FEW technologies have undergone a quieter environmental, social and governance (ESG) re-rating than blockchain.
Not long ago, it ranked among the worst polluting digital sectors. Much of it has since moved on. The industry has not solved every ESG problem, but it has earned a second hearing.
At the start of this decade, bitcoin alone burned through 143 TWh of electricity a year – more than most countries. Today, many leading blockchains consume less than 10 GWh annually (1 TWh = 1,000 GWh), marking a near-vertical collapse.
The main reason is blockchain’s consensus algorithm: When you change this, the energy bill changes drastically.
Under the Proof-of-Work (PoW) model used by bitcoin, miners compete to approve a block of transactions through sheer computing brute force. Newer ones such as Proof-of-Stake (PoS), by contrast, assign this task to nodes that commit tokens as a stake.
Ethereum made the switch in 2022 and cut its energy use by 99.99%. Over 60% of actively maintained blockchains now run on eco-friendly non-PoW designs like PoS.
An International Monetary Fund study found that non-PoWs consume far less energy per transaction than many legacy payment systems.
For credit card companies, their usage can be higher by a few orders of magnitude once physical card operations and network maintenance are included.
Still, bitcoin is the industry’s biggest culprit for emissions, releasing roughly 98 million tonnes of carbon dioxide each year.
The mining map has made it worse. China is recalibrating its industrial base in pursuit of domestic energy security and ‘green tech’ leadership.
After it banned bitcoin mining in 2021, most of the activity moved to the United States where hydropower was replaced by heavier fossil fuel-based grids.
With energy prices at wartime highs, miners are turning to greener energy mix and co-locating their farms for operational efficiency, where flexible bitcoin loads can soak up surplus electricity and shut down during peak demand.
Some are pivoting to artificial intelligence (AI) compute, which can generate up to 10 times more revenue per megawatt, or building dual-use facilities for ASIC rigs and GPU clusters.
E-waste remains largely unresolved, however. Bitcoin hardware often becomes obsolete within 18 months; they are built for one job and cannot be redeployed to mine another digital asset.
To stay competitive, miners must continually replace old equipment, dump them in landfills, or export them under the guise of “secondhand goods”.
These factors hit close to home: Malaysia is among the world’s top bitcoin producers, typically ranking seventh or eight in hash rate.
Major global miners like Bitmain manufactures here, while Bitdeer leases our data centre capacity for high-density hosting. At the same time, the government is cracking down on electricity theft which underground miners are notorious for.
Since April 1, 2026, a total prohibition on e-waste imports has been in force, while local authorities work to ship back all 8,000 tonnes sent illegally to our shores.
If you’re a corporate investor with strict ESG mandate, the key takeaway is that crypto should not be treated as a single environmental category.
There’s a clear distinction between PoW and non-PoW, with the former carrying most of the carbon burden.
Companies planning to add bitcoin treasuries (from bitcoin’s PoW network) to their balance sheet may have to make transition risk disclosures under the National Sustainability Reporting Framework (NSRF) and its phased timelines.
It will likely affect a company’s Scope 3 emission profile, as an upcoming revision to the Greenhouse Gas Protocol (which NSRF adopts) explicitly includes digital assets held, bought or sold, as part of carbon accounting.
Non-PoWs are less problematic and may approach net-zero in some cases. Ethereum, the highest-ranked network, earns an AA grade (based on the industry’s ESG benchmark by CCData CCRI) as do solana, polygon and aptos.
Bitcoin gets a brown B, though it’s increasingly powered by renewables (57% according to 2026 estimates).
Essentially, the company’s choice of digital asset will determine its subsequent offset plans. Some auditors note that blockchain’s public image has improved just as AI has become the latest punching bag.
Big Tech’s massive buildout and power binge for AI is outpacing its decarbonisation initiatives to such an alarming extent that it pollutes more for every dollar of revenue it generates!
In all fairness, blockchain’s progress deserves credit because it cleaned up its dirty footprints on its own volition; particularly when the current US administration has rescinded federal ESG commitments and withdrawn from climate accords (despite being the world’s largest bitcoin miner with half the emissions).
The industry did the right thing without being told and without excuse, regardless of whether the political zeitgeist calls it “compliance” or accuses it of being “woke”.
Blockchain does not deserve a free pass, but it has proven something more important: That it can manage shared resources responsibly with decentralised governance and avoid the Tragedy of the Commons.
Now let’s see how AI handles its ecological mess.
Edmund Yong is a director of the Generative AI Association of Malaysia and ambassador of the Global Blockchain Business Council founded in Davos. The views expressed here are the writer’s own.
