Norway is a bastion for renewable energy management in Europe. As much as 99% of Norway’s energy derives from hydropower while the grid often enjoys a green energy surplus.
But for Norway’s largest data center and Bitcoin (BTC) miner, Kryptovault, using regenerative hydropower to attempt to solve valid Bitcoin blocks was not enough.
At the Hønefoss Bitcoin mining operation, which employees have aptly named “the Cathedral” due to its vast and cavernous expanse, the hot air generated by Bitcoin mining rigs is recycled and used to dry out chopped logs.
Kjetil Hove Pettersen, CEO of Kryptovault, told Cointelegraph that Norway is an “ideal location for mining” and that alongside the log-drying operation, seaweed drying operations will kick off in the first half of 2022.
According to Pettersen, Norway has a lot of “trapped” energy, pointing out to a much higher production compared to consumption as well as a limited capacity to transfer the excess energy:
“This translates to very low energy prices and we can ‘rescue’ that trapped energy rather than letting it go to waste.”
It would appear that the withdrawal of electricity subsidies from Bitcoin mining farms in 2018 has not affected the Scandinavian country’s status as a sought-after destination to mine cryptocurrency.
The Guardian newspaper, which typically asserts Bitcoin mining energy-FUD, flipped the narrative while reporting on Kryptovault’s operation. Their article considered “can Bitcoin be sustainable?”
Svein Bjerke, General Manager at the timber company that receives the dry logs, answers that question. In a video, Bjerke says that drying wood with waste heat from Bitcoin mining is the “most environmentally friendly way to do this.”
Moreover, the secondary benefits of Bitcoin mining branch out to more than the environment. Over time, Hønefoss grid customers are actually better off due to the presence of Kryptovault’s energy-hungry process.
Grid fees–like trees–are hacked down year after year because the local area’s total energy consumption increases. The more energy is used, the more prices come down over the long term. The company estimates that circa 2 million Euros is saved due to “Kryptovault’s existence in our grid.”
Nonetheless, the route to mining 100% green and renewable Bitcoin has not been easy. Numerous challenges face miners in Norway, including:
“Project and engineering perspectives to financial challenges, involving banks, tax and regulatory compliance. Just the step of setting up a bank account when working in this industry can be a large challenge today.”
Related:EU securities regulator calls for proof-of-work crypto mining ban
Unphased, these hiccoughs are unlikely to hinder Kryptovault’s vision to transform clean energy into Satoshis. Pettersen says he “can’t think of any better industrial use-cases than what we are doing.”
When asked by Cointelegraph if Kryptovault would consider mining other cryptocurrencies in the future, Pettersen jokes, “for us, Bitcoin is the name of the game.”
Bitcoin (BTC) seems to be on everyone’s mind lately as the world recently witnessed the price of BTC take a rather unexpected bearish turn this month. On January 21, 2022, Bitcoin reached six-month lows, sinking below $40,000 for the first time in months.
While some panicked, other industry experts pointed out that the Bitcoin network has become verifiably stronger than ever before. The growth of the Bitcoin network has become apparent, as hash rate figures for BTC continue to set new highs this month. For example, on Jan. 22, the BTC network recorded an all-time high of 26.643 trillion with an average hash rate of 190.71 exahash per second (EH/s).
The hash rate will continue to grow, which is a good thing
Samir Tabar, chief strategy officer at Bit Digital — a publicly listed Bitcoin miner — told Cointelegraph that the BTC hash rate refers to the amount of computing power being contributed to the network at any given time. Tabar explained that when it comes to Bitcoin mining, a higher hash rate equates to a good hash rate. “The more computing power going towards maintaining a network, the more secure it will be and the more transactions it will be able to handle,” said Tabar.
As such, the recent hash rate figures for Bitcoin are extremely notable, even with the price of BTC being down. Peter Wall, CEO of crypto mining firm Argo Blockchain, told Cointelegraph that he wasn’t surprised to see the BTC hash rate hit close to 200 EH/s. Wall further stated that even with events that have recently disrupted BTC mining hash rate like the political upheaval in Kazakhstan, the hash rate will continue to grow higher each month:
“Argo Blockchain’s mining margin last year in 2021, which is our revenue minus our direct costs, was over 80%. It was a very good year for miners. In 2020, where BTC prices were much lower, our margin was 41%. So, this year I think we will still see strong margins in the space despite the recent drop in the price of Bitcoin and the increase in the hash rate.”
