Want To Invest In Crypto Sustainably? Here’s How

Want To Invest In Crypto Sustainably? Here’s How
  • PublishedJuly 5, 2022

As the climate crisis develops, it’s on the top of everyone’s minds — as it should be. Corporate entities have largely contributed to this crisis. However, that doesn’t mean that we can’t respond to climate change at the individual level.

This is why we wrote the post ‘How You Can Save The Planet & Live More Sustainably’. Some tips we shared included using energy more efficiently at home, recycling and composting waste, and buying either second-hand or from ethical brands.

Yet you don’t need to limit yourself to these suggestions. For example, your efforts can extend to your finances too!

If you’re an investor, you may be interested in the burgeoning world of crypto. Crypto mining is a notoriously carbon-heavy process — but there are ways you can invest to help the technology develop in more sustainable ways. Here’s how!

Buy proof-of-stake (PoS) cryptocurrencies

Most cryptocurrencies — including Bitcoin — run on a proof-of-work (PoW) model. Under PoW, crypto miners have to prove that they’ve mined a significant amount of crypto before it’s added to the publicly available supply of cryptocurrency.

However, providing this proof requires miners to conduct trillions of computations using specialised, energy-guzzling computers. The Independent reports that crypto mining activities in Bitcoin alone are said to consume as much electricity as he entire country of Argentina.

Fortunately, others in the crypto industry recognise and are actively combating crypto’s contribution to climate change. Many cryptocurrencies today are instead using a PoS system, which validates transactions based on how much of a cryptocurrency a user holds.

By buying PoS cryptocurrencies, you can help popularise its use over the power-hungry PoW model. Some currencies you can invest in as a store of value are Ethereum 2.0’s ETH, Cardano’s ADA, Solana’s SOL, and Algorand’s ALGO tokens.

Consider yield farming

There are many ways to turn a profit using crypto. You can mine, buy, or sell cryptocurrencies. You can invest in them as a store of value. In the same way, you can create, buy, and sell non-fungible tokens (NFTs).

Another option you can consider is yield farming. Trading platform FXCM explains that yield farming involves “staking” or “pledging” the crypto assets you own in return for compensation.

To get started, procure some coins — maybe you’d like to opt for the PoS cryptocurrencies mentioned above — and pledge them to a liquidity pool. It’ll then be locked up for a certain period. After this period ends, you get a payout by way of interest rates.

All this makes yield farming quite similar certificate of deposits and savings accounts. It’s ultimately another way you can support more sustainable cryptocurrencies while still turning a profit.

Support sustainable crypto initiatives

If you’re wary about buying crypto directly, there’s still a way you can dip your toes in the crypto market. Investing directly in the stocks of sustainably-minded crypto companies, can help you make a difference in your own way.

Since crypto mining has arguably the largest impact on the crypto industry’s carbon footprint, you can consider investing in green crypto mining companies. Canadian Computational Unlimited Inc. is a good example: 99% of its operations run on renewable resources.

You can also support other green crypto initiatives. For example, Polygon — a scaling solution that runs on the Ethereum blockchain —- currently hosts carbon-negative NFTs on the 1Planet Marketplace.

Finally, you can invest in the companies behind PoS cryptocurrencies themselves. By directly supporting the likes of Ethereum, Cardano, Solana, and Algorand, you can further support the sustainable plans they have in store for their tokens.

If you’re interested in crypto, you can still invest in it sustainably. Hopefully, these methods give you ideas on how to get started.

Written By
Gesten Van Der Post

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