The economic shutdown brings with it some surprising – and welcome – reverberation times that extend beyond the stock market. A typical example: the resulting environmental impact.
The world is evidence of massive reductions in almost every imaginable energy sector. At the height of the pandemic-triggered economic shutdown, countries that were completely lockdown saw an average drop in energy demand of 25% per week.
Non-renewable energy sources such as coal and oil saw the world’s largest declines as part of this shutdown. Demand for coal declined nearly 8% year over year in the first quarter of 2020 and faced an ongoing challenge from cleaner renewable energy sources – the only energy sector to see growth during the stalemate. With global road traffic 50% below the 2019 average, oil demand fell nearly 5% year over year in the first quarter of 2020.
While electricity demand also fell by around 20% during the full lockdown, many countries around the world are reopening and putting in place recovery plans and policies, many of which are digital. Recent data shows that consumer and business adoption of advanced digital technologies increased by five years in just eight weeks with full lockdown.
This rapid migration and accelerated adoption of digital technologies is only expected to continue. Of those who used digital channels for the first time during the lockdown, 75% said they would like to continue using them in the future. As a result, businesses rely on these technologies to meet changing consumer needs and those of a more remote workforce.
The energy it takes to drive a digital future
Based on data from McKinsey’s report on countries already in recovery, energy usage patterns are higher than they were before the lockdown as advanced digital technologies become more common.
This will undoubtedly result in significant long-term increases in energy consumption if the right planning and investment is not made to ensure that our increasingly digital future is also a sustainable one. It starts with relying on cleaner, naturally environmentally friendly technologies and energy sources.
The cloud is a current snapshot of how unsustainable our digital future is. Companies that offer many of the systems and services that fuel our digital economy rely heavily on data centers in the cloud and on-premise to keep going – and use more and more energy as demand increases.
In fact, the researchers expect cloud fuel consumption could increase a whopping 300% over the next decade. It should be noted that this research was conducted prior to the pandemic, so given recent trends and developments, this number could be a more conservative estimate.
While the International Energy Agency (IEA) only forecast a doubling of global renewable energies from data centers and the cloud over the next decade, this forecast also led to a pre-coronavirus economy. The agency now fears that the recession will dampen fiscal buzz for more expensive green energy plans.
The Crypto Impact
Right now, electricity is a historic demand as this pandemic continues to create a digital future that is set in motion much faster than expected. The impact of this power consumption could reverse the environmental benefits we achieved during the lockdown and further set us back in terms of the progress we made on sustainability.
A fully digital future is one that instinctively relies on digital payment resources such as cryptocurrency. However, increased investment in blockchain technology, which is used to mine and produce many of these digital assets like Bitcoin, could put further strain on the global environment.
On average, a single Bitcoin transaction consumes 700 kWh of electricity. This is a huge carbon footprint considering that a single transaction in fiat currency like paper money only uses 0.044 kWh.
Of course, despite the large discrepancy in power consumption between Bitcoin and Fiat currency, paper money still adds significant environmental damage when you factor in the deforestation, eutrophication, and photochemical ozone generation that result from its production and disposal – not to mention the greenhouse gas emissions that result consume from its transport and the electricity banks to house and store this money.
Cryptocurrency is not manufactured, transported or stored in the same way. This means it can be a sustainable payment option – you just have to use the right digital asset. XRP is basically a much more sustainable commodity than Bitcoin or Ethereum and consumes just under 0.0079 kWh of electricity per transaction.
A main reason why XRP is so much more sustainable than other cryptocurrencies is that all XRP tokens are currently in place, so no additional energy is required to get more out of this asset. Meanwhile, Bitcoin and Ethereum continue to be made through evidence of mining practices that devour energy.
On average, an ASIC Bitcoin miner costs $ 1,500, and a powerful miner costs over $ 6,000. These numbers refer to the cost of mining equipment, which due to the inability to predict future network behavior and the profitability of mining, tends to be bought by miners on the cheaper side of the scale, meaning it is likely to be energy efficient too.
These are monetary and environmental costs that XRP simply does not incur. And thanks to the XRP ledger, XRP transactions can also be processed immediately without the associated energy costs. Conclusion: More sustainable blockchains will only encourage the continued introduction of cryptocurrencies like XRP.
As we prepare for our electrically powered digital future and the promised real economic growth, we must also consider the environmental impact of this future. Put simply, a digital future that works for everyone must also be a sustainable one.
Learn more about XRP and its role in creating a digital, sustainable future for global cross-border payments.