Blockchain technology is often criticized for its exorbitant energy consumption, but the Algorand platform was created to address that. It's an energy-efficient blockchain designed to have the lowest possible environmental footprint.
The industry's bad reputation mostly stems from one model: Proof-of-Work. As Sustainability Magazine explained, this is the method that forces powerful computers to solve complex math puzzles to secure the network. It's a process that "sucks a ton of electrical power from the grid," often from dirty fuels, per Sustainability Magazine.
The numbers are staggering. One report showed how bitcoin miners alone can consume more electricity than some nations. And it's not just energy; this model also creates mountains of e-waste from outdated hardware and relies on rare minerals, as the U.N. notes.
But that's not the only way of doing things. Algorand, founded in 2019 by MIT's Silvio Micali, was designed specifically to fix this. Algorand uses a different method called Pure Proof-of-Stake (PPoS), which doesn't require all that energy-intensive computation. As a result, its "annualized CO2 use [is seven times] lower than Ethereum," Matt Keller of the Algorand Foundation told Sustainability Magazine.
The cryptocurrency industry has a complex and frankly confusing relationship with the environment. That Proof-of-Work model is a massive, well-known problem. But it's not the whole story. The industry is "moving toward greener models," as Keller noted. Newer blockchains, like Algorand, were built to be energy-efficient.
Even older networks are changing; Ethereum, a huge player, switched to a less energy-intensive model in 2022. Beyond reducing power consumption, blockchain has "significant potential to support sustainability," according to PwC.
Think about it: a transparent, unchangeable ledger. This can be used to prove where a product came from, like the seafood traceability from Wholechain. It also offers new ways to finance clean energy. That's where "tokenization" comes in, allowing people to buy fractional ownership in renewable assets, such as a share of a solar farm.
So, what's the real-world use? Marc Vanlerberghe of the Algorand Foundation told Sustainability Magazine it's a way to make sustainability claims "immutable, transparent, and verifiable."
But here's what's really interesting: "tokenizing" renewable energy. Enel, a major global utility, partnered with Algorand to tokenize its renewable energy assets. This means people in apartments can buy tokens representing "fractional ownership" in a solar farm, letting them benefit from clean energy without installing panels.
This concept is expanding. One firm, Farmway Technologies, is using blockchain to tokenize farmland in the Republic of Georgia. Another, Amadeus, is developing a "thinking blockchain" that redirects mining energy toward AI training. And Algorand's own model has already built a reputation for requiring drastically less energy to run.
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It's a clear example of the shift Keller described to Sustainability Magazine: The industry is definitely "moving toward greener models."
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