The high energy consumption of cryptocurrency miners has led to changes in the industry, and there are constant calls for more sustainable practices.
Fedrok AG, a Swiss blockchain startup, is a platform that is trying to do just that by investing in carbon credits, according to Bitcoinist.
Carbon credits, or carbon offsets, are designed to prevent pollution from entering the atmosphere, eliminate air pollution, or produce clean energy. But the market suffers from inefficiency, a lack of transparency and other problems.
Fedrok and similar companies are working to ensure sustainability by innovating solutions to make mining less harmful to the environment and, perhaps, to communities.
“(Fedrok’s) ‘Proof of Green’ consensus mechanism directly connects blockchain activity to real-world environmental impact by tying its native token (FDK) to the price of carbon credits,” Bitcoinist reported. “This approach allows for combined mining, where miners can simultaneously mine FDK and other cryptocurrencies, such as Bitcoin, without operational interruption. It also allows participation in mining operations verified as using renewable energy sources, thereby 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. Miners are rewarded with digital tokens and coins for solving complex puzzles, which requires a lot of computing power.
So mines consume electricity at frightening rates. A University of Cambridge tracker shows the industry exceeds demand in many countries with annual consumption of 180.5 terawatt hours. Years ago, the rate was 150 tWh, Bitcoinist noted.
“It was egg on the face for a sector that emerged on the values of decentralization and promoting fairness in the financial sector,” the online media outlet said.
So, for example, Ethereum adopted a proof-of-stake mining method – and almost completely reduced its energy consumption. This helps reduce demand on power grids and pushes the industry toward other, more sustainable systems, as dirty energy remains the dominant energy source for miners, just as it does for other industries and for most people in the world.
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Fedrok’s blockchain legitimizes carbon credits, tracks offsets and monitors greenwashing, CEO Philip Blazdell told Coinspeaker. The transparent and scalable market is supported 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 trade.
“The overall result is a standardization of the carbon credits industry while incentivizing miners to adopt greener practices,” Bitcoinist reported. “Having FDK at the heart of this initiative means that such an incentive benefits all stakeholders. There are also opportunities to extend this model to various sectors that require standardization beyond the carbon credit market. »
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