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Blockchain’s environmental impact and how it can be used for carbon removal

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Blockchain’s environmental impact and how it can be used for carbon removal

Climate change has become an important issue over the years due to concerns over environmental changes caused by the emission of greenhouse gasses into the atmosphere. Conversations have even reached the crypto space, and blockchain technology is being considered a potential tool to reduce carbon emissions.

Cryptocurrencies like Bitcoin (BTC) and Ether (ETH) that use the proof-of-work (PoW) mining algorithm have come under scrutiny due to their alleged energy expenditure. To see where this scrutiny comes from, it first needs to be known how much energy is used when mining PoW cryptocurrencies.

Unfortunately, estimating the amount of energy necessary to mine Bitcoin and other PoW cryptocurrencies cannot be calculated directly. Instead, it can be estimated by looking at the network’s hash rate and the power usage of the mining setups of expensive graphics cards.

Initially, Bitcoin could be mined with a basic computer, but as the network matured, the mining difficulty increased, requiring nodes to use more computing power to mine a new block. Due to the increased power requirements, to mine Bitcoin today, one would need multiple graphics cards as well as cooling systems to stop them from overheating. This is what has led to the high energy usage of PoW networks like Bitcoin and Ethereum.

According to the New York Times, the Bitcoin network uses around 91 terawatt-hours (91 TWh) of electricity annually, which is more energy used than countries like Finland. Other sources put this number at 150 TWh per year, which is more energy than Argentina, a nation of 45 million people.

However, as mentioned earlier, calculating Bitcoin’s energy usage is not a straightforward task, and there have been disagreements about the actual energy usage of the Bitcoin network. For example, Digiconomist claimed that Bitcoin uses 0.82% of the world’s power (204 TWh) while Ethereum uses 0.34% (85 TWh). Ethereum developer Josh Stark disputed the accuracy of these claims and highlighted Digiconomist’s tendencies to place estimations on the higher end while pointing out data from the University of Cambridge that estimated Bitcoin’s actual consumption to be 39% lower (125 TWh).

Additional sources have agreed with Bitcoin’s energy expenditure being on the lower level. The Cambridge Bitcoin Electricity Consumption Index estimates that the Bitcoin network uses 92 TWh of energy per year. A research report by Michel Khazzaka also claims that traditional banking systems use 56 times more energy than Bitcoin.

R. A. Wilson, chief technology officer of 1GCX — a global digital asset and carbon credit exchange — told Cointelegraph, “To say that Bitcoin is ‘bad’ for the environment leaves a number of nuances and important conversations unexplored. It’s true that Bitcoin and other proof-of-work chains do consume larger quantities of energy than blockchains that operate on a proof-of-stake consensus mechanism. However, there are a number of other considerations to take into account when analyzing and understanding the energy consumption of Bitcoin and blockchain in general.”

Recent: How Bitcoin whales make a splash in markets and move prices

“For example, the sheer amount of energy consumed doesn’t directly equate to environmental impact. It is also important to understand where that energy is coming from. Currently, Bitcoin miners use around 55%–65% renewable energy, which is impressive for an industry so relatively young. Comparatively, the sustainable energy mix in the United States is only 30%. Bitcoin can, therefore, continue to incentivize the rise in renewable energy sources within the crypto mining industry and in the U.S. more broadly.”

There may be no clear consensus on the environmental impact of cryptocurrency mining on PoW networks. Still, there has been a push toward using blockchain to become more energy-efficient and improve the environment. As a result, sustainable energy sources for Bitcoin mining have also grown by almost 60% this year. Blockchain is also being used to help remove carbon dioxide and other greenhouse gasses from the atmosphere. In some areas, blockchain technology is being used alongside carbon credits to try to improve the atmosphere.

What are carbon credits?

It is common to see the terms “carbon offset” and “carbon credit” used interchangeably, but they have different meanings. A carbon offset refers to an action that intends to compensate for the emission of greenhouse gasses into the atmosphere. Examples of carbon offsets include planting trees, reforestation and using renewable energy sources instead of fossil fuels. 

A carbon credit permits an organization to produce a certain amount of greenhouse gasses depending on how many credits they own. One carbon credit represents one ton of carbon dioxide or other greenhouse gasses. Organizations receive a set amount of credits, meaning they can only produce a limited amount of greenhouse emissions.

Entities that produce emissions above the limit must purchase more credits, while entities that produce emissions below the limit can sell any leftover credits. The scheme works by providing a financial incentive for polluting entities to produce fewer greenhouse gasses. If their emissions stay below the limit, they can save or make money (by selling credits), while they lose money by producing emissions above the limit.

