A Guide to Greener Operations for Blockchain Projects

11 Apr 2022 by Datacenters.com Cryptocurrency

There’s no denying that blockchain technology is on the rise. From cryptocurrencies and non-fungible tokens(NFTs) to financial protocols and decentralized autonomous organizations (DAOs), blockchain is infiltrating and taking over many areas of the modern economy.

Unfortunately, that growth is accompanied by a sharp uptick in public backlash. Concerns surrounding the environmental aspects of this technology are mounting by the day. Bitcoin, the most popular blockchain network, alone is responsible for enough electricity consumption to power some European nations.

The good news is that most of these negative aspects can be tackled through two primary measures.

Carbon Offsetting Initiatives

Greener blockchains are the need of the hour. Innovators in this space are finally taking note of the rising public demand for eco-friendly initiatives.

Given the complexities involved in completely restructuring a project to lower its carbon footprint, many blockchain projects are looking toward carbon offsetting as a reliable solution.

Carbon offsetting is when a business contributes to emissions projects like reforestation drives by buying credits from a broker. In the world of decentralized finance, this is being done through the acquisition of crypto tokens that act as a decentralized version of those brokers from the traditional finance world.

Most blockchain projects implement carbon offsetting by enforcing a carbon tax on all transactions within their network. In other words, a fraction of all transaction fees is diverted towards carbon offsetting efforts.

Technological Improvements

While carbon offsetting is a great start, many people argue that it’s not the end-all solution. Like a bandaid, it can help improve the issue at hand but it can’t treat the underlying problem.

This is where technological restructures come in. Many novel blockchain models are completely reshaping the way this technology operates by reimagining it through the lens of environmental impact and performance too.

Proof-of-Stake Blockchains

For instance, the world is slowly but surely moving away from the proof-of-work (PoS) model. That’s because PoW requires all network participants to solve complex cryptographic puzzles, a process that takes extreme amounts of computing power to execute.

Furthermore, each successful solution leads to an uptick in the complexity of the next cryptographic puzzle, which is why the power consumption of popular networks like Bitcoin is rising exponentially.

This is where newer models of operation can make a massive difference. Proof-of-Stake (PoS), for instance, has the potential to cut the electricity and raw computing requirements of blockchain to a fraction of one percent of what PoW requires.

This is why the creators of Ethereum, the most popular blockchain for decentralized applications, are working hard to shift their network from PoW to the PoS model. Once this transformation is completed successfully, blockchain and the surrounding decentralized finance sector will become a lot friendlier for the environment.

Combined with carbon offsetting initiatives, it is possible that many future projects built on these emerging models will develop a net negative carbon footprint.

That being said, there are already multiple blockchains available that operate on a PoS model, including:




Layer-2 Solutions
Another avenue for blockchain projects to minimize their carbon footprint without moving to less popular blockchains is Layer-2 solutions. For instance, Matic is one such solution that handles all transactions through its own PoS network before settling all data on the Ethereum blockchain later.

These solutions can help your project offer blazing fast and incredibly affordable transactions while minimizing the carbon footprint at the same time.


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