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Blockchain and cryptocurrencies are not known as the most energy-friendly technologies, but initiatives are being put in place to make the industry more sustainable. As per a report conducted by Chainlink Labs in conjunction with Tecnalia Research, there are new dynamics that are driving energy providers to change to blockchain users to clean energy in a bid to climate change.
The report, “Managing Climate Change in the Energy Industry With Blockchains and Oracles”, looks at how the infrastructure in the blockchain and crypto industry such as tokenisation, smart contracts and blockchain oracles, can be shifted to cleaner energy to manage climate control. Energy executive at Tecnalia Jose Luis Elejalde commented on the need to shift blockchain energy providers to cleaner energy, noting the possible use that blockchain can offer the green energy industry to assign value to clean energy investment. According to Elejalde, the potential exists in the blockchain industry to design fully automated systems of reward and incentive for participating in sustainable practices, encouraging the use of clean energy across sectors.
According to the report and research conducted in the industry, blockchain technology can be used across three layers: The settlement later, the application layer and the computational layer. As per the report, blockchain technology itself can be used as a database in settlements, with smart contracts driving the application and oracles creating connectivity in the computational layer. With these three layers in place, the use-case of the underlying technology can help tokenise carbon credit (encouraging cleaner energy use) and smart grid management. This will help reward systems that use more sustainable energy sources as well as offering smarter management, which is both cost and time effective overall. Together, these approaches can help contribute to a shift towards clean energy use.
How exactly can blockchain tech contribute to cleaner energy use?
According to the research, blockchain technology, through the creation of hybrid smart contract systems, can be used in eco-data reporting that is both transparent and immutable. With a blockchain-based database that can be worked on with field experts across the industry, there is a massive possibility of collecting verifiable and credible data, Projects like Hyphen, that make use of oracles to show data on greenhouse gas within the blockchain, are a case of how the industry can create ways to monitor energy consumption, making it easier for companies, corporations, and nations to manage their energy use.
As blockchain and cryptocurrencies become more and more integrated across sectors, clean energy in the industry will become not only important but critical for sustainable use. Using the technology to work towards better, cleaner systems might also drive development as more companies start taking advantage of the opportunities blockchain technology offers.
As part of the report, executive at Chainlink Labs William Herkelrath commented that “a data-driven backend infrastructure is critical to propelling the cross-sector collaboration needed to address the climate crisis.”