Wilson believes that blockchain technology can help the carbon offsets industry: “The carbon offsets industry has the potential to scale to a multitrillion-dollar market over the next several years, but it currently suffers from a number of obstacles including fraud and duplication of credits. The immutability and security of blockchain technology can help solve these challenges by ensuring that all records of carbon credit sales are responsibly and accurately tracked.”

“While blockchain technology alone cannot solve these problems in the market, a combination of blockchain and associated infrastructural services such as digital exchanges, a global registry and Anti-Money Laundering/Know Your Customer for purchase, creation and retirement can help to vastly improve existing bottlenecks,” he continued.

How organizations use blockchain to reduce emissions

EarthFund is one platform where users can donate cryptocurrency, mainly Tether (USDT), to different environmentally friendly causes on the platform. The platform also has a decentralized autonomous organization (DAO) and houses a treasury that allows DAO members to decide how the funds are used. Smaller communities within the ecosystem choose which causes get highlighted for donations. Carbon capture and storage, as well as renewable technologies and conservation, are some of the areas that are explored when it comes to improving the environment.

Toucan is another platform that has created tokenized carbon credits, which are crypto tokens backed by real-world carbon offset credits. The carbon offsets are represented on-chain as Base Carbon Tonnes (BCT). In November 2021, Mark Cuban stated that he had bought $50,000 worth of carbon offsets every 10 days and placed them on-chain as BCT.

Traditional organizations and governing bodies have also looked to blockchain technology as a possible solution to reducing carbon emissions. Last year, for example,the United Nations Environment Programme and other governing bodies came together at the Middle East and North Africa Climate Week to look at blockchain’s potential for tackling climate change.

In April 2022, Algorand announced that its blockchain was entirely carbon neutral. This is achieved through its pure proof-of-stake mining algorithm, which doesn’t involve any mining but instead relies on a process where validators are randomly selected to verify the next block.

Recent: Proof-of-work: The Bitcoin artists on minting NFTs and OpenSea

Organizations in the crypto space are looking toward improving the ecosystem through blockchain-tracked donations to carbon removal projects, tokenized carbon credits and carbon-neutral blockchains.

Finally, Ethereum 2.0 is on the horizon, which will see the blockchain network transition from a PoW consensus algorithm to proof-of-stake, as well as some additional changes. PoS does not require mining hardware to validate blocks, drastically reducing its energy consumption. Due to a lower amount of energy being used to power the network, fewer fossil fuels will be burned, reducing the amount of carbon emitted into the atmosphere.

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Bit Coin

4 On-Chain Metrics Show the Bitcoin Price Is Primed for Bullish Explosion

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4 On-Chain Metrics Show the Bitcoin Price Is Primed for Bullish Explosion

Amid recent macroeconomic extremes, Bitcoin has maintained a quiet stance, almost eerie for its HODLers. Nonetheless, its hashrate and accumulation are soaring — what could this mean for its price?

Bitcoin has been consolidating in a narrow range between $18,800 and $20,200 since the mid-Sept price fall. In volatile markets like cryptocurrency, similar quiet periods of consolidation are rare. 

Recent Glassnode findings show that the current BTC price action resembles both pre-crash November 2018 and pre-rally March 2019. Despite price downturns, mining and accumulation statistics are improving. Let’s look into what this means for the health of the network.

Bitcoin hashrate makes new ATH 

Last week, the Bitcoin hashrate made a new all-time high of 242 exahashes per second.

Source: Glassnode

In the chart below, we can see that Bitcoin’s longer-term, slower hash ribbon was once again overtaken by the faster ribbon, indicating improved mining conditions in late August. Since the price saw no major uptick during this time, the rise in hashrate was likely due to more efficient mining hardware and more mining rigs working in general.

Source: Glassnode

Historically, these hash ribbon moving average swaps precede price gains. Historically, when the hash-rate drops and subsequently recovers, major BTC price bottoms have been made. 

Is a price bottom in?

Apart from the hashrate, Bitcoin accumulation levels also reached a 7-year high. CryptoQuant data shows that 6-month-old and older Bitcoins now make up 74% of the realized cap. During the 2019 and 2015 bottoms, this score sat at 70% and 77%, respectively.

Source: CryptoQuant 

Lastly, for the first time in this cycle, the percentage of supply in loss has reached the 50% level.

CryptoQuant data shows that the price bottoms during previous cycles normally occur when the percentage of supply in loss reaches 50% or more.

Source: CryptoQuant

The current data shows the highest percentage of losses at 52% on the daily chart, 50.4% on the weekly (7DMA), and 48% on the monthly (30DMA). 

While quite a few metrics suggest that BTC should be near a bottom, the overall momentum will likely still depend on macroeconomic conditions as well as its correlation with the Nasdaq and S&P 500. 

Disclaimer

All the information contained on our website is published in good faith and for general information purposes only. Any action the reader takes upon the information found on our website is strictly at their own risk.

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Bitcoin price sees first October spike above $20K as daily gains hit 5%

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Bitcoin price sees first October spike above $20K as daily gains hit 5%

BTC price action sees a new October peak amid a declining U.S. dollar and a successful prior day’s trading for U.S. equities.

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Bitcoin price sees first October spike above K as daily gains hit 5%

Bitcoin (BTC) saw its first trip above $20,000 on Oct. 4 as traders expected familiar resistance to cap gains.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingView

Multi-week dollar lows fuel Bitcoin bulls

Data from Cointelegraph Markets Pro and TradingView showed BTC/United States dollar climbing prior to the Wall Street open, up over 5% in 24 hours.

The pair had shaken off macroeconomic concerns at the start of the week, with trouble at Credit Suisse and the escalating Russia-Ukraine conflict failing to slow performance.

Now, the short-term analysis focused on a run potentially topping out closer to $21,000 — as was the case late last month, as sell-side pressure at that level remained significant.

“20500-21000 is a sell zone. If price gets there, which should, don’t be too bullish,” popular trader Il Capo of Crypto told Twitter followers on the day.

Razzoorn, an analyst at international trade group The Birb Nest, noted that the current charge was Bitcoin’s fifth attempt at escaping a major liquidity cloud in several weeks.

Despite the potentially limited upside opportunity, Bitcoin rallied in line with a broader risk asset tide which saw United States equities finish noticeably higher the day prior.

At the same time, the U.S. dollar suffered, the U.S. dollar index (DXY) extending losses to approach 111 points and threaten support in place since mid-September.

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

“Up the market goes,” a more optimistic Michaël van de Poppe, CEO and founder of trading platform Eight, continued:

“Flipping $19,500 for support. Now, if range-high at $19,600 holds for Bitcoin, I assume we’ll continue towards $22,400.”

Altcoins attempt to change sticky trend

Across major altcoins, it was Ether (ETH) and Ripple (XRP) leading daily performance at the time of writing. 

Related: CoinShares’ Butterfill suggests ’continued hesitancy’ among investors

ETH/USD traded above $1,350, still yet to break out of its sideways trend in place for several weeks since major losses entered during the post-Merge breakdown.

ETH/USD 1-day candle chart (Binance). Source: TradingView

XRP, on the other hand, faced a more stubborn band of resistance after prior gains, bouncing off multi-week support just below $0.45.

XRP/USD 1-day candle chart (Binance). Source: TradingView

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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McDonald’s starts to accept Bitcoin and Tether in Swiss town

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McDonald’s starts to accept Bitcoin and Tether in Swiss town

The global fast food chain is among the first to participate in a crypto-friendly experiment in the town of Lugano.

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McDonald’s starts to accept Bitcoin and Tether in Swiss town

Multinational fast food chain McDonald’s started to accept Bitcoin (BTC) as a payment method in the 63,000-populated city of Lugano in Italian Switzerland, which is becoming a hotspot for crypto adoption in Western Europe. 

A one-minute video of ordering food on McDonald’s digital kiosk and then paying for it at the regular register with the help of a mobile app was uploaded on Twitter by Bitcoin Magazine on Oct. 3. The Tether (USDT)  logo could be spotted next to the Bitcoin symbol on the credit cash machine, which is not surprising, as in March 2022 the city of Lugano announced it would accept Bitcoin, Tether and the LVGA token as a legal tender.

On March 3, 2022, the city signed a memorandum of understanding with Tether Operations Limited, launching the so-called “Plan B.” According to this plan, Tether has created two funds — the first one is a $106 million, or 100 million Swiss francs, investment pool for crypto startups, and the second is around $3 million, or 3 million Swiss francs, attempt to encourage the adoption of crypto for shops and businesses across the city.

In addition to allowing Lugano residents to pay their taxes using crypto, the project will extend payments to parking tickets, public services and tuition fees for students. More than 200 shops and businesses in the area are also expected to accept crypto payments for goods and services.

Related: Swiss Post’s banking arm developing in-house crypto custody platform

Speaking to Cointelegraph in June, Paolo Ardoino, chief technology officer of Tether and Bitfinex, claimed that Plan B “is going great,” announcing a two-week educational activity on blockchain and cryptocurrencies in the city.

In September 2021 El Salvador became the first country in the world to allow using Bitcoin as a legal tender. Since that time, McDonald’s has been accepting Bitcoin at all its 19 outlets in the country.

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