoS). PoS works by randomly selecting one computer to forge the next block in a blockchain, as opposed to requiring them to compete. While this is slightly less secure than a fully decentralised PoW approach, PoS provides a more scalable blockchain with higher transaction throughput and most importantly does not require energy intensive mining to operate.

Indeed, a recent study by the Crypto Carbon Ratings Institute explored the differences in energy consumption by six of the top PoS networks: Polkadot, Tezos, Avalanche, Algorand, Cardano and Solana. Findings demonstrated that PoS networks consume just 0.001% of the electricity required by the Bitcoin network, with the Polkadot network using 70,237 kWh/ year versus Bitcoin's 89,780,000,000.

Indeed, Ethereum is expected to complete a long-awaited PoS upgrade called ‘the Merge’ on 15 September 2022. This will reduce the network’s carbon footprint by 99.95%, transforming it’s impact per transaction from that of the Leaning Tower of Pisa to a screw… 👇 This represents an ongoing trend toward blockchain organisations taking responsibility for their environmental impact.

Energy per transaction for ETH on PoS shrinks to the size of a screw...

Bringing climate action on-chain: Polygon and Celo 💡

Toucan Protocol is currently deployed on two PoS blockchains: Polygon and Celo. These chains were selected due to their dedication to low carbon operation and have attracted multiple other regenerative projects including MOSS, Nori Carbon Removal Marketplace, KlimaDAO and Flow Carbon.

Polygon sits on top of Ethereum, created to help the network scale and drive its mass adoption. While operation of the PoS Polygon chain produces very low emissions, as it interacts with Ethereum’s PoW operations, to date it has produced 104,794 tonnes of carbon dioxide.‌

In April 2022, Polygon released a Green Manifesto, in which it pledged $20 million to becoming carbon-negative by the end of 2022. Working with Offsetra and the Crypto Carbon Ratings Institute (CCRI), Polygon assessed and audited its carbon footprint. $400,000 was then pledged to offsetting all historic emissions via four selectively redeemed projects from Toucan’s BCT pool.

Once the Ethereum Merge is complete, each Polygon transaction will reduce to practically zero carbon, preventing the need for future offsets.

Polygon went carbon negative in 2022

Celo is a PoS blockchain on a mission to build a financial system that creates prosperity for all. Its commitment to regenerative values has involved contributing daily carbon offsets through its network protocol since 2020, since enabling it to become carbon negative. Celo has now offset an additional 3,227 tonnes of carbon beyond its operations, the equivalent of 3,351 flights from Los Angeles to Paris.‌‌

Building on these credentials, Celo has additionally created the Climate Collective, a group of climate conscious projects working to accelerate low carbon blockchain development; and the recent #ReFiSummer campaign, encouraging developers interested in sustainable outcomes to build on the Celo blockchain.

Celo are encouraging regenerative projects to build on their blockchain


While the impact of Bitcoin cannot be ignored, it is important to recognise that the majority of blockchains do not operate using energy intensive, PoW mining.

PoS blockchains dramatically reduce electricity usage and are growing in popularity due to their higher environmental credentials. These chains enable developers to build projects that actively combat climate change while having a low impact on the climate via their operation.

It is therefore possible for blockchain to be good for the climate, creating exciting and scalable new opportunities for climate action and innovation.

Check out more awesome web3 projects embedding low carbon practices here 💚

What is Toucan?
Toucan is building the technology to bring the world's supply of carbon credits onto energy-efficient blockchains and turn them into tokens that anyone can use. This paves the way for a more efficient and scalable global carbon market.