Updated: May 12
Any new year starts with good intentions or even better with a good plan. Here are five easily achievable, impactful ideas for an environmentally conscious approach to cryptocurrencies. 2022, here we come!
Let's start with the obvious. If you want to hold environmentally friendly cryptos, you should pay close attention to the energy component. A good reference point is the energy consumption per transcation. Our calculations have shown that there are huge differences between coins. Bitcoin, for example, consumes over 700-kilowatt hours per transaction, while Cardano only requires around 0.5 kWh. It is thus worth taking a deeper look at your coin of interest.
This leads us to the second point: the Consensus algorithm. We've said it before, we'll say it again: cryptocurrencies based on the Proof of Stake (PoS) system are much more energy-efficient than Proof of Work (PoW) systems because they don't require additional energy to prove trustworthiness. Those who consider the ecological footprint a relevant factor when compiling their crypto portfolio should therefore focus on PoS coins as a rule of thumb.
However, if you plan to play the sustainable game in the long run, you need to consider not only environmental components but understand that sustainability consists of several dimensions. Enter ESG! The abbreviation stands for Environmental, Social, and Governance and has become an industry-standard in the traditional financial world. Today, interest in ESG assessments is still low in the crypto sphere but this is likely to change in the next few years.
So sustainable considerations are likely to have a lasting impact on the world of cryptos. To make the topic accessible to everyone, we need to create a common understanding of what it entails. Let's use this opportunity to create transparency: Whether in chat posts, social media messages, blog articles, or simply in private conversations - share your knowledge and resources with others and help to put sustainability on the common agenda.
Last but not least, it is important to continuously educate yourself and keep up with changes in the market. Admittedly, this is not always possible at the pace that is being set today. That's why we make it easy for you: We regularly publish new ESG ratings on cryptocurrencies and are happy if you follow along, constructive feedback and questions included!
Now, have fun with your resolutions, and let us know how you get on.
Happy New Year!
Disclaimer: Please note that this blog is intended for your entertainment and does not constitute financial advice.