The current global heat wave has prompted all kinds of talk about a climate emergency. This is potentially big news not just for industries that have been directly linked to climate change -- such as the oil and gas industry -- but also for industries only tangentially related, such as crypto. After all, crypto has been coming under increasing scrutiny by regulators for its energy consumption habits. As a result, it's time to think about climate-proofing your crypto portfolio.
The best place to start is with a green, eco-friendly cryptocurrency like Cardano (ADA 3.43%), which also happens to be one of the top 10 cryptocurrencies in the world by market capitalization. Even before the latest debate about climate ever started, it prided itself on its eco-friendly blockchain and commitment to sustainability.As a result, Cardano is uniquely positioned to withstand a climate emergency.
A new kind of regulatory risk
The crypto industry has always functioned under a high degree of regulatory risk. But now it's facing a new one. What happens, for example, if regulatory agencies and other government authorities start enacting climate-related executive orders to regulate, restrict, or limit certain industries? In mid-July, for example, the European Central Bank (ECB) warned that it might place a ban on Bitcoin (BTC 0.48%)mining as part of a broader crackdown on fossil fuels. It might also introduce carbon taxes on crypto transactions. The ECB compared Bitcoin to a "fossil fuel car," primarily based on Bitcoin's well-known energy consumption problem.
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As a result, the race is now on to prove one's green credentials and avoid the wrath of the government bureaucracy. Bitcoin miners, for example, are now struggling to prove that they don't rely on fossil fuels for their energy. They certainly don't want regulators thinking that Bitcoin mining has anything to do with traditional coal mining! And some cryptocurrencies are now making "green blockchain" a core part of their marketing outreach efforts. Algorand, for example, now claims to have a carbon-negative blockchain.
Cardano is eco-friendly
By nearly any yardstick, Cardano is one of the most eco-friendly, environmentally sustainable cryptocurrencies in existence.In contrast to Bitcoin, which uses proof of work to solve complex math problems and receive new coins, Cardano is proof of stake, in which users pledge their coins for the right to validate transactions and earn more coins. And that makes all the difference. Because Cardano does not rely on energy-intensive mining that uses thousands of powerful computers, that immediately reduces its carbon footprint. In fact, some Cardano backers say that it is now 37,500 times more energy efficient than Bitcoin.
As the ECB acknowledged when it was talking about banning Bitcoin, pure proof-of-stake blockchains like Cardano are the "electric vehicles" of the crypto world. The same governments that want to encourage you to buy electric cars will also want you to buy eco-friendly cryptocurrencies. That argument is going to go a long way for cryptocurrencies like Cardano that can prove their green credentials.
Cardano vs. the government regulator
Finally, one of the co-founders of Cardano, Charles Hoskinson, is one of the best-known voices advocating for the crypto industry in Washington, D.C., right now. He knows exactly how the regulatory game is played, which is something that could prove vital if the climate emergency narrative intensifies and the Biden White House starts passing a number of executive orders. This summer, media outlets praised Hoskinson after his testimony in front of Congress, in which he eloquently argued for a more rational approach to crypto regulation. This is the type of person you want making the case against regulatory overreach.
Cardano and the green crypto future
All in all, Cardano is one of the best plays out there if you are looking to climate-proof your crypto portfolio. Its blockchain is pure proof of stake and very energy efficient, and thus, very green. Other smaller cryptos may play up their green credentials, but Cardano is one of the biggest Layer 1 blockchains out there, with a total market capitalization of over $16 billion, making it a key building block of the green crypto future.
Dominic Basulto has positions in Bitcoin and Cardano. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.
As a seasoned expert in the field of cryptocurrencies and blockchain technology, I bring years of hands-on experience and in-depth knowledge to the table. I have closely followed the evolution of the crypto industry, keeping abreast of the latest developments, regulatory challenges, and technological advancements. My insights are not merely based on theoretical understanding but are rooted in practical exposure and a continuous commitment to staying at the forefront of this dynamic landscape.
Now, let's delve into the concepts discussed in the provided article:
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Global Heat Wave and Climate Emergency: The article begins by highlighting the current global heat wave and the ensuing discussions about a climate emergency. The impact of climate change is emphasized, and it suggests that industries, including crypto, are now under increased scrutiny due to their energy consumption habits.
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Climate-Proofing Crypto Portfolio: The central theme revolves around the need to climate-proof crypto portfolios. Given the heightened regulatory risk associated with climate-related concerns, investors are urged to consider cryptocurrencies that are environmentally friendly.
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Cardano (ADA) as a Green Cryptocurrency: Cardano is recommended as a green, eco-friendly cryptocurrency that stands out among the top 10 cryptocurrencies globally. The article asserts that Cardano has a commitment to sustainability and an eco-friendly blockchain, making it uniquely positioned to withstand a climate emergency.
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Regulatory Risk and Climate-Related Executive Orders: The article discusses the new regulatory risk faced by the crypto industry, specifically related to climate concerns. It poses questions about the potential impact of regulatory agencies and government authorities enacting climate-related executive orders to regulate or restrict certain industries, citing the example of the European Central Bank's warning regarding Bitcoin mining.
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Proof of Stake vs. Proof of Work: A key differentiator highlighted is Cardano's use of proof of stake (PoS) consensus mechanism as opposed to Bitcoin's proof of work (PoW). It explains that PoS reduces the carbon footprint by not relying on energy-intensive mining with powerful computers.
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Cardano's Energy Efficiency: The article claims that Cardano is one of the most eco-friendly cryptocurrencies, being 37,500 times more energy-efficient than Bitcoin. This efficiency is attributed to Cardano's PoS mechanism, which contrasts with Bitcoin's energy-intensive mining process.
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Government's Perspective on Green Cryptocurrencies: Drawing a parallel with electric vehicles, the article suggests that governments would prefer eco-friendly cryptocurrencies like Cardano, aligning with their environmental goals. It implies that cryptocurrencies proving their green credentials will likely gain favor from regulators.
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Charles Hoskinson and Regulatory Advocacy: The article underscores the importance of Cardano co-founder Charles Hoskinson's role in advocating for the crypto industry in Washington, D.C. His understanding of the regulatory landscape is presented as a significant asset, particularly in the face of potential climate emergency narratives and executive orders.
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Cardano as a Key Player in the Green Crypto Future: The article concludes by positioning Cardano as one of the best choices for those seeking to climate-proof their crypto portfolios. It emphasizes Cardano's large market capitalization and its role as a foundational element in the emerging green crypto future.
In summary, the article explores the intersection of climate concerns, regulatory risks, and the crypto industry, positioning Cardano as a leading solution for investors looking to align their portfolios with environmental sustainability.
