Blockchain technology has surely made a huge impact and since its application, it has definitely changed the people’s perception towards transaction and banking system. The technology comes at a heavy price. The blockchain technology is based on algorithms that are used to process it further. The process to carry out this function requires a high spec hardware and eats up tremendous amount of energy.
This is carried out using the mechanism of mining. Mining is the mechanism that allows the blockchain to be a decentralized security. It secures the bitcoin system and enables a system without a central authority. On average, a block is mined in every 10 minutes. Miners compete to solve a difficult mathematical problem based on a cryptographic hash algorithm. The solution found is called the Proof-Of-Work. This proof proves that a miner did spend a lot of time and resources to solve the problem. This process of mining requires high energy consumption and this habit could be leading to carbon emission levels that could be interfering with national climate change mitigation obligations.
There is not enough research and data available to be certain about the amount of power mining takes. However, many see blockchain as a way to open up traditionally centralized carbon markets to a wider variety of players — eventually accelerating the shift towards a low carbon worldwide economy.
Many efficiencies and sustainability projects are underway that are focusing on having legislative agreements and compliance mechanisms to slash emissions.
The United Nations announced the Climate Change Coalition (CCC) in January, which is designed to study and research how blockchain can help combat climate change. The members will look into distributed ledger technologies will focus on project related to case studies.
A Blockchain startup for Climate Foundation (BFC) in Canada, is looking to use the blockchain to build a tool that could achieve their objectives. Article 6.2 proposes the idea of a unit carbon impact transfer value, referred to as Internationally Transferred Mitigation Outcomes (IMTOs). The eventual outcome would the crafting of a system that links every nation’s carbon accounts together. The goal for BFC team is to, “support and accelerate this goal,” applying Ethereum to track IMTOs using smart contracts. According to the founder of BFC, the information inside each token would be enough so everyone is clear about the “provenance and eligibility of each tonne of emissions reduction.”
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