CRYPTOCURRENCIES & THE ENVIRONMENT: WHERE DO WE STAND IN 2025?

By CoinTradeUp Team

published in May 11, 2025

Cryptocurrencies & the Environment: Where Do We Stand in 2025?

Explore how cryptocurrencies are shifting from energy-hungry Proof-of-Work to leaner Proof-of-Stake chains. The article breaks down their carbon footprint, green upgrades like Layer-2 scaling and carbon offsets, and emerging ESG rules, showing why blockchain now aligns with sustainability and detailing the progress ahead and remaining challenges.

Why were crypto-assets first branded “dirty”?

Early on, “cryptocurrency” was almost synonymous with Bitcoin and its Proof-of-Work (PoW) consensus. PoW forces miners to run power-hungry machines 24/7; at its peak the network consumed about 138 TWh a year—roughly 0.5 % of global electricity. Images of coal-fired mining farms in China or Siberia cemented the idea that a single Bitcoin transfer “burned” as much energy as a short flight.

Source: Cambridge Judge Business School

PoW vs PoS: the technological pivot

PoW’s main flaw is its linear energy curve: the more valuable the network, the more watts it burns. Proof-of-Stake (PoS) replaces computing power with staked tokens, cutting energy use by well over 99 %. The watershed moment was The Merge: in September 2022 Ethereum switched from PoW to PoS and slashed its footprint by about 99.988 %. Overnight, the world’s second-largest crypto network became almost negligible in climate terms—proof that a large ecosystem can run without energy-hungry miners.

Source : Bitwave / The Verge

Blockchains “green by design”

Several chains started out on PoS:

Algorand offsets more CO₂ than it emits via ClimateTrade.
Polygon vowed to be carbon-negative in 2022, retiring 90 000 t of CO₂ credits.

The list now includes Cardano, Solana, Tezos, NEAR, Hedera and more. For new projects, an energy-efficient consensus is the rule, not the exception.

Source: algorandtechnologies.com / Web3, Aggregated

Bitcoin: less coal, more wind… yet still PoW

Bitcoin hasn’t changed its mechanism, but the share of renewable energy in mining rose from 37.6 % in 2022 to 52.4 % in 2025 thanks to:

relocation of farms to North America with abundant hydro and wind,
programs capturing flared methane at oil wells,
next-gen ASICs twice as efficient as in 2020 (≈ 15 J/TH for top models).

Source: Hashrate Index

Layer-2 solutions and batching matter

On Ethereum, rollups such as Arbitrum, Optimism and zkSync bundle thousands of transactions before anchoring them on-chain, amortising validator energy across the batch. Adoption has soared since 2023 and now accounts for over half of Ethereum traffic.

Source: ResearchGate

Regulation and ESG indicators

The EU’s MiCA regulation (in force since 2023) mandates sustainability indicators in public token documents. Issuers must disclose energy use and emissions, making comparisons easier for investors.

Outlook: climate-compatible digital finance

Bitcoin is likely to stay PoW, but market forces push miners toward greener power and ever-more-efficient chips.
Proto-Danksharding and other Ethereum upgrades slated for 2025-26 aim to cut rollup costs—and energy—further.
New models (Proof-of-Space-Time, decentralized PoA) seek a balance of security, decentralisation and frugality.
On-chain carbon-credit markets (KlimaDAO, Toucan) tokenise offsets, anchoring DeFi in real-world sustainability.

Cryptocurrencies need not be energy hogs; their impact depends on protocol design, the local energy mix, and the sector’s resolve to measure and reduce its footprint.