5 cryptos boosting their green credentials in 2022

A number of pioneering tokens are working to minimise their emissions.

A wide-smiling businessman in suit and tie rips open his shirt to reveal a green t-shirt underneath

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Crypto mining continues to use a phenomenal amount of energy 
  • A number of pioneering tokens are working to reduce their emissions 
  • More tokens are turning to proof-of-stake protocols to cut their electricity needs 

Crypto mining may appear to take place in the virtual realm.

But the reality is that the blockchains behind these virtual tokens are maintained by numerous powerful, energy hungry computers.

Take Bitcoin (CRYPTO: BTC), the world's original crypto, for example.

Bitcoin relies on a proof-of-work (PoW) protocol to verify transactions, which requires a series of miners along the blockchain working in tandem. While the system works, in today's carbon weary world, the amount of electricity used is mind boggling.

In fact, according to a study by the University of Cambridge, in 2020 Bitcoin used as much energy as all of the Netherlands' 17 million people. The university also revealed that Bitcoin used almost as much energy as all of the global gold mining activity that year.

But just like corporations are working to green their images and minimise their environmental footprints, so too are a number of pioneering cryptos.

One of the best means for cryptos to go green is to shift from the proof-of-work protocol that Bitcoin still relies on, to what's known as proof-of-stake (PoS). This sees miners staking some of their own holdings to participate in verification processes. Requiring a lot fewer computers, proof-of-stake has the potential to significantly reduce associated emissions along with reducing overall costs and increasing speeds.

So, which five cryptos are leading the green transition charge?

For insight into that answer, we turn to Coinspot market analyst, Lee Daniels.

World's number eight crypto greening its credentials

First up, Daniels points to Cardano (CRYPTO: ADA). Currently trading for 45.4 US cents, Cardano has a market cap of US$15.4 billion, making it the eighth biggest token in virtual circulation.

"The digital currency is named after Ada Lovelace, a 19th century mathematician who is recognised as the world's first computer programmer," Daniels said.

"Cardano's PoS blockchain platform has been built with the purpose of igniting the 'positive change the world needs'," he added. "Users can utilise ADA as a secure exchange of value and every transaction is recorded under the Cardano blockchain. Cardano works like Ethereum (CRYPTO: ETH), enabling smart contracts and decentralised applications."

Cardano hit all time highs of US$3.10 on 2 September last year.

ALGO and EOS

Two other cryptos that are spruiking their green credentials are Algorand (CRYPTO: ALGO), and EOS (CRYPTO: EOS).

Algorand, a decentralised blockchain-based network, supports a range of applications.

Currently worth 30.4 US cents, it has a market cap of US$2.1 billion, placing it at number 28 in terms of size.

As for its sustainable nature, Daniels explains:

Algorand was the world's first pure PoS blockchain. Its network was designed to minimally impact the environment, allowing for faster and cheaper transaction times. Committed to being the greenest blockchain, Algorand is built on an open-source, carbon-negative network and sets the industry standard in sustainability to combat CO2 emissions.

Algorand hit record highs of US$3.28 on 21 June 2019.

As for EOS, it's "the native cryptocurrency of EOSIO, an open source platform for blockchain innovation and performance".

EOS is currently trading for 99.2 US cents, with a total market value of just under US$1 billion.

It's similar to Ethereum, Daniels said, in that it's a smart platform for the development of decentralised applications:

EOSIO uses a unique consensus model called Delegated Proof-of-Stake model (DPoS), which allows it to process millions of transactions per second. It also features a voting and delegation mechanism that makes the process more democratic, allowing users to spend their coins to vote for various delegates.

EOS hit record highs of US$22.89 on 29 April 2018.

Two other leading cryptos with an eye on the environment

Next up we have IOTA (CRYPTO: MIATA).

Trading for 28.9 US cents, IOTA is the 54th biggest crypto, with a market cap of US$804 million.

IOTA, Daniels said, "is designed for the 'Internet-of-Things'(IoT), handling payments and other transactions between physical devices that are connected to the internet".

As for its green credentials, he explained:

IOTA exists to overcome the cost and scalability limitations of blockchain by its proprietary technology called the 'Tangle'. The Tangle's data structure consists of a group of data nodes that flows unidirectionally, unlike that of blockchain structure. IOTA is designed to accommodate devices such as sensors that operate in a low-energy environment.

IOTA hit all time highs of US$5.69 on 19 December 2017.

Which brings us to the fifth crypto with a green tinge, Stellar (CRYPTO: XLM).

Stellar is trading for 10.6 US cents and has a current market cap of US$2.7 billion, number 24 on the top-100 list in terms of size.

So what is Stellar and why is it considered a green crypto?

According to Daniels:

Stellar is an open network for storing and saving money. Users can create, send and trade digital representations of all forms of money like USD, peso or Bitcoin.

The software runs across a decentralised, open network and handles millions of transactions each day… Stellar features a unique algorithm called the Stellar Consensus Protocol (SCP), which strives to be highly configurable, faster, and more highly energy efficient than Bitcoin's PoW method.

Stellar hit all-time highs of 93.8 US cents on 4 January 2018.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin and Ethereum. The Motley Fool Australia has positions in and has recommended Bitcoin and Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Cryptocurrencies

A man holding a mobile phone walks past some buildings
Cryptocurrencies

The Betashares Crypto Innovators ETF (CRYP) is up 37% in a month. Is it too late to buy?

Looking at the CRYP ETF? Here's my take on whether it's too late to buy.

Read more »

Bitcoin ETF digital illustration.
ETFs

Why is the BetaShares Crypto Innovators ETF (CRYP) surging on Thursday?

Some massive Bitcoin news is lifting this ETF today.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
Cryptocurrencies

Bitcoin ETF approved. When is it coming to Australia?

Crypto bulls will be celebrating this milestone moment.

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Bitcoin price rockets to 21-month highs. Here's why

The Bitcoin price is now up more than 174% in 12 months.

Read more »

BTC spelt out on wooden blocks with a red sign going down.
Cryptocurrencies

Bitcoin price sinks from 21-month high as ETF rumours swirl

What's going on with this cryptocurrency this week?

Read more »

person dancing in bitcoin spectacles wearing a gold outfit with hands up.
Cryptocurrencies

Up 145% in a year, the Bitcoin price just smashed through 18-month highs!

After a horror year in 2022, the Bitcoin price has come roaring back in 2023.

Read more »

Two investors look at a graphic showing a bitcoin in the centre
Cryptocurrencies

Why did the Bitcoin price just hit a 17-month high?

The long-standing cryptocurrency is finding its feet to reclaim a price not seen since May 2022.

Read more »

ETF written in gold with dollar signs on coin.
ETFs

This ASX ETF is up 21% in April so far

How on earth has this ETF smashed the market by a factor of 10?

Read more »