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Is Blockchain Good or Bad for the Environment?

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Blockchain uses vast amounts of energy, but it has the potential to save vast amounts of energy, too. We examine the positive and negative effects of blockchain on the environment.

At the dawn of the Industrial Revolution, humanity faced one of the biggest dilemmas of its entire history for the first time: Are the benefits brought by technology advancement worth the environmental damages it causes? This quandary has eventually become the mainstay of our current age, as humanity has grown more and more dependent on its newest technologies. Back then, electricity and fossil fuels reshaped the world we lived in, while today, in less than two decades, interconnectivity has forever changed the way we think and live.

Blockchain technology is among the most controversial inventions brought by the Digital Revolution. Its vast potential is still largely untapped, with way too much attention focused on mining cryptocurrencies rather than using it for more… enlightened purposes. The immense amounts of energy required to fuel mining made blockchain become the villain in the never-ending struggle of technology vs. nature. However, a few brilliant minds have devised some curious and interesting solutions to use this technology for a better planet as well. Let's have a look at some of the pros and cons to the blockchain technology and its environmental impact. (To learn more about cryptocurrency, check out Are Cryptocurrencies the True Future of the World's Economy?)

Mining and Its Implications

Mining generates a lot of electricity, actually equal to more than 20 European states combined. The mining network is powered by countless, incredibly potent computers that need a lot of energy to make their encryption efforts profitable. Electricity represents 90 percent of the cost to mine cryptocoins, and all this "computer brain power" needed keeps increasing, to the point that today crypto mining accounts for nearly 1 percent of the global energy consumption. Sounds ominous, doesn't it? Well, actually things are not as terrible as they seem.

With the exception of China, almost 80 percent of this energy, in fact, comes from renewable energy sources produced in "green factories" across the United States and Europe. Since blockchain is a new source of profit that can be claimed by virtually anyone, many "lesser players" on the global scene have jumped on the bandwagon. Mining has created a race to innovate within the energy sector, with old power plants in Africa being reopened, windmills popping up everywhere, salt water being used to create energy, and so on. Much of this green energy would be wasted if left unutilized since you can't turn down wind, solar energy or a waterfalls when the energy demand is reduced. The energy that powers cryptocurrency mining farms largely comes from a surplus of energy that many nations don't know how to unload. We just found a smart way to use something that would otherwise be wasted.

Efficient Energy Consumption

Efficient energy consumption is much more important than decreased energy consumption. Even if we ignore the additional burden on the world's energy grids brought by crypto mining, consumption levels will grow by 28 percent in the next two decades no matter what. Humanity needs more energy, it's just that simple. Instead of demonizing this new 1 percent that made its appearance in 2017, we should focus on the remaining 99 percent, and figure out how to produce it more efficiently and with a reduced environmental impact.

And here blockchain and decentralization come to our rescue. A new blockchain-based energy grid known as Eloncity has been proposed as a futuristic and innovative solution to improve the efficiency of the system. The idea is to move away from the uneconomical and cumbersome centralized power supply, to a much more efficient and intelligent energy storage system based on a network of smart microgrids. The centralized power supply mode is plagued by substantial energy distribution and service costs that largely surpass the cost of energy itself. Regional small grids and local decentralized renewable power supplies have been tested across the globe as a new solution to reconstruct the value of energy. Energy resources are optimized and integrated dynamically to maximize the utilization of resources, help consumers manage their own electricity usage habits, adjust their consumption according to the change of energy prices, and store energy surplus.


Improving Supply Chain Management

When Volkswagen's fuel emission scandal emerged in 2015, it wasn't the first, nor the last time that corporate social responsibility drew the attention of the media. The health of entire countries as well as the environmental stability of large regions has been jeopardized by outbreaks of serious hazards such as the toxic insecticides found in food products in South Korea and Europe. Current supply chain management systems are not able to adequately monitor all the stages of the supply chain to understand when the problem occurs, and how to manage it. Also, each supply chain management system is customized to the needs of each corporation, lacking the flexibility and transparency to be monitored by neutral third parties. (For more on supply chain management, see Big Data: Logistically Speaking.)

What if we could prevent this using IoT sensors and blockchain technology by tracking the supply during each step? Whether it's for cars, medicine, or textiles, a new blockchain-based solution is being offered by TEMCO. Their proposed technology goes beyond supply chain management and transparency, and brings to the table an innovative way to analyze the supply chain's efficiency and reduce alternative costs – both organizational and environmental. The use of smart contracts within all stages of the supply chain process will provide real-time information to consumers about the reliability of its management standards. Everyone will be connected, from manufacturers, to warehouses, transport companies, distributors, up to end consumers. As a matter of fact, increased transparency is bound to make companies more accountable for the environmental impact of their choices as well as their carbon footprint. A similar solution is the one proposed by Waltonchain, which uses RFID (radio-frequency identification) tags to track products during every step and store physical items on-chain.


Fortunately enough, blockchain technology seems to provide a positive solution to one of humanity's longstanding problems: environmental damage. Not only is it much more sustainable than it was initially thought, but it has become a driving force toward the use of healthier and greener energy sources. It can bring efficiency to the table, helping humans solve some of its problems with other new technologies, and lessen their environmental impact.


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Claudio Buttice
Data Analyst
Claudio Buttice
Data Analyst

Dr. Claudio Butticè, Pharm.D., is a former Pharmacy Director who worked for several large public hospitals in Southern Italy, as well as for the humanitarian NGO Emergency. He is now an accomplished book author who has written on topics such as medicine, technology, world poverty, human rights, and science for publishers such as SAGE Publishing, Bloomsbury Publishing, and Mission Bell Media. His latest books are "Universal Health Care" (2019) and "What You Need to Know about Headaches" (2022).A data analyst and freelance journalist as well, many of his articles have been published in magazines such as Cracked, The Elephant, Digital…