Is the environmental footprint of blockchain projects an obstacle to their development?

In the coming years, companies must meet the ambitious objectives involved in reducing their environmental footprint. To achieve this, they have committed to large-scale projects, often disrupting and evolving their business models to those based on new technologies. The impact of digitisation on the environment is a subject of much debate, with a particular focus on blockchain, which is energy-intensive by design. While the high energy consumption of blockchains has been known for years, Elon Musk’s recent stance on Bitcoin has reignited the debate on its carbon footprint. Is it still appropriate for business and government leaders to continue to develop blockchain projects?

There are reasons to believe that, in many cases, this technology actually contributes to companies’ CSR efforts, rather than running counter to them. Projects based on blockchain technology should not be dismissed for the wrong reasons.

Three key trends in the market point to a rapid downward trend in emissions from blockchain technology:

  • Adoption of the “Proof of Stake”, a validation algorithm that is less energy intensive than earlier algorithms
  • Growth of the proportion of green energy used by mining farms
  • Transparency and the quest for economic efficiency, which are part of the DNA of blockchain players

Moreover, in many cases, the positive impact of blockchain could significantly mitigate – or even offset – the impact on CO2 emissions. The main gains generated by blockchain are linked to the dematerialisation of processes, requiring less consumption of paper, the production of which in turn consumes energy and contributes to deforestation. In addition, blockchain’s traceability and operational excellence applications also make it possible to limit the return of non-conforming goods and to optimise stock management. Blockchain projects with a neutral or even positive overall impact on CO2 emissions can be launched without any detrimental impact on a companies’ CSR efforts.  Emerging methodologies for accurate estimation of environmental impacts must be adopted by companies to inform any investment decision in blockchain.

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