Cryptocurrencies have taken the global financial markets by storm and are showing no signs of slowing down. Some people believe that cryptocurrencies, such as Bitcoin, are simply a fad; however, others see cryptocurrencies as an essential catalyst in the fight against climate change and the transition to renewable energy and green technologies worldwide. Read on to find out more about how cryptocurrencies can be used to help fund renewable energy and energy efficiency projects in developing nations and which ones are best positioned to make this happen.
Current State of Renewable Energy
In many parts of the world, renewable energy is still a far-off dream. Millions of people lack access to electricity, and even more live in energy poverty, spending a disproportionate amount of their income on fuel. In sub-Saharan Africa, for example, only around one in four households have access to electricity. This has enormous implications for development; without access to energy, it is difficult to power homes, businesses and schools. With this in mind, a team of technologists from Canada are designing cryptocurrencies that will enable developing countries to leapfrog traditional fossil fuels with renewables. Another team, Melanin Solar, an Estonian company, is incentivizing the adoption of renewable energy, targeting regions with high solar reliability indices, for instance, Africa and South East Asia. The idea is that as cryptocurrency adoption grows across the developing world, people will be able to invest locally in renewable energy projects by purchasing tokens that represent portions of those projects’ output over time. If they choose wisely, they can see investment returns while also helping grow clean energy economies back home.
Impact of U.S. Government Tax Credits on Renewables
The U.S. government offers tax credits for businesses and individuals who invest in renewable energy. These tax credits can make a big difference in the economics of renewable energy projects, making them more likely to be built and providing a financial incentive for people to switch to cleaner energy sources. In addition, these tax credits create jobs in the renewable energy industry and help reduce greenhouse gas emissions. They have helped boost solar capacity by 17 times since 2007. A similar program has not been created for cryptocurrency investors, but some think that it should be considered due to the demand and potential impact on developing countries like South East Asia and Africa, where electricity is expensive or difficult to come by.
The Lack of Support Infrastructure is Hindering Adoption of Clean Technologies in Developing Countries
In many developing countries, a lack of support infrastructure is hindering the adoption of clean technologies. For example, there may be no way to recycle used batteries or solar panels. This makes it difficult for people in these countries to switch to renewable energy sources, even if they wanted to. Cryptocurrencies can help fund and finance these infrastructures and make this transition more possible. The blockchain-based platform SolarCoin, for instance, awards one SolarCoin per megawatt-hour of electricity generated by solar power plants in more than 40 countries globally.
How Cryptocurrency Could Be Used in the Future
Cryptocurrency could be used in the future to help fund renewable energy and energy efficiency projects in developing countries. For example, a company could create a new cryptocurrency that would be used specifically for funding renewable energy projects. This currency could then be traded on exchanges and used to purchase renewable energy credits or other forms of financing. Alternatively, a portion of existing cryptocurrencies could be set aside to fund renewable energy and energy efficiency projects in developing countries.