Tesla CEO Elon Musk shocked a lot of people on Wednesday when he tweeted that Tesla would no longer accept Bitcoin (BTC) as payment, due to the environmental influence of cryptocurrency mining.
It was shocking, in part, because Musk is seen as a crypto fan and the firm just started accepting BTC in February, but also because Bitcoin’s huge energy demands are well established.
According to Digiconomist, the whole Bitcoin mining industry has a carbon footprint similar to Singapore, due to the enormous energy consumption of robust rigs that solve the complicated equations needed to create new blocks. Some backers, such as Twitter CEO Jack Dorsey, recommend that Bitcoin mining “incentivizes renewable energy” — and Musk earlier agreed.
Now, Musk says that Tesla is “concerned about rapidly increasing use of fossil fuels” for mining. According to his tweet, the company is looking at alternative cryptocurrencies that use much less power than Bitcoin’s network. Bitcoin’s price has dropped more than 13% in the wake of the news.
Tesla’s announcement might have some people second-guessing their Bitcoin investments, and not every cryptocurrency uses the same kind of resource-intensive model for producing blocks and validating transactions. Here are the five cryptocurrencies which are more environmentally friendly than Bitcoin.
Explicitly billed as an eco-friendly currency, Nano (NANO) has no “mining, minting, or printing” and uses a lightweight proof-of-work model, which reportedly takes just seconds to prepare a transaction on a typical consumer PC.
Without the need for heavy mining rigs and top-end GPUs, Nano is charged as a cleaner alternative to the likes of Bitcoin and Ethereum. In the wake of Tesla’s announcement, investors are buying the argument: the price of NANO has nearly grown in the last 24 hours.
The newly-released Chia, created by BitTorrent inventor Bram Cohen, puts a spin on the familiar proof-of-work formula. Its “proof of space and time” model uses storage space on your computer to secure “plots” of cryptographic numbers and “farm” them as the network runs.
It’s one of the successful new coins to mine, given that you don’t need an extravagant, high-powered GPU to compete, but watch out: farming Chia could burn through some entry-level consumer SSDs in weeks.
Created by Ethereum co-founder Charles Hoskinson, Cardano has skyrocketed in value in 2021, growing more than 10 times in price since the start of the year and arriving a new all-time high yesterday (May 13) of $1.96. It is currently the 5th most valuable cryptocurrency, according to CoinMarketCap, ranked by total market cap.
The blockchain network is based on peer-reviewed research and relies on a proof-of-stake consensus model, in which participants hold the ADA coin within the network and receive rewards as a result. Hoskinson claims that the entire network uses just 6 GWh of power annually, a tiny fraction of what Bitcoin consumes. Cardano is now courting Tesla to select ADA over BTC.
Like Cardano, Polkadot hails from another Ethereum co-founder (Gavin Wood), who chose to try a different approach. Polkadot has also grown in value so far this year, up nearly five times in price since the start of 2021, and is one of the top 10 cryptocurrency performers by market cap.
Polkadot is designed as a multi-chain network that can bridge the gap between different blockchains and is based on a nominated proof-of-stake (NPoS) model that is based on holding coins within the network, rather than energy-intensive mining.
Stellar Lumens (XLM) is a long-established cryptocurrency that has profited from 2021’s market-wide gains, growing nearly five times in value since the start of the year.
XLM’s unique consensus model for validating transactions is energy-efficient, requiring only a small number of distributed nodes to confirm each. As such, XLM doesn’t have the enormous energy demands of some blockchain networks, which might be why it’s being tapped for big projects — for example, Ukraine plans to build its national digital currency on XLM tech.