Under the title "Blockchain and Cryptocurrencies: 'Solution' or 'Disaster'?", Al-Hurra reported that despite the negative environmental impact of cryptocurrencies, which has been widely discussed recently, the United Nations believes that the underlying technology of blockchain can be of great benefit in combating the climate crisis and achieving a more sustainable global economy, according to a report published on the organization's website.
The negative environmental impact of cryptocurrencies, such as Bitcoin, has been extensively covered in the media in recent weeks and months, especially after Tesla's CEO, Elon Musk, announced last month that his company would stop accepting Bitcoin as a payment method in order to protect the environment due to the high energy consumption involved in mining this digital currency. Musk then appeared to indicate that Tesla was planning to sell its massive holdings of the cryptocurrency, before clarifying that it had not done so, suggesting that his company could accept cryptocurrencies if about half of them were mined using clean energy.
Bitcoin mining is a process that utilizes a significant amount of electricity in giant data centers. The UN report states that Tim Berners-Lee, who is seen as the inventor of the web, described Bitcoin mining as "one of the most senseless ways to use energy." Estimates indicate that the Bitcoin network consumes more energy than many countries, such as Kazakhstan and the Netherlands. Since fossil fuel power plants remain a significant part of the global energy mix, Bitcoin mining is considered "partially responsible" for producing greenhouse gases that contribute to climate change.
Another issue is the amount of energy required for each transaction, which is "massive" compared to the energy consumed by traditional credit card transactions. For example, a single Mastercard transaction consumes 0.0006 kilowatt-hours, while a Bitcoin transaction consumes 980 kilowatt-hours, enough to power an average Canadian home for more than three weeks, according to the report.
**Promising Future**
Despite these issues, UN experts believe that cryptocurrencies and the technology supporting them, blockchain, could play "an important role in sustainable development and improving our management of the environment." Blockchain is a database for digital assets that uses encryption to create transaction records, facilitating transactions and enforcing a form of trust between parties. Because the technology is resistant to tampering and fraud, it can provide a reliable and transparent record of transactions. This is particularly important in areas with weak institutions and high levels of corruption.
The World Food Program has found that this technology can help ensure that funds reach those in dire need. A pilot program in Pakistan showed that the World Food Program was able to transfer cash directly to beneficiaries quickly and securely without the need to go through a local bank. The project was also successfully tested in refugee camps in Jordan, providing reliable records of financial transactions. If this can succeed with refugees, it can also succeed with "other vulnerable and marginalized groups."
Supervisors of a report from the United Nations Environment Program indicate that the technology can enhance the livelihoods of waste collectors. The report suggests that the transparent monitoring system provided by blockchain can accurately track where and how recovered waste is used for recycling, as well as identify those who chose it, ensuring that the right people are rewarded for their efforts.
This technology has also been tested for environmental protection by the UN and other organizations in areas such as preventing illegal fishing, and on the CarbonX platform, which converts reductions in greenhouse gas emissions into cryptocurrency that can be bought and sold. Blockchain can provide a transparent and trustworthy way to demonstrate how countries are taking action to reduce their climate impact. It could become an important part of accelerating the uptake of renewable energy sources like wind and solar, given that these sources are inherently intermittent and decentralized.
**However...**
Despite all these potential benefits, the UN points out that the enormous energy consumption associated with the technology is one of the main obstacles to overcome, and many players in the industry are working to find ways to address this issue. If vulnerable groups are to benefit from the advantages of this technology and if it is to have a positive impact on the climate crisis, more technical research and international dialogue involving experts, scientists, and policymakers are required, according to the UN website.
