Blockchain and Environmental Impact
Blog 30/05/2022

Blockchain and Environmental Impact

The environmental impact of Bitcoin blockchains can be really high, but there are green cryptocurrencies


The environmental impact of Bitcoin blockchains can be really high: this the “fault” of mining based on proof-of-work, which involves energy expenditure and CO2 emissions at stratospheric levels.

However, most of the latest generation cryptocurrencies are abandoning this system in favour of other more eco-sustainable ones, with the aim of creating a green and ecological virtual currency.

Blockchain and Bitcoin, what are they for and what are the advantages

What are Blockchain and Bitcoin for?

Bitcoin was born as a cryptographic virtual currency which allows users to carry out peer-to-peer transactions without the need for intermediaries and that are not subject to authorisation or control by any central authority; the legitimacy of the transactions is provided by the network itself.

Blockchain, according to the definition of the Digital Innovation Observatories of the School of Management at the Politecnico di Milano, "exploits the characteristics of a computer network of nodes and allows to manage and update, in a univocal and secure way, a ledger containing data and information (for example transactions) in an open, shared and distributed manner without the need for a central control and verification entity”.

Operationally, Blockchain is a technology that is based on a distributed ledger, which can be managed thanks to the collaboration of the Network participants, responding primarily to the need for disintermediation and decentralisation: in a system of this type, banks, financial institutions, notaries etc potentially no longer have any purpose.     

In addition to this, the advantages of Blockchain technology also include the traceability of transfers, transparency and verifiability, the immutability of the ledger and the programmability of the transfers.

Brief history of cryptocurrencies, between media hype, Crypto Winter and new rise

After their birth, cryptocurrencies experienced a sensational media hype that began to decline in 2018, when a collapse in capitalisation led to the so-called ‘Crypto Winter’.

In particular, three fundamental factors intervened to undermine the stability of cryptocurrencies:

  1. the risk of becoming an easy tool for financial speculation,
  2. the slowness of the transactions,
  3. the too high consumption of energy during mining, that is, occurring during the validation process of the Bitcoin network.

A relatively short 'winter', if we consider that during 2021 cryptocurrencies began flying again: the company ChainAnalysis has in fact highlighted how between the end of 2019 and mid-2021, the use of cryptocurrencies increased by +2500%.

On the other hand, the technology underlying cryptocurrencies has never known down phases: indeed, the blockchain is not onlycontinuously evolving, but more and more companies are observing it with interest and attention, acknowledging one of the most revolutionary technologies of recent years.


Where are Bitcoins/cryptocurrencies stored?


Bitcoins are a virtual currency, as such not issued by any central bank (a mechanism that was questioned in the G7 in Washington in October 2021, during which there was talk of a Central Bank Digital Currency, that is, the possibility that central banks could issue cryptocurrencies was addressed).

In any case, there are shared databases within which Bitcoins are stored and which, thanks to cryptographic systems, keep track of transactions, generate new currency and attribute this to the owners.

These Cryptocurrencies are then stored in a virtual wallet and saved in a specific wallet which is associated with a private key that allows the owner of the address to control his/her own 'account', as well as to receive and make payments and carry out transactions.

There are many types of wallets, with different characteristics depending on the needs of the holder; just to name a few, there are the full wallet, the lightweight wallet, the hardware wallet, the paper wallet, the hot wallet and cold wallet, the HD wallet, the SPV wallet.

Why do cryptocurrencies pollute?

Why do cryptocurrencies pollute?

Despite being virtual currencies, cryptocurrencies have a really significant impact on the environment: recent analyses have revealed that the average energy consumption for a single Bitcoin transaction in 2022 could amount to several hundred thousand VISA card transactions (

But how do cryptocurrencies pollute? The cause of their environmental impact is to be found in the 'mining' (extraction) process, through which the so-called 'Miners' - we are talking about out-and-out factories specialised in this sector - 'mine' Bitcoins from high-powered computers connected to the blockchain.

The computers take part in a sort of computational race, continuously trying to solve complex mathematical calculations: whichever one wins the race gets Bitcoins in exchange.

The processors of these machines consume enormous amounts of energy and in particular of fossil fuels which, as we know, are an important source of electricity generation.


Artist: DesignGeo

How much does a Blockchain pollute and what is its environmental impact

The technology behind the Bitcoin blockchain is defined as ‘proof-of-work’: as we have seen, its operation is based on the need to use ever more powerful computers to increase the odds of winning the race.

The energy impact of this technology is therefore devastating. Numerous studies have in fact shown that the carbon emissions generated in the mining process equal the quantities of entire nations, such as New Zealand and Argentina.

In February of this year, a paper by the Bank of Italy found that the blockchain behind Bitcoins consumes a truly impressive amount of energy, with an impact on CO2 emissions 40,000 times higher than, for example, the 'instant' payment system adopted by the ECB for the euro (TIPS, Target instant payment settlement).

However, as we will see shortly, not all blockchains pollute in the same way, and it is possible to speak of eco-sustainability in this case too.

In search of less energy-hungry cryptocurrencies

If the ethical and environmental considerations were not enough to highlight the problem of the enormous energy expenditure of cryptocurrencies, in May 2021 a simple Tweet opened Pandora's box.

Elon Musk, the founder of Tesla who has over 90 million followers on the social network and who just a few months earlier had invested 1.5 billion dollars in Bitcoins, announced that Tesla would no longer accept payments in Bitcoin due to the excessive energy consumption necessary for mining the cryptocurrencies, with related repercussions on the environment.

This statement was followed by an immediate collapse of Bitcoins of over 10%.

A few months earlier, Bill Gates, founder of Microsoft, had also highlighted the negative impact of Bitcoin mining on the environment.

In short, a growing sensitivity by operators concerning the environmental issue and the actually impressive numbers of the environmental cost of mining, have meant that some cryptocurrencies are trying to reinvent their operating protocols and to implement the use of renewable energy.

From proof-of-work to proof-of-stake

As we have seen, the proof-of-work technology, at the basis of cryptocurrencies such as Bitcoin, is the most wasteful and polluting from an energy point of view.

A change in the operating protocol of the mining can generate large savings in energy terms: the system to aim for is, for example, the ‘ proof-of-stake’ one, which does not reward the computational race but envisages that the nodes taking part in the blockchain should be randomly selected.

A blockchain based on proof-of-stake in fact consumes a significantly lower amount of energy: for each transaction, this mechanism requires less than 1% of the energy used by Bitcoins.

Ethereum for example, the second most widespread cryptocurrency in the world after Bitcoin, is making the transition from the proof-of-work system to the proof-of-stake one, and in general, there are several alternative cryptocurrencies to Bitcoin that use this system to validate their transactions.

Not just proof-of-stake, however: over time other systems have been developed that aim at reducing the impact on the environment, such as the proof-of-history used by Solana

What are green cryptocurrencies?

They are those that are characterised by low energy consumption, whose operation is based mainly on renewable sources and which are capable of not producing waste.

The green, or eco-friendly cryptocurrencies are those that belong to two macro-families: those with low consumption, which offer the services of a classic blockchain but with low energy consumption, and cryptocurrencies born with eco-friendly purposes.

The website, an online magazine entirely dedicated to the world of cryptocurrencies, has drawn up a list with the 7 best eco-friendly cryptocurrencies:

- Cardano


- Ripple

- Stellar

- Tron

- Eos

- Hedera Hashgraph

Governments with public policies designed to regulate the sector and direct the mining industry towards more sustainable choices will also play an important role in guiding the operator’s attention towards green and eco-friendly cryptocurrencies.