“It is critical for the future, at scale, adoption of blockchain technology that our innovation doesn’t have the drag of wasteful, high energy consumption for computation/consensus and the negative environmental impact of a large carbon footprint.” — Algorand Foundation
Green tokens, or green cryptocurrencies, were born out of a need to find sustainable alternatives to mining cryptocurrency. The massive energy requirements of mining Bitcoin and other proof-of-work cryptocurrencies have reached a point of saturation, and excessive greenhouse gas emissions from cryptocurrency mining now threaten the very intent of digital currencies: to provide a sustainable, accessible and equitable alternative to traditional currencies.
Research shows that Bitcoin has emitted 200 million tons of carbon dioxide since its launch, creating the equivalent of some countries’ annual output. On the other hand, green tokens are designed to minimize or even eliminate these emissions. They use proof-of-stake algorithms, which require much less energy than traditional mining processes and often come with incentives for tokenholders to purchase renewable energy.
Alongside the increasing awareness of cryptocurrency’s severe environmental impact, some are pushing cryptocurrency initiatives to rethink their infrastructures. Blockchain projects are migrating to less power-consuming validation systems or exploring renewable energy-based mining in the face of these events. Some of the existing green tokens include Algorand’s ALGO, Chia, Solana’s SOL and Tezos’ XTZ, whose blockchains all have incredibly low C02 emissions.
Algorand celebrated its increased commitment to featuring a sustainable cryptocurrency by blacking out 20 billboards in Times Square during Earth Day 2022. The blockchain also announced its commitment to being not just carbon-neutral but carbon-negative. To achieve carbon negativity, Algorand developed a smart contract that will neutralize each transaction’s carbon footprint without requiring user action. It has also dedicated a portion of network fees for purchasing carbon credits via ClimateTrade.
The Bitcoin Mining Council also released a survey early in Q2 of 2022 revealing that while still not completely sustainable, Bitcoin is increasingly becoming greener, with 66.8% of miners now using sustainable energy sources for mining the cryptocurrency.
Another notable achievement in 2022 with regard to green cryptocurrency is the Merge, which officially allowed Ethereum to transition from PoW to PoS by merging the network’s mainnet with its previously separate consensus layer, the Beacon Chain. The Merge effectively reduced Ethereum’s overall energy consumption by 99.95% and decommissioned PoW.
Several promising green cryptocurrencies and projects have cropped up and are ripe for launch in 2023, such as C+Charge, which offers carbon credits as rewards, and Dash 2 Trade, a low-carbon social trading platform that offers crypto analytics on cryptocurrency projects.
Already launched green token projects that are expected to continue down the green path in 2023 include IMPT, a carbon offset protocol that offers carbon credits that can later be minted into NFTs; Chia, a unique protocol that uses proof-of-space-and-time; and Tamadoge, a play-to-earn green token that allows users to collect rare virtual pets. Some in the crypto community also suggest that some existing green tokens will be recognized for their eco-friendly approach in 2023, given the renewed global focus on sustainability. This includes tokens such as Avalanche’s AVAX, Flow, Polygon’s MATIC, Polkadot’s DOT and Cardano’s ADA.
