The Cardano Foundation, alongside the Crypto Carbon Ratings Institute (CCRI), has made a significant stride in the realm of sustainable blockchain practices. Their recent release of MiCA-compliant sustainability indicators for the Cardano network positions Cardano as a frontrunner in environmental responsibility and regulatory compliance within the European Union.
The Markets in Crypto-Assets (MiCA) regulation, set to be implemented in the EU, mandates that issuers and service providers of crypto assets disclose specific sustainability metrics. To fulfill this requirement, the Cardano Foundation partnered with CCRI, a leader in blockchain sustainability data, to meticulously assess the Cardano network’s environmental footprint.
This collaboration resulted in a comprehensive report outlining key sustainability indicators tailored to Cardano. The report highlights the network’s energy efficiency, a critical differentiator when compared to traditional Proof-of-Work (PoW) blockchains that consume significantly more electricity.
Here’s a closer look at the key findings:
- Energy Efficiency: Cardano’s consensus protocol, unlike PoW, boasts a considerably lower electricity consumption rate.
- Reduced Carbon Footprint: The annualized electricity consumption for the Cardano network sits at an estimated 704.91 MWh (as of May 2024), translating to a total carbon footprint of 250.73 tCO2e. It’s worth noting that the carbon intensity of the consumed electricity, which depends on the source of power generation, is estimated at 356 gCO2 per kWh.
- Efficiency per Transaction: The report delves deeper, revealing the marginal power demand per transaction processed on the Cardano network. This metric stands at a mere 0.192 W, showcasing the network’s efficiency in handling transactions.
Beyond just electricity consumption and carbon footprint, the report incorporates additional sustainability metrics aligned with the draft regulatory technical standards (RTS) provided by the European Securities and Markets Authority (ESMA). This comprehensive approach ensures transparency and adherence to upcoming regulations.
The release of these MiCA-compliant indicators signifies a major step forward for Cardano. It not only fosters transparency and environmental responsibility within the Cardano network but also serves as a valuable resource for the entire blockchain community grappling with navigating the evolving regulatory landscape.
Frederik Gregaard, CEO of the Cardano Foundation, emphasizes the importance of addressing sustainability concerns as crypto asset adoption continues to rise. He highlights the collaboration with CCRI, a trusted authority in sustainability data, as a crucial step in ensuring the Cardano network meets the stringent requirements of MiCA. This, in turn, will empower financial institutions to integrate sustainability into their digital asset offerings and cater to the growing investor focus on Environmental, Social, and Governance (ESG) factors.
Dr. Ulrich Gallersdörfer, CTO and Co-Founder of CCRI, underscores the significance of scientific methodologies and real-world data in accurately assessing the environmental impact of blockchain networks. He acknowledges the lack of robust sustainability reporting within many blockchain networks and expresses his satisfaction in collaborating with the Cardano Foundation. By leveraging CCRI’s expertise and infrastructure, Dr. Gallersdörfer believes this collaboration will pave the way for the Cardano ecosystem to lead in both regulatory compliance and environmental responsibility.
The Cardano Foundation and CCRI’s initiative sets a strong precedent for the future of sustainable blockchain development. This move not only positions Cardano favorably within the emerging regulatory environment but also sets a benchmark for other blockchain networks to emulate in their pursuit of environmental responsibility.