Darin Feinstein, co-founder and co-chairman of Core Scientific — a major publicly-traded blockchain infrastructure provider — told Cointelegraph that based on previous Bitcoin mining hash rate data, the BTC network grew by 200% following the mass exodus of miners from China:
“The Bitcoin network one year ago was approximately 143 EH/s. Following the mining ban in China, the network fell to 63 EH/s. Today, the hash rate has grown to approximately 198 EH/s. This recent increase represents three important metrics. One, it represents a 130 EH hash rate increase on the network. Two, it represents 130 EH of new hosting infrastructure and primarily new generation hardware deployment and three, this deployment has taken place in geographic regions that use far cleaner energy than the energy used in China.”
With this in mind, Feinstein noted that even though the BTC network has hit all-time highs in terms of EH/s, due to the massive improvements in miner chip technology and geographic distribution away from China, the network is now the most efficient and sustainable than it has ever been. Feinstein added that this data is important because it shows how much energy every terahash uses, which is generally represented by a metric called jules/terahash. He noted that this ratio has fallen greatly over the last several years, demonstrating a major increase in mining energy efficiency.
Michael Levitt, co-founder chairman and CEO of Core Scientific, told Cointelegraph that he fully anticipates for the BTC global hash rate to continue growing at an aggressive pace.
However, Levitt mentioned that this growth is dependent on the price of Bitcoin moving forward, along with the success of the infrastructure currently being built. “The amount of infrastructure expected will be challenged by global supply chain issues,” he remarked.
Feinstein added that infrastructure is the biggest challenge when it comes to mining Bitcoin. “The bottlenecks for Bitcoin mining are land, energy, equipment, and lastly, infrastructure. There is plenty of ASIC hardware to be purchased, energy and land are also readily available, but miners need a place to plug in power, and, historically, that is where miners run into issues,” he commented.
North America has become one of the world’s largest Bitcoin mining hubs, as per data from the Cambridge Bitcoin Electricity Consumption Index, which shows that 35% of the average monthly BTC hash rate comes from the United States, while 10% comes from Canada. Wall explained that North America has taken the lead as a global Bitcoin mining hub for a number of reasons. “This is the case due to the region’s crypto-friendly jurisdiction, its stable regulatory environment, pro-innovation nature and, most importantly, access to the most important thing miners need — low-cost power, preferably renewable.”
Wall elaborated that the low costs of power in the U.S. have been significant for miners, especially when organizations tap into the right part of the power grid. “We’ve seen significant growth in Texas over the last 12 months,” he said.
Cointelegraph previously reported that the Bitcoin mining industry in Texas consumed around 500 to 1,000 megawatts (MW) of power during Nov. 2021. The Electric Reliability Council of Texas reportedly anticipates that demand could increase as much as fivefold by 2023 and has planned an additional 3,000 to 5,000 MW.
Wall elaborated that many miners are moving to Texas due to the fact that the state operates its own power grid that consists of a high degree of power from sustainable generation sources, but needs more flexible demand, or load:
“Miners can provide a consistent load that is flexible. It’s also helpful that Texas has demand response programs in place, where miners will shut down and give power back to the grid when there is high demand. This makes the grid more resilient.”
Benefits such as these have prompted Argo Blockchain to build its next 200 MW facility in Dickens County, west Texas, directly next to a 5.5-gigawatt substation. “There is a lot of congestion at that substation and they need local load to relieve it. The power from west Texas needs to go a long way to reach major urban cities like Dallas and Houston. But, if we can use that energy much closer to where it’s being generated, that relieves the congestion,” remarked Wall.
