Unsustainable cryptocurrencies are going out of fashion, fast… and it’s easy to see why.
Investors don’t want exposure to the risk of future climate regulations. Many more are uncomfortable being part of the climate problem rather than the solution. As power-hungry protocols become a less viable investment, crypto, and finance generally, is evolving.
We’re seeing many new coins enter the market which put sustainability at the forefront and many have already seen huge growth. Could these be the next big crypto opportunity? We think so. And here’s why.
Pressures For Change
First, consider where Bitcoin is right now. In March, President Biden ordered a report into the environmental costs of cryptocurrencies, focusing on the “potential for these technologies to impede or advance efforts to tackle climate change at home or abroad.”
Pressure is mounting from all directions. Greenpeace is among several climate groups and leading crypto figures who’ve launched the “Change the Code, Not the Climate’’ campaign. They want Bitcoin to become greener by transitioning from Proof of Work to the much greener Proof of Stake method.
Though changing to PoS seems to make sense, any change to Bitcoin’s fundamentals is fraught with controversy. To early adopters, Bitcoin is almost a religion. And changing scripture is never easy.
Proof of Work is seen by many as integral to Bitcoin’s value and there’s little appetite for change without a financial incentive. Chris Bendiksen, one of the world’s leading experts on Bitcoin said, “I’d put the chance of Bitcoin ever moving to PoS at exactly 0%. There is no appetite among Bitcoiners to destroy the security of the protocol by making such a move.”
Crypto billionaire Chris Larsen has said that without this sort of change, Bitcoin won’t enjoy investors’ support for much longer. “Now with Ethereum changing, Bitcoin really is the outlier,” Larsen said.
Just as coal plants are an unwise investment in 2022, some are beginning to see Bitcoin in a similar way. The crypto market is adapting and new coins that put sustainability at their core are entering the scene. This is where we see the big opportunities of the future.
The times they are a-changin’… and investors need to decide which side of the coin to bet on.
Proven Growth in Proof of Stake
Source: State of Staking Q4 2021
Some of the newer protocols — — Solana, Cardano — are built on low energy infrastructure. It’s in these new, sustainable coins where we’re seeing investor activity really expanding. Last year the Proof of Stake market cap increased to 31% of the total, a 127% Y/Y increase. Developers in the blockchain community are working hard to innovate sustainable blockchains that are compatible with a future low-carbon economy.
Here are three examples of green protocols experiencing high growth…
Polkadot (DOT) uses an ultra-efficient “relay chain” blockchain with tiny energy costs. In fact, it has the smallest annual carbon footprint out of Cardano, Polkadot, Solana, Tezos, Avalanche, and Alogrand. DOT has seen strong growth, from $4 at the end of 2020 to over $20 today.
PoS Avalanche currently supports 94 million transactions a year, 24 times that of Polkadot. It’s one of the first protocols to announce it’s offsetting its entire carbon footprint and it’s gone from $4 at the end of 2020 to over $90, another green coin seeing strong growth.
And the good news continues for sustainable coins… Solana is responsible for a massive 11 billion transactions a year. You’d think that would create a big emissions problem. But no. Solana only uses slightly more energy than a Google search, making it 100 times more efficient per transaction than Polkadot. They’ve even hired a Climate and Energy Advisor. This long-term sustainable vision is being backed by investors, with its price rising from $1 to $111 in just over a year.
The Future’s Green
A transition towards greener investments is happening across the board, not just within crypto. It simply doesn’t make sense anymore to invest in environmentally damaging ventures, not when the world is doing everything it can to move away from carbon-intensive practices.
We see how in business, ESG (Environment, Social, and Governance) considerations are taking center stage. Increasingly, “more and more investors are starting to understand that a company cannot be understood only through its financial performance”.
Crypto investors are recognising that change. Whether they’re motivated by a desire to combat climate change or they simply don’t think profits tied to high emissions are economically viable, funds are flowing towards green coins.
The time to act on this change is now. If you missed DeFi, and slept on NFTs, don’t miss this.
Liquid Carbon Credits
This summer, we’re launching our Liquid Carbon Credits (LCO2). These green, tradeable tokens are tied to real-world regenerative projects that sequester carbon and ensure a greener future. Join us this year and become one of the early adopters of a cryptocurrency that offers real hope for positive change.
Author: Rowan Mann