An overview on the environmental impact of blockchain technology.

How Avalanche Enables a Greener Cryptocurrency Ecosystem

Ecological sustainability is a growing concern across nearly all social sectors, as more and more people realize that their daily activities—whether in the workplace, on the road, or at home—contribute to the burden that modern-day industrial civilization continues to impose on the environment.

The cryptocurrency industry is not excluded from this trend. Now that the crypto world has progressed past its early years and has proven itself to be more than merely a flash-in-the-pan phenomenon, many observers have raised questions about the long-term ecological impact of this technology.

As matters stand today, there is no question that blockchain platforms often use massive amounts of electricity. The problem of blockchain energy consumption has led to the ongoing search for more eco-friendly methods of carrying out crypto transactions.

The Avalanche smart contracts platform, launched by Ava Labs in 2020, is at the forefront of this sustainability revolution. This platform has successfully implemented, and demonstrated the viability of, several important energy-efficient innovations.

Cryptocurrency & Energy Consumption

Traditional crypto transactions, which use proof-of-work, require a colossal amount of electricity. This is hardly a trade secret, but even experienced crypto pros often underestimate the extent of the problem. The statistics relating to these crypto emissions are both awe-inspiring and worrying. Here are just a few recent reports:

  • Bitcoin mining consumes more electricity than Argentina.
  • Bitcoin produces about 37 megatons of carbon dioxide (CO2) every year.
  • The average non-fungible token (NFT) creates a carbon footprint equivalent to driving a gas-powered car for 1000 kilometers.  

The good news is that this state of affairs can be changed. In fact, the world of cryptocurrency has been gradually shifting away from the energy-intensive practices that marked its early days. One of the major trends in this still-evolving process involves the abandonment of the proof-of-work consensus mechanism in favor of less-wasteful verification procedures.

The Problem of the Proof-of-Work Mechanism

In the absence of any centralized authority that can verify transactions, blockchains are forced to deploy alternative methods of preventing false data from compromising the integrity of the platform. This typically involves the use of a consensus mechanism. The oldest of these, and one that remains widely used throughout the cryptocurrency field, is the proof-of-work (PoW) mechanism.

The proof-of-work algorithm essentially puts blockchain miners on a race with one another to discover a random or semi-random 32-bit number—or “nonce,” which stands for “number used once”—to win the right to add a verified block to an existing chain. Miners, aided by the computing power at their command, perform millions of calculations per second in an effort to uncover the nonce.

This procedure involves manipulating and testing the hash of a block over and over until the correct value is found. And it requires an enormous amount of computing power. Many miners utilize powerful application-specific integrated circuit (ASIC) computers that are specifically designed for this purpose.

For miners, all this laborious activity can pay off in the form of a generous amount of cryptocurrency, bestowed as an award for solving the puzzle correctly. This time-tested method has also proven to be extremely effective at preserving the integrity of blockchains and preventing the addition of falsified blocks. But there’s no getting around the fact that proof-of-work expends a huge amount of energy—and places a sizable burden on the environment.

In an effort to devise eco-friendly solutions, developers have created dozens of alternative consensus mechanisms. The most effective of these is the proof-of-stake protocol, which has been successfully implemented by Avalanche as well as a number of other notable platforms. When properly utilized, it can substantially reduce blockchain carbon footprints.

Proof-of-Stake & Avalanche’s Minimal Energy Usage

The proof-of-stake protocol represents an advance over the older proof-of-work method in a number of ways. In essence, it works by requiring blockchain validators to put up a certain amount of value—a “stake,” such as the chain’s native cryptocurrency—in order to participate.

A validator is randomly selected from the pool of qualified candidates to affirm the integrity of the transaction in question. Once this task has been completed, the block is added to the chain and the validator is provided with the standard reward for a job correctly done.

By requiring participants to invest in the system in order to perform as validators, proof-of-stake disincentivizes fraudulent activity, because any threat actor who falsifies a block will lose their investment. It’s also possible for the system to punish bad validators by seizing and burning their stake.

Proof-of-stake consensus carries the additional benefit of providing a high degree of resistance against 51% attacks. This kind of attack, in a proof-of-stake context, would require the threat actor to control the majority of the stake controlling a particular blockchain. Doing so would probably be a prohibitively expensive endeavor, especially as the threat actor stands to lose their entire stake. Incentivizing good behavior in this way is one of the key advantages of the proof-of-stake protocol.

Arguably the biggest benefit to be gained from proof-of-stake consensus, however, is the massive reduction in energy expenditure as compared with the proof-of-work method.

Proof-of-stake does not demand from miners a huge investment in computing power. In fact, validation can be performed with the kind of hardware that is easily accessible to the average consumer. As a result, there is no need for the enormous amounts of energy associated with proof-of-work.

The disparity in energy consumption between the two protocols is truly staggering. A report issued by the Crypto Carbon Ratings Institute (CCRI) in early 2022 revealed that the proof-of-stake Avalanche blockchain used only 0.0005% of the energy consumed by the proof-of-work Bitcoin blockchain.

The widespread adoption of the proof-of-stake protocol would mean that routine blockchain maintenance would no longer require the expenditure of energy rivaling that of an entire sovereign nation.

The Avalanche blockchain is on the leading edge of the PoS revolution, having launched in 2020 as a fully functional proof-of-stake platform. Its native token, AVAX, has become the most green cryptocurrency available today, and Avalanche validator requirements are easily met by most users. The proven success of Avalanche in utilizing the proof-of-stake protocol continues to influence other blockchains.

Eco-Friendly Solutions from Ava Labs

As the creator of Avalanche, Ava Labs has established several other sustainability initiatives. These include:As the creator of Avalanche, Ava Labs has established several other sustainability initiatives. These include:

Avalanche Consensus

Avalanche relies on a novel consensus protocol that differs from—while using the best features of—classical consensus and Nakamoto consensus. Basically, this consensus uses multiple rounds of “votes” from a sample of nodes to determine the course of action favored by the majority in verifying the validity of a transaction.

Avalanche Consensus offers quick finality, low latency, and high throughput. More to the point, it is a highly sustainable quiescent protocol, requiring no energy-intensive mining. Nodes go into action only when needed; otherwise, they passively “listen” for new transactions to be made.

Plastic-Free Live Events

Ava Labs has also committed to a plastic-free policy during its real-world events. To this end, Ava Labs has teamed up with Bye Bye Plastic Foundation to eliminate single-use plastics.

A notable implementation of this policy was the 2022 Avalanche Summit in Barcelona, Spain, which was attended by about 10,500 people over six days. The Summit’s organizers implemented a no-straw policy, handed out reusable cups, and set up water fountains to reduce the need for liquid containers. In total, these actions resulted in the savings of 322 pounds of plastics that otherwise would have been sent to a landfill.

Ava Labs will continue to develop and refine strategies to reduce crypto’s negative impact on the environment and help pave the way for a sustainable blockchain future. Feel free to learn more about how to build on the blazingly fast, low-cost, and green Avalanche platform.

In just a brief period of time, Avalanche has distinguished itself as the host of the best play-to-earn games in the blockchain world. More gaming innovations will surely arrive over the next few years. To become better acquainted with the exciting field of AVAX crypto games, click on the gaming tab.

Disclaimer: Ava Labs/Avalanche Foundation is not affiliated with any of the brands mentioned above. This article is for educational purposes only.