An International Monetary Fund (IMF) study on energy consumption revealed the importance of design choices within the crypto ecosystem to build an environmentally friendly mainstream payment system.
In the study entitled “Digital Currencies and Energy Consumption,” the IMF examined the energy consumption of crypto assets based on their distinct design elements to evaluate the ideal mechanism for developing central bank digital currencies (CBDCs).
Sharing the groundwork for policy discussions around the environmental impacts of digital currencies, the IMF recommended moving away from proof-of-work (PoW)-based distributed ledger (DLT) applications, adding:
“In particular, Bitcoin (BTC), the best-known application of this type, is estimated to consume much energy (about 144 terawatt-hours (TWh)) per year. Although scalability solutions reduce the energy cost per transaction, they do not reduce the overall energy spending.”
However, the international organization acknowledged the high energy efficiency brought about by non-PoW, permissioned crypto assets when compared to the traditional financial system:
“The potential of non-PoW permissioned crypto assets to reduce energy consumption relative to the existing payment system comes about from energy savings on both core processing architectures and user payment means.”
Drawing a conclusion from the study, the IMF’s recommendation to the central banks is to “design CBDCs with the explicit goal to be environmentally friendly.” This means selecting platforms, hardware and design options with “a lower carbon footprint than the central banks’ legacy systems” right from the experimentation phase.
In addition to eco-friendly components, central banks were recommended to include other features in the CBDCs, such as compliance, higher resilience and offline capabilities.
The IMF also pointed out that the policymakers will consider the mainstreaming of crypto or CBDCs by weighing the environmental impact of the technology’s underlying design. In the study, IMF estimated that the annual energy consumption by the global payment system stands at 47.3 TWh — roughly matching the yearly consumption of economies like Portugal and Bangladesh.
Related: Iota Foundation joins Dell to develop real-time carbon footprint tracking
Joining in the cause to address climate change, the Iota Foundation, a nonprofit DLT ecosystem provider, partnered with Dell Technologies to develop a real-time carbon footprint tracking system.
We've partnered w/ @Iota, BioE, & @ClimateCHECK to develop real-time carbon footprint tracking through a #data confidence fabric!
— Dell Edge & Telecom (@Dell_Edge) June 6, 2022
Hear how #ProjectAlvarium accurately tracks carbon footprints w/ #DellTech Edge solutions.
https://t.co/u5CxmbMBAL@Intel#IOTA#Sustainabilitypic.twitter.com/52RENnEW3X
The initiative will bring about near-real-time tracking of carbon emissions from BioE’s sustainable energy and composting facility. Mathew Yarger, head of sustainability at the Iota Foundation, stated:
“We’re now able to track and verify data around climate change and how we’re actively trying to address it at a level that’s never been achieved before.”
A recent study unveils a surprising trend in Norway, where less than 1 in 10 individuals show interest in investing in cryptocurrencies. Intriguingly, men are twice as likely to consider crypto investments compared to women.
JoyBoth Solscan and Etherscan share a vision of offering neutral and equitable access to blockchain data, emphasising transparency and fairness in the blockchain space.
AlexMATIC Polygon's promising performance hints at a potential surge towards $1.20, buoyed by industry momentum and bullish projections. Analysts and patterns foresee a significant upward trajectory, fostering anticipation for Polygon's continued ascent.
JoyCEO Bill Lou lost $125,000 in stETH to a deceptive LFG token airdrop scam via a phishing attack. The incident underscores the rampant threat of phishing in crypto, urging users to stay vigilant and verify sources for secure transactions.
JoyRipple Labs is spearheading a transformation in global IT payments, with blockchain technology at the helm, promising swifter, more secure transactions.
BrianMicroStrategy's Saylor is selling company shares worth $216 million to increase his Bitcoin holdings, while maintaining a significant stake in the company.
KikyoCryptocurrency-based gambling on the outcome of Taiwan's presidential election has surged, attracting nearly $700,000 in wagers. Authorities are cracking down on illegal activities, emphasizing the importance of avoiding legal violations during this sensitive election period.
JoyBen Armstrong presents a balanced view of Cardano's controversies, achievements, and resilience in the volatile crypto market.
BrianRadiant Capital's new USDC market on Arbitrum faced a security breach, with a swift response from Radiant DAO.
KikyoEtherscan acquires Solscan.io, expanding its blockchain data services to include the Solana network.
Brian