Cardano is ready for MiCA: Sustainability indicators are published

As part of an environmental assessment mandated by the Emerging Markets for Crypto-Assets (MiCA) regulation, the Crypto Carbon Ratings Institute (CCRI) has published detailed sustainability metrics for the Cardano blockchain. CCRI partnered with the Cardano Foundation to work on the sustainability assessment that provides a detailed overview of the network’s energy consumption, carbon emissions, waste production, and its broader environmental impact, serving as a check on compliance with the latest regulatory standards from the European Securities and Markets Authority (ESMA).

Is Cardano Ready for MiCA?

Cardano’s infrastructure, running on a proof-of-stake (PoS) protocol called Ouroboros, shows a significant reduction in energy consumption compared to traditional proof-of-work (PoW) networks. The annual energy consumption of the Cardano network stands at 704.91 MWh. For comparison, traditional PoW networks like Bitcoin consume a significantly higher amount of energy, often equivalent to the production of small countries, as the report points out.

Cardano’s total annual carbon emissions are estimated at 250.73 tons of CO2 equivalent. The carbon intensity, which measures emissions per unit of electricity consumed, is 356 grams of CO2 per kWh. This figure is indicative of the types of energy sources used by the grid, reflecting a mixed reliance on renewable and non-renewable resources.

The CCRI report states: “We find a total annualized carbon footprint of 250.73 tCO2e for the Cardano network. The carbon intensity of the electricity consumed amounts to 356 gCO2 per kWh, suggesting a marginal but necessary shift toward more renewable sources to further reduce this metric.”

One of the new metrics introduced by the MiCA framework is the measurement of waste generation, particularly e-waste. The Cardano network generates approximately 8.26 tonnes of waste electrical and electronic equipment (WEEE) per year. Of this, 51.93% is not recycled, highlighting an area for improvement in waste management practices across the lifecycle of network hardware.

The report examines the impacts of grid operations on natural resources, including critical raw materials needed to produce hardware components. These materials are often scarce and have significant extraction costs, both environmentally and economically. Grid energy consumption also indirectly affects water consumption, particularly in regions where non-renewable energy sources predominate and where water is used extensively for cooling purposes in electricity generation.

Under the MiCA regulation, which came into effect in June 2023, all crypto-asset service providers are required to disclose the full environmental impacts of their operations. CCRI’s detailed report on Cardano not only aligns with these requirements, but also sets a precedent for transparency in reporting sustainability metrics within the crypto industry.

At the time of writing, the Cardano network operates 3,147 nodes and has processed an annualized number of 19,530,055 transactions. These operational numbers are essential to understanding the network’s physical infrastructure and environmental load. The average power per node is 25.576 watts, with the total network power being 80.47 kW. The energy demand per transaction per second (TPS) is 0.192 W.

Overall, the CCRI report provides a vital insight into Cardano’s environmental profile and its alignment with global sustainability goals. As the crypto industry faces increasing scrutiny regarding its environmental impact, such assessments will be crucial for investors, regulators, and the broader community to make informed decisions about the sustainability of blockchain technologies.

At press time, ADA stock was trading at $0.41.

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