To be Green or not to be, that is the Crypto Question!
The required change in the cryptocurrency energy paradigm.
In recent years, the cryptocurrency model has developed at a great pace and led to the start-up of many business models. Bitcoin, Ether and other alt-corners are multiplying around the world and are now part of our daily lives. Cryptocurrencies have generated both enthusiasm and fear from economic and state actors.
Growing at the same pace as their popularization, came the concerns. Cryptocurrencies have been accused of all the evils: scam, security problems, financial losses more or less consistent… nothing will have been spared them.
The E-Word (E for Energy is a big crypto-taboo)
Problems related to the general sector of cryptocurrencies are more and more known to the general public. Apart from their sensitivity to various hacking attempts, blockchains, cryptocurrencies and data mining have also gained a reputation for consuming a lot of energy.
Recently, the scandal over their excessive consumption of energy had finished placing them as undesirable for a large part of the Net surfers. Each of these digital transactions requires high energy consumption. According to the Digiconomist, the only Bitcoin transactions would consume 30.14 billion kilowatt hours per year, the equivalent of four nuclear power plants.
Last year, some figures released by analysts, outlined that the consumption related to mining cryptocurrencies would exceed that of a small country. According to a study, Bitcoin used, in 2017, about the same amount of energy as Angola or Panama (ranked 102–103 in the world for energy usage). The news had then marked the spirits. Max Krause and Thabet Tolaymat published their article in the journal Nature concerning the energy costs of the “crypto” activities. The authors conclude by estimating that Bitcoin between 2016 and 2018 accounted for between 3 to 15 million tons of CO2 emitted as an externality of mining. This study, while revelling interesting figures, could be improved with some more accurate data and notion. For example, the author’s omission of energy from cooling in Bitcoin mining. This is a very direct part of the mining lifecycle and probably deserve to be included; see similar questioning by Nic Carer in its analysis of the study published in @Medium:
Digesting ‘Quantification of energy and carbon costs for mining cryptocurrencies’
Unpacking the article in Nature
Still a relevant question, but let’s change the paradigm
Are these virtual currencies and the technology that supports them — commonly referred to as the blockchain — the source of innovation or significant economic and ecological risks?
The field of energy, the Power sector, which is already facing increasingly heated controversy over the waste of fossil resources, has found itself besieged by critics of crypto-active.
The latter, stating that too much energy demand, would not only affect individuals who find themselves limited in their consumption.
Today, we can change this trend by changing a paradigm related to cryptocurrencies.
The trend could well take a major turn. Indeed, cryptocurrencies could initiate the transition to green energy. We would need to a business that would include clean energy.
Crypto-currencies to subsidize a green mining
Other voices are being heard today. For them, the mining of altcoins does not have to be based on a model of polluting consumption or requiring fossil resources impossible to hold in the long term. They say today that it would be quite possible to produce digital currencies through alternative energy solutions. These solutions are the ones we already know, which have encouraged producers to look to countries like Iceland or Canada. But we need to go further than that. Clean energy and efficient operation would thus be an alternative to the problem so much mentioned by the defenders of the green revolutions.
To date, crypto-currencies could well initiate a change, favouring renewable energies. The model is more responsible and relies entirely on the potential of the decentralized system. Some experts would be more formal: blockchains could play an important role in the distribution of these alternative energies, just as in the evolution of the public service. This revolution takes the form of a subsidy for green projects, which will ultimately benefit cryptocurrencies.
Indeed, the significant consumption of cryptocurrencies had prompted several regions of the world to consider dissuasive tariffs. This “easy” solution, which was to impose a limit on the cryptocurrency farms that are spreading everywhere, had outraged the farmers, as well as the buyers. The profitability of block chains remains essential for the sector to continue to grow. For many, accusations about crypto-assets are only part of the truth. If many do not hesitate to decry the methods used to generate digitized currencies, the great majority conceals the very origin of this is energy generation. A rendering that would be far from fair and that would be far from serving the interests of the currencies of the web.
Clean Power Generation
So, let’s work on good options to generate the required energy. Some are already in the market, others are in fast development.
For example, Power Ledger is an Australian start-up whose project could, at first sight, look like a parody as it concentrates all the vocabulary cliché associated with new technologies: this young push intends to disrupt the market of renewable energies using crypto-energy in the blockchain. The company is serious and it's objective, bright: to allow anyone to invest and invest in the energy transition market and accelerate, perhaps, the essential evolution to the all-green.
Another tech players could encourage hydropower plants, as is the case in Austria, with Hydrominer, which promises “green mining” by using renewable energy produced in the Alps. A virtuous model, that interestingly use hydropower, the company says it can reduce its energy costs: “it is 85% cheaper than the average European price, which allows it to be competitive with its Chinese competitors”, for the moment still very active in the bitcoin industry.
Some options are given by a combination of clean technologies including renewables and hybrid energy storage with the energy recovery and conversion of waste heat generated by the mining operation. Many options are discussed in this article:
The Combo effect against the Butterfly effect
Artificial Intelligence to boost Energy Storage that will give resilience and efficiency to the Renewable Energy…
At a time when the Intergovernmental Panel on Climate Change (IPCC) keeps repeating its calls for caution in the face of global warming, the use of this energy-consuming technology is clearly questioned. Solutions already exist to imagine a “green” cryptocurrency, based on a “proof of space/proof of time” security. It is therefore relevant to question the involvement of public authorities in the development of these green technologies.
So even if energy is still a relevant question when dealing with cryptocurrencies, let’s change the paradigm and come with solutions. Well defined and with proper green solutions integrated from the start, cryptocurrencies could initiate the transition to green energy. We would need to a business that would include clean energy.
The author, Stephane Bilodeau, ing., P.Eng, PhD, FEC, is an entrepreneur in cleantech, working and teaming on innovation, notably in energy storage, renewables, and artificial intelligence. He is the Founder and Chief Technology Officer, of Smart Phases (Novacab), Fellow of Engineers Canada and expert contributor to Energy Central and to Medium.
You can also look at this other article in The Startup discussing notably of Disruptive Financing including the new Facebook Libra cryptocurrency and other blockchain technology:
An eye for an eye, a disruption for a disruption
How we can fight a Disruptive Climate with Disruptive Technologies and Proactive Leadership
You can find other articles of the same author on Medium here: