Climate Impact Information

This page is being published in accordance with Regulation (EU) 2023/1114 Markets in Crypto-Assets Regulation (MiCAR) of the European Parliament and of the Council of 31 May 2023. While Payhound does not issue any digital assets, we recognise our obligation as a crypto asset service provider to disclose information related to the principal climate and other environment-related adverse impacts of the consensus mechanisms used for the crypto assets that we make available to our clients.

High Energy Consumption: Consensus mechanisms such as 'Proof of Work' (e.g., Bitcoin) require miners to perform complex computational tasks to validate transactions and secure the network. These tasks are computationally intensive, leading to enormous energy demands. As the network grows and more miners compete for rewards, the difficulty of these tasks increases, further raising energy consumption far exceeding 500,000 kWh. Consensus mechanisms using 'Proof of Stake' (e.g., Ethereum, Tron, Solana, FTN), consume far less energy and consume under 500,000 kWh.

Carbon Emissions: The environmental impact of PoW is directly linked to the energy sources used by miners. In regions where coal or other fossil fuels dominate the energy grid, PoW mining leads to high carbon dioxide emissions. Even in areas with renewable energy, miners often use mixed grids that still include non-renewable sources, contributing to greenhouse gas emissions.

E-Waste Generation: Mining requires specialised hardware that becomes obsolete as more efficient models are developed or as mining difficulty increases. Obsolete hardware contributes to electronic waste (e-waste), which is difficult to recycle and often ends up in landfills.

As the cryptocurrency industry continues to evolve, understanding the environmental impact of different consensus mechanisms is crucial for fostering a more sustainable future for blockchain technologies. While Bitcoin's Proof-of-Work mechanism remains energy-intensive, newer systems like FastToken's Proof-of-Authority, Tron's Delegated Proof-of-Stake, and Solana's hybrid Proof-of-History model offer promising solutions with significantly lower energy consumption and carbon footprints. However, no blockchain is entirely free from environmental challenges, and the responsibility lies with developers, miners, and the broader crypto community to adopt more energy-efficient practices. As blockchain technology matures, efforts to minimize the ecological footprint - whether through renewable energy integration, protocol optimizations, or better governance - will be essential in ensuring that crypto assets contribute positively to the global economy without compromising the planet's well-being.

By continuing to innovate with sustainability in mind, the cryptocurrency ecosystem can lead the way toward a greener and more sustainable future, balancing technological advancements with environmental stewardship.