Can Blockchain Help Combat Climate Change?

By Dan Israeli


When you think of all the use cases for blockchain technology, solving the existential threat that is climate change is probably not one of them. If anything, crypto has had to play defense in 2021 when it comes to environmental issues, as big questions have been posed about the industry’s energy consumption and sustainability. 

Well, if you haven’t heard, crypto is taking several steps to go green. In fact, blockchain’s ongoing shift from proof-of-work to proof-of-stake is one big example of the industry’s energy conservation efforts, as the latter doesn’t require the massive computational power it takes to mine large-cap cryptos like Bitcoin and Ethereum. (Ethereum is currently in the process of completing its 2.0 migration to proof-of-work, known as Eth2). 


But can it do more than that? Can crypto go beyond just reducing its own carbon footprint and actually solve problems on a global level when it comes to climate change and renewable energy? 


Freeing Up the Gridlock 

An illustration of multiple hard drives, with three recycling symbols superimposed on top.

As previously addressed, it should come as no surprise that energy conservation is top-of-mind to many in the space as a means to solve not only crypto’s problems, but issues in other industries and society as a whole. In addition to building more efficient, less energy-invasive blockchains, there has also been a growing effort to recycle the massive amounts of energy involved in cryptocurrency. 

For example, a lot of energy is wasted by computers or servers that are idle for long periods of time. Instead of letting it go to waste, blockchain technology has the ability to “crowdsource” large amounts of unused energy and recirculate it to other users. Doing so puts less of a strain on electricity grids and also frees up cloud computing providers like Amazon Web Services (AWS) that are constantly building new data centers. 

Blockchain tech is even exploring ways to conserve forms of renewable energy, which is often plagued by its intermittent availability (e.g., solar and wind energy). A company called Brooklyn Microgrid is utilizing a permissioned data platform to create a marketplace for excess solar energy among NYC residents, allowing them to sell their surplus by funneling it into a microgrid (i.e., an autonomous, localized renewable energy grid). 


The Missing Link

An unheralded aspect of green crypto initiatives is not just what they accomplish, but what they can inspire others to do. In the same way recycling energy can spearhead a movement against throwaway culture (i.e., society’s tendency to rack up garbage), blockchain also strives to bring accountability and transparency to the climate change crusade. In a broad sense, that could mean banks and other financial institutions having to share their ESG (environments, social and governance) obligations on a public blockchain ledger, to ensure everyone is meeting their end of the bargain. 

Sergey Nazarov, founder of the popular crypto platform Chainlink (LINK), made his public pitch in 2021 regarding just how integral blockchain can be in furthering climate change projects. Nazarov specifically highlighted how the transparency of blockchain can positively influence the actions of people in power, further noting that “fundamentally, blockchains are very, very good at creating proof and creating incentives.” 


An illustration of the Chainlink symbol, repeating, with trees on top of some of the symbols.

Chainlink, the Ethereum-based DeFi platform that uses oracles to connect smart contracts to real-world data, possesses several use cases when it comes to combating climate change. Nazarov highlighted that oracles can make carbon credit systems more reliable and trustworthy, as far as tracking processes like reforestation and carbon capture. 

Nazarov also noted that  oracles can expand risk management for certain green industries affected by changing weather patterns, like regenerative agriculture. Nazarov said that since the world’s analog insurance infrastructure cannot reach every region, a decentralized crop insurance platform using insurtech protocols could offer a better and more expansive solution. 



Whether it’s Ethereum working to reduce its energy consumption or Chainlink pushing protocols that optimize the conservation landscape, crypto clearly has an opportunity to do more good than harm when it comes to climate change. Investors interested in assets that foster sustainability and green initiatives should check out ETH and LINK on eToro today, as well as a variety of other cryptocurrencies pushing the boundaries of innovative blockchain technology.