Explained | How to invest in ecofriendly cryptos

cnbctv18.com:

There have been multiple reports on the negative impact of crypto mining on the environment. According to the Digiconomist, a single Bitcoin transaction eats up nearly 2,264 KWh of energy; that's enough to power the average American household for 75 days. This is staggering given the fossil fuel and climate change hurdles we currently face.

Most of this power consumption can be attributed to the notorious proof-of-work (PoW) consensus mechanism.As all decentralised blockchain currencies operate without any intermediaries or central authority, they require network users to reach a mutual agreement (consensus) regarding the authenticity of a transaction. There are different ways (mechanisms) to do this, and proof-of-work (PoW) is one of them. It requires users to devote substantial amounts of computing power (and therefore electricity) to verify transactions.

Two of the largest blockchains, Bitcoin and Ethereum, use the PoW consensus mechanism.But now, due to rising concerns, people have started looking at eco-friendly alternatives. And to the credit of the crypto industry, there have been many sustainable, carbon-neutral cryptocurrencies popping up in the last few years that also serve as viable investment options.Also read: 5 things you should not do when investing in cryptocurrenciesThe outcry for sustainabilityOver the last couple of years, several countries have started realising the environmental impact of crypto mining. China even banned crypto mining in 2021 citing environmental concerns.