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The negative environmental impact of cryptocurrencies such as Bitcoin has been widely reported in the press in recent weeks and months, and their volatility has also been highlighted as a cause for concern.

However, the United Nations believes that the blockchain, the technology behind these online currencies, can greatly benefit those fighting the climate crisis and helping to achieve a more sustainable global economy.

A "pointless way to use energy"?
The amount of energy required to power the Bitcoin network is astonishing: Tim Berners-Lee, considered the inventor of the World Wide Web, has gone so far as to describe "mining Bitcoin" as "one of the main pointless ways energy use. ”

Bitcoin does not exist as physical objects, but new currencies are "mined" or put into circulation through a process that involves the use of powerful computers to solve complex mathematical problems. This process requires so much energy that the Bitcoin network is estimated to consume more power from many countries, including Kazakhstan and the Netherlands.

And, as fossil fuel power stations remain a significant part of the global energy mix, Bitcoin mining can be blamed in part for greenhouse gas emissions that cause climate change.

Another problem is the amount of power required for each transaction, which is huge compared to traditional credit cards: for example, each Mastercard transaction is estimated to use only 0.0006 kWh (kilowatt hours), while each Bitcoin transaction consumes 980 kWh , about as much as an average home in Canada needs for more than three weeks.

An important lever for sustainable development?
Despite these issues, United Nations experts believe that cryptocurrencies and the technology that powers them (blockchain) can play an important role in sustainable development and, in fact, improve environmental management.

One of the most useful aspects of cryptocurrencies for the UN is transparency.

Because the technology is resistant to fraud and fraud, it can provide a reliable and transparent transaction log. This is especially important in areas with weak institutions and high levels of corruption.

The World Food Program (WFP), the largest UN charity, has found that blockchain can ensure that cash reaches those who need it most.

A pilot project in Pakistan has shown that it was possible for WFP to send cash directly to beneficiaries, safely and quickly, without having to go through a local bank. The project, Building Blocks, was also successfully tested in refugee camps in Jordan, ensuring that WFP could create a reliable online record of every transaction.

If this can work for refugees, it can also work for other disadvantaged, vulnerable groups. The authors of a report by the United Nations Environment Agency (UNEP) suggest that technology could improve the livelihoods of waste collectors living in the informal economy.

A transparent monitoring system, the report says, could pinpoint exactly where and how the recovered waste is used, as well as identify who got it, ensuring that the right people are rewarded for their efforts.

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Environmental degradation
The potential of the blockchain in environmental protection has been tested in many other projects, by the UN and other organizations. These range from a tool to eliminate illegal fishing in the tuna industry, developed for the World Wide Fund for Nature (WWF), to a platform (CarbonX) that converts greenhouse gas emission reductions into cryptocurrencies that can be purchased and sold, giving manufacturers and consumers financial incentive to make more sustainable choices.

For the UNEP DTU Partnership (collaboration between UNEP, the Danish Technical University and the Danish Ministry of Foreign Affairs), there are three key areas where blockchain can accelerate climate action: transparency, climate finance and markets clean energy.

Evidence of harmful greenhouse gas emissions in many countries, says the Partnership, is incomplete and unreliable. Blockchain solutions could provide a transparent, credible way to show how nations are taking action to reduce their climate impact.

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