In the rapidly evolving world of cryptocurrency, energy efficiency has become a critical consideration. As individuals seek to invest in digital assets while minimizing their environmental footprint, a new class of energy efficient cryptocurrency has emerged. In this guide, we will explore the top 7 cryptocurrencies that not only offer investment potential but also align with sustainable and eco-friendly principles. These digital assets combine innovation with environmental responsibility, making them appealing choices for individual investors looking to make a positive impact while growing their portfolios.
The Most Energy Efficient Cryptocurrency: A Look at Sustainable Options
There are several cryptocurrencies have implemented energy-efficient consensus mechanisms. Among these, Ethereum’s transition to Ethereum 2.0, which includes the adoption of the Proof of Stake (PoS) consensus mechanism, is one of the most significant steps toward energy efficiency. PoS does not require the energy-intensive mining processes associated with Proof of Work (PoW) cryptocurrencies like Bitcoin.
However, it’s important to note that the “most efficient” cryptocurrency can change over time due to network upgrades and technological advancements. The efficiency of a cryptocurrency is also influenced by factors such as its consensus mechanism, the number of validators or miners, and the energy mix used for mining.
1. Bitcoin (BTC-USD)
Bitcoin is, in many ways, the crypto industry in its simplest form for investors. The digital asset was created in 2009 and has become a household name. Although the crypto experienced a remarkable bull run between 2015 and 2017, its price plummeted after that, and many people fear its demise. Bitcoin rebounded last year to deliver gains of more than 260%. It has an unmatched growth runway, despite the competition and regulatory hurdles.
BTC has pulled back sharply of late due to the regulatory crackdowns by various governments, especially in China. There have been concerns about whether cryptocurrency is harmful to the environment due to its large energy consumption. But, this concern will likely fade over time because of the popularity and utility of the crypto.
2. Ethereum (ETHUSD)
Ethereum, with a market capitalization of $269 billion, is the second-largest cryptocurrency. ETH’s growth has been more than 854% in the last year than BTC. It has one of the strongest bull cases in the industry, thanks to multiple growth drivers. Its upcoming ETH 2.0 upgrade will be a key factor in expanding decentralized financing (DeFi).
The update is expected to be completed by 2022. It marks the transition of the platform’s proof-of-work model to a proof-of-stake model. The update will make the platform more secure, efficient, and robust. It will also facilitate the expansion and growth of DeFi projects. These will continue to grow at a rapid pace. Its upcoming upgrade and relevance in the DeFi realm could knock Bitcoin off its perch.
3. Litecoin (LTC/USD)
Litecoin, which has a market capitalization of more than $9.2 million, is one of the most important cryptos in the sector. A fork created it in Bitcoin’s blockchain. This is the oldest cryptocurrency in the market. It has risen by an amazing 215% over the past twelve months. It has been slipping a lot of late. LTC has seen signs of a rebound in the last week. This indicates that it is experiencing a reverse of fortunes.
LTC is similar to BTC in that it is open-sourced, highly decentralized, and has a high degree of decentralization. It is also quicker than BTC, as it takes only 2.5 minutes per transaction, rather than nine minutes. It also has a 40% lower transaction cost than Bitcoin. It’s been a difficult battle to keep its market share and brand equity. It will be difficult to surpass industry veterans, but its unique features and value to users make it a viable long-term option.
4. Tether (USDT/USD)
Tether, a cryptocurrency that isn’t as well-known as its peers, doesn’t get much attention. It is, however, the third most valuable crypto worldwide with a market capitalization of $62 billion. Because it is a stable currency, it stands out from the rest. It can be pegged to fiat currencies such as the Euro or the U.S. dollars. It is therefore attractive to investors who don’t want the volatility associated with investing in cryptocurrency.
Tether is more of a store-of-value and exchange medium than a speculative investment. Investors can increase stability in their crypto portfolios by adding USDT that is backed with fiat currencies.
5. Stellar Lumens (XLM-USD)
Stellar Lumens, one of the most promising DeFi initiatives in the crypto-world, is Stellar Lumens. It is valued at over $6 billion, and its market cap has increased by 260% over the past twelve months. It has done an amazing job in building a utility that its users can use as a cross-border payments platform. Ultimately, XLM’s goal is to work alongside traditional banks. This lofty goal will ensure that it grows at a steady pace in the future. Stellar is investing aggressively in its platform and expanding its goals—Stellar Development Fund (SDF).
A massive $750,000 was invested in Nigerian fintech company Cowrie. In building a platform for local citizens for cross-border payment. It was established earlier this year. Signed an agreement with Ukraine’s government they will use the funds to create a national digital currency. Horizon 2.0 is a new, robust update that will improve the network’s flexibility and efficiency.
6. Binance Coin (BNB – USD)
Binance Coin has more than doubled in 2020 and has increased 733% from January. BNB has greatly benefited from the integrations with Binance. The Binance Chain allows multiple blockchain applications to be hosted. Binance Earn is another option, offering passive income services and products to Binance users. BNB is constantly developing new products and services to provide strong returns to its owners in the future.
Binance Coin, the top cryptocurrency exchange in the world, is an easy crypto investment. Each day, the exchange receives thousands of trades in crypto. BNB’s bull case is expected to grow with the support of the largest exchange and the addition of several new products.
7. Cardano (ADA-USD)
Cardano, an energy-efficient proof of stake altcoin, is the fifth most valuable cryptocurrency worldwide. In the last 12 months, the ADA token has risen by 1,259%. Although it trades at a dollar and some change right now, analysts believe it could soon reach $10 as an energy-efficient alternative for Ethereum and Bitcoin.
Coinbase added Cardano back to its platform in March of this year. Due to its huge energy consumption, Tesla later removed Bitcoin from its website as a payment option. These factors have significantly increased the price of ADA. Alonzo, a smart contract platform that ADA launched, will increase its utility in DeFi.
Muslim Farooque had no positions (directly or indirectly) in any securities at the time of publication. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. Muslim Farooque is an investor at heart and an optimist. He is a lifelong gamer and a tech enthusiast. He has a special affinity for the analysis of technology stocks. Muslim has a bachelor of science in applied accounting from Oxford Brookes University.
Conclusion
As the world places greater emphasis on sustainability and reduced energy consumption, the cryptocurrency landscape is evolving to meet these demands. While Ethereum’s transition to Ethereum 2.0 and its adoption of Proof of Stake (PoS) stands out as a significant move towards energy efficiency, the cryptocurrency space continues to innovate.
Investors are now presented with an array of energy-efficient options, including PoS-based cryptocurrencies like Cardano and Algorand. These digital assets not only offer investment potential but also align with eco-friendly principles, making them appealing choices for those who wish to grow their portfolios while minimizing their environmental impact.
As the cryptocurrency market evolves, it is essential to stay informed about the latest developments in energy-efficient blockchain technologies, as these innovations shape the future of both digital finance and sustainability.
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