The high energy consumption of cryptocurrency miners has led to changes in the industry, and there are continuing calls for more sustainable practices.
Fedrok AG, a Swiss blockchain startup, is one platform trying to do just that by investing in carbon credits, according to Bitcoinist.
Carbon credits, or carbon offsets, are designed to keep pollution from entering the atmosphere, remove pollution from the air, or produce clean energy. But the market is plagued by ineffectiveness, a lack of transparency, and other problems.
Fedrok and similar businesses are working to ensure sustainability by innovating solutions to make mining less harmful to the environment and, perhaps, communities.
"[Fedrok's] 'Proof of Green' consensus mechanism links blockchain activity directly to real-world environmental impact by tying its native token (FDK) to the price of carbon credits," Bitcoinist reported. "This approach allows combined mining, where miners can simultaneously mine FDK and other cryptocurrencies, such as Bitcoin, without operational disruption. It also lets mining operations verified as using renewable energy sources participate, promoting sustainable practices for energy-intensive PoW blockchains."
PoW blockchains are based on proof of work, in which mining operators verify transactions to create the next block in a blockchain. The miners are rewarded with tokens and digital coins for solving complex puzzles, which requires great computational power.
So, mines gobble up electricity at startling rates. A University of Cambridge tracker shows the industry exceeds the demand of many countries with annual consumption of 180.5 terawatt-hours. Years ago, the rate was 150 tWh, Bitcoinist noted.
"It was an egg on the face for a sector that emerged on values of decentralization and promotion of equity in the financial industry," the online outlet stated.
So, for example, Ethereum moved to a proof-of-stake mining method — and cut its energy consumption almost totally. This helps reduce demand on power grids and pushes the industry toward other more sustainable systems, as dirty energy is still the dominant source of power for miners, just as it is for other industries and most people around the world.
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Fedrok's blockchain legitimizes carbon credits, tracking offsets and monitoring for greenwashing, CEO Philip Blazdell told Coinspeaker. The transparent and scalable market is backed by Swiss regulations and climate action goals, and the hope is to create a standard for environmentally friendly financing as well as improve access to the trade.
"The overall outcome is a standardization of the carbon credit sector while providing incentives for miners to adopt greener practices," Bitcoinist reported. "Having FDK at the heart of this push means that such incentivization benefits all stakeholders. There are also opportunities for scaling this model for various sectors that require standardization over and above the carbon credits market."
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