Algorand (CRYPTO: ALGO) is focusing on its green credentials and hoping to attract the attention of environmentally-conscious companies, such as Elon Musk’s electric car manufacturer Tesla Inc. (NASDAQ:TSLA).
What Happened: In May, Musk announced that Tesla would no longer accept Bitcoin (CRYPTO: BTC) for its vehicle purchases because the automaker is concerned about the “rapidly increasing use of fossil fuels” used for Bitcoin mining and transactions.
According to Algorand’s spokesperson, the project “pledged to be carbon-negative and the greenest blockchain,” which might potentially “fit [Elon Musk’s] bill” as a possible alternative to Bitcoin.
The company’s recent announcement claimed that the network “was designed from the ground up to minimally impact the environment.”
Why It Matters: The environmental issue is not the only concern about cryptocurrency mining.
According to a Chinese news outlet, Bitcoin mining led to numerous deaths when the surge in power demand caused illicit coal extraction in certain parts of China.
What else: Last year, ClimateTrade, a marketplace where users can directly offset their carbon footprint, partnered with Algorand to power its global platform in an attempt to achieve carbon negative status.
Algorand and ClimateTrade will notarize the network’s carbon footprint and then lock the equivalent number of carbon credits “to ensure that the network is carbon negative,” the companies told Benzinga.
How It Works: Algorand is a proof-of-stake (PoS) consensus algorithm, which means that unlike Bitcoin’s (CRYPTO: BTC) proof-of-work (PoW), it does not require great quantities of energy-intensive computing power to maintain network security.
Instead, Algorand miners, called “stakers,” lock (stake) ALGO coins and then confirm the network’s transactions.
If they try to hurt the network, their coins are taken away — their crypto is “at stake.”