By drawing power from a nearby substation, Argo Blockchain is demonstrating the use of sustainable energy. According to Wall, the mining company has been carbon negative since 2020. This is important, as Tabar stated that a massive environmental, social and governance movement is currently facing the crypto mining industry:
“Miners must draw from clean sources of power or else they will be regulated out of business. It can’t always be about the cheapest sources of power. Miners will eventually suffer valuation discounts if they use dirty power, even if that source is cheap.”
The perks of going public
A rush of mining firms to go public is another trend the Bitcoin mining industry is likely to witness this year. Most recently, Texas-based Bitcoin mining company Rhodium announced plans to offer 7.69 million shares at $12–$14 each in an initial public offering (IPO).
Core Scientific went public on Jan. 20 after merging with Power & Digital Infrastructure Acquisition in a SPAC transaction. Although shares of Core Scientific have
Bitcoin (BTC) is often used to criticize all blockchain-based projects. This is understandable since Bitcoin was the first project to use a blockchain, is arguably the most recognizable and is the largest cryptocurrency by market cap.
In the first half of this article, I will use Bitcoin as a proxy for all blockchain-based projects because most people associate blockchain with Bitcoin. Anything environmentally positive that can be said about Bitcoin will be doubly true for the vast majority of newer blockchain-based projects since Bitcoin uses the oldest version of blockchain technology.
Blockchain energy consumption
Bitcoin has been attacked for high energy consumption. Headlines pointing out that Bitcoin’s electricity usage is comparable to a country’s total consumption is a popular critique. Comparisons are useful, but they can have a deceptive framing effect. For example, the statistics most often cited in these attention-grabbing headlines are taken from the Cambridge Center for Alternative Finance (CCAF). The same organization also points out that transmission and distribution electricity losses in the United States could power the entire Bitcoin network 2.2 times. Always-on electrical devices in America consume 12.1x more energy than the Bitcoin network.
So, the Bitcoin network uses as much electricity as a small country or far less than one sliver of America’s energy budget. Is that a lot? It depends on how you look at it.
Related:Is Bitcoin a waste of energy? Pros and cons of Bitcoin mining
Another often used critique is that Bitcoin’s electricity consumption is growing so rapidly that Bitcoin emissions alone could push global warming above 2°C, or consume all of the world’s energy by 2020. The latter didn’t happen. Why? First, like most network-based technologies, Bitcoin is following an adoption curve defined by the theory of diffusion of innovations — an “S curve.”
The explosive, exponential-like growth in the first half of the curve slows down considerably in the latter half. Second, large and predictable improvements in computer efficiency will continue to lower the energy cost of computing even as Bitcoin’s growth slows. Third, such predictions don’t take into account the evolving energy mixture of Bitcoin.
Blockchain energy mixture
Almost all of the energy consumed by blockchain projects come from electricity used by computers that secure the network. Bitcoin calls these “miners,” but newer blockchain projects can use much more efficient “validators.” Electricity is produced from many different sources, such as coal, natural gas and renewables like solar and hydroelectric. Those sources can create very different levels of carbon emissions, which largely determines their environmental impact. The two most prominent estimates of Bitcoin’s energy from renewables range from 39% in this report to 74% in this report. Either of these estimates is “cleaner” than America’s energy mixture, which is just 12% from renewables.
There is evidence that the public scrutiny to which Bitcoin has been subjected has most likely ensured that energy from renewables will only increase in the future.
Blockchain is worth it
Bitcoin’s energy consumption and composition are not perfect, nor is it as terrible as is often reported. What is often lost in the conversation over Bitcoin’s energy usage is whether Bitcoin’s use of energy is worthwhile. Plenty of industries require energy or produce massive amounts of waste, but most people deem the environmental costs to be worthwhile. The agricultural industry requires massive outlays of fossil fuels for fertilizers and to power field equipment, not to mention producing harmful runoff. Yet, despite the environmental negatives, we recognize the overwhelming importance of growing food. Instead of discarding agriculture, we strive to improve the environmentals of agriculture.
Related:Green Bitcoin: The impact and importance of energy use for PoW
Whether enabling the 1.7 billion unbanked to gain financial inclusion or offering an alternative to predatory international remittance services, it seems clear to me that Bitcoin is worth the energy usage. It’s even clearer that enterprise blockchain is an unmitigated public good.
Newer, alternative blockchain technology uses at least 99.95% less energy than older ones. Enterprise blockchain can use even less energy since it can be tailored for specific use cases. In addition to using significantly less energy, Enterprise blockchain is helping organizations achieve sustainability goals.
Blockchain as a key driver for renewable energy
Solar and wind are now cheaper than fossil fuels such as coal and natural gas. Solar and wind are now comparable to geothermal and hydroelectric. Despite solving the cost problem, renewables have several problems preventing mass adoption. Geothermal and hydroelectric are geography bound. Solar, wind and to a lesser extent, hydroelectric suffer intermittency and grid congestion. Intermittency means they are currently too unreliable. There’s no sun at night, the wind sometimes stops, and there are rainy and dry seasons. Grid congestion is similar to car traffic. Due to geographic constraints, renewables are usually built in rural areas. However, most energy is needed in dense towns and cities. Like a car in a traffic jam, the electricity is delayed getting to its destination.
There are solutions, such as building battery storage and increasing transmission capacity, but these are expensive infrastructure projects. This is where Bitcoin, and blockchain, in general, can help. Unlike Bitcoin miners and other blockchain projects can be built anywhere. They’re profitable businesses so they can essentially subsidize the building of renewable infrastructure by always using excess energy produced.
Related:No, Musk, don’t blame Bitcoin for dirty energy — The problem lies deeper
Another promising energy technology well suited to blockchain is person-to-person (P2P) electricity trading. These energy sharing schemes provide electricity suppliers and consumers with the opportunity to trade energy without the need for existing third-party intermediaries while increasing the level of renewable energy. Similar to renewable infrastructure, blockchain-based projects will incentivize the development of P2P energy grids.
Blockchain enables material procurement and provenance
Consumer demand for more ethically sourced products is steadily increasing. Companies have to prove that their product is produced in such a way that protects the environment and public health, and is made ethically. Consumers wary of greenwashing, have had to rely on information provided by companies. Blockchain-based projects are already changing this dynamic.
Everledger has created tools to increase consumer and enterprise insight into the provenance of a given object. By combining blockchain, AI and IoT, Everledger digitally streamlines compliance processes and allows companies to demonstrate the true origin of their products.
Transparency and traceability will be crucial to fostering consumer trust in food supply chains. Supermarket giant Carrefour and the world’s largest brewer AB InBev partnered with enterprise blockchain developer SettleMint to deliver a digital traceability solution that utilizes dynamic QR codes attached to a product during the packaging process.
Green financing
Green financing is the use of loans to support sustainable companies and fund the projects and investments they make. It will be crucial to close the $2.5 trillion annual SDG funding gap, which is estimated to grow bigger. A good example of green financing is the green bond (GB) market. According to the Climate Bonds Initiative, $269.5 billion in GBs were issued in 2020.
Unfortunately, GBs are not without problems, such as confirming that sustainability metrics are authentic, or that funds were used to support sustainability. Blockchain can immutably store this data, thus, projects can be verified to satisfy sustainability requirements. Blockchain can help in other ways too, like tokenization.
Related:How will blockchain technology help fight climate change? Experts answer
Oi Yee Choo, chief commercial officer at iSTOX, a Singapore-based digital securities exchange, said in this interview: “Even in markets where the demand for green bonds is high because investors are motivated by ESG considerations, tokenization helps investors diversify their portfolio across different bonds because of smaller subscription sizes.”
The blockchain industry is currently far from ideal in terms of environmental sustainability. However, if it maintains its current trajectory, the blockchain industry will not only be an exemplar but an enabler of environmental sustainability.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Matthew Van Niekerk is a co-founder and the CEO of SettleMint — a low-code platform for enterprise blockchain development — and Databroker — a decentralized marketplace for data. He holds a BA with honors from the University of Western Ontario in Canada and also has an international MBA from Vlerick Business School in Belgium. Matthew has been working in fintech innovation since 2006.
As the nonfungible tokens craze took off at the start of the year, many climate-conscious artists vocalized their disapproval of Ethereum’s energy consumption. In May, Elon Musk then derailed Bitcoin (BTC), citing the energy consumed by Bitcoin as cause for Tesla to withdraw its plans to accept BTC as payment for its electric cars.
Both of these events have provoked a surge of debate from inside and outside the blockchain community. In particular, the arguments tend to focus on two areas: Bitcoin’s energy consumption and its dependency on climate-damaging fossil fuels versus renewables and, secondly, the benefits of one blockchain platform over another — generally focusing on consensus models and promoting proof-of-stake as the greener option.
Each debate is overflowing with arguments for both sides. If the IPCC is right, then the need for drastic action to help reverse some of the damage cannot be overstated. To do that, the focus ought to be on the positive applications of blockchain.
Related:Experts answer: How does Elon Musk affect crypto space?
Leveraging blockchain’s strengths
One significant way that blockchain’s impact is already substantial is in its ability to crowdsource large amounts of otherwise wasted energy — which is aggregated and reignited for further utility. Crowdsourcing wasted energy is in keeping with the principles of a circular economy, which eliminates the throwaway culture, for recirculating available resources as much as possible. And computing power is one example.
Whether it be on a personal laptop or a commercial server out of office hours, there’s a vast amount of wasted idle computing power lying around on hardware, particularly when not in use. At the same time, there’s a vast demand for computing power that’s being met by companies like Amazon Web Services, which is continually building new data centers to accommodate this need.
Related:No, Musk, don’t blame Bitcoin for dirty energy — The problem lies deeper
Blockchain networks, like Cudos’ decentralized cloud computing platform, redirect spare computing power from idle computers and put it to better use, reducing waste in the process. Other networks like Filecoin or Bluzelle focus on storage services, but the principle remains the same.
Decentralizing the energy grid
Other projects are using this concept to decentralize energy networks. Brooklyn Microgrid is a hyper-local initiative allowing “prosumers” (producers and consumers) of solar energy to sell their surplus by funneling it into a microgrid where other participants can buy it. It’s the kind of “act local, think global” project that proves anything is possible if you’re willing to start from scratch.
In Vienna, the government had previously funded an initiative allowing citizens to earn token-based rewards for identifying sources of heat waste that can be recycled back into the energy grid. A slightly different variation on the same decentralised theme, but uses the same principles of leveraging blockchain technology for the greater good.
Trustless green credentials
Blockchain technology also has a fundamental role in bringing transparency and accountability to governments and corporations for their role in fighting climate change. Transparency in ESG (environmental, social and governance) matters is currently high on the agenda for chief financial officers following the introduction of the EU Sustainable Finance Disclosure Regulation earlier this year. In its broadest terms, the regulation obliges banks and financial institutions to categorize their investment products according to their green credentials.
Using blockchain to store and verify this information would increase visibility and vastly increase the level of trust that investors can place in products brandishing ESG credentials. It’s quickly becoming easy to envisage a future where consumers and enterprises can make choices based on the algorithmic ESG ranking of any type of organization on the blockchain.
Related:How will blockchain technology help fight climate change? Experts answer
Being the “least bad” blockchain platform will no longer suffice, and the community is far from helpless when it comes to the climate emergency. It has a powerful technology at its disposal, along with some of the best, brightest and most innovative thought leaders in the world.
Clearly, blockchain technology can be applied to a myriad of positive use cases that give more to the green cause than they take away. And in doing so, blockchain technology makes a stronger argument for its applications in environmentalism than against them.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Matt Hawkins is founder and CEO of Cudo Ventures, a provider of global cloud computing and monetization software, and Cudos, a decentralized cloud computing network bridging the gap between the cloud and blockchain by recycling the world’s idle computing power. He previously founded C4L in 2000, which was acquired in 2016 and was one of the U.K.’s fastest data center ISPs, supporting around 1% of the U.K.’s internet infrastructure, and was winner of many fast-growth awards, including: The Sunday Times Tech Track 100, Deloitte’s U.K. Technology Fast 50 and Technology Fast 500 EMEA, and many more.
For some time, the global climate crisis was a hot topic to debate. But the discourse has changed and a consensus has been reached, moving the conversation toward how to stop — or at least to lessen — the ongoing issue of climate change. Two pivotal moments in reaching this point were the adoption of the United Nations’ Sustainable Development Goals (SDGs), whose mission is to be a “blueprint to achieve a better and more sustainable future for all,” and the Paris Agreement, an international accord adopted by nearly every nation six years ago in 2015.
The discussion around how to fight against the global climate crisis has turned to emerging technologies and their role in the process. Back in 2017, the United Nations Framework Convention on Climate Change (UNFCCC) highlighted the importance of blockchain technology in helping to combat climate change globally. The secretariat of the UNFCCC detailed some specific use cases:
“In particular, transparency, cost-effectiveness and efficiency advantages, which in turn may lead to greater stakeholder integration and enhanced creation of global public goods are currently viewed as the main potential benefits.”
Decentralized technologies indeed have the potential to help achieve the SDGs by recasting conventional approaches to sustainable development via the benefits of blockchain technology, such as transparency and immutability. As 2020 showed us, many countries around the globe are already turning to emerging technologies in their fight against the climate crisis and in their efforts to lessen carbon-intensive practices. Some examples include Russia, India, Qatar, the United Arab Emirates, countries in Africa and the Asia-Pacific region, and certainly the G7 nations — which include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
Meanwhile, earlier in 2021, concerns about Bitcoin’s (BTC) carbon footprint became a highly discussed topic both within and outside of the crypto community, forcing some major global media outlets to speak up about Bitcoin’s energy consumption and carbon emissions. However, the topic wasn’t a new one, as experts had already been discussing the pros and cons of Bitcoin mining for a while. Bitcoin’s supporters argued that its energy consumption is irrelevant “when compared with global energy production and waste” and that compared with BTC mining, “Processing gold and steel is wasting money, energy and resources.”
It’s best to set aside the problem of who is right and who is wrong in this debate and instead focus on the impact of it. There is a saying that every cloud has a silver lining, and the most important one that came out of this debate is that the crypto industry has accepted that it must prioritize focusing on green technology, offsetting Bitcoin carbon emissions and leveraging renewable energy.
To find out the impact these technologies can have in the fight against the climate crisis, Cointelegraph reached out to a number of experts in emerging technologies whose goals are directly related to sustainable development and technological innovation. The experts gave their opinions on the following question: How can emerging technologies help achieve the U.N.’s Sustainable Development Goals and lessen the impacts of climate change?
Blockchain mining networks are often victims of their success. The two contemporary realities that demarcate the mining landscape and cause blockchains to fall short of what they promise are 1) the ongoing technological arms race driven by inherent competitive greed; and 2) the rising energy costs associated with proof-of-work (PoW) mining. Blockchains built on the PoW consensus have become highly unequal and increasingly centralized in terms of their hash rate. This concentration of mining power in fewer and fewer hands is an attack on the fundamental requirement for distribution and decentralization that blockchains possess.
In addition, the motivation to ramp up mining power has a knock-on effect in terms of runaway energy costs, which have the potential to cause irrevocable environmental harm, as has been the crux of the Chinese Bitcoin (BTC) mining saga. To ensure a sustainable future for blockchain and cryptocurrencies, the hash rate must be distributed more equitably, ensuring that the chief components of distribution and decentralization are kept intact. This requires a reimagining of the mining process as we know it and necessitates a restructuring of PoW systems.
Related:Green Bitcoin: The impact and importance of energy use for PoW
The detrimental impact of mining re-centralization
Before unpacking what such a solution may look like, it is worth emphasizing the extent of the issues. The PoW consensus was, and continues to be, essential to Bitcoin’s enduring popularity, success and reliability. Most notably, PoW offers a solution to the well-known Byzantine Generals’ Problem in the fields of mathematics and computer science, through an incentivization setup and ongoing resource commitment that makes it infeasible for a malicious party to interfere with honest consensus.
Distribution and decentralization remain the crucial aspects of solving the dilemma where parties must agree on a single strategy to avoid complete failure, by enabling widespread consensus on “the message” and eliminating the risk posed if some of the involved parties are corrupt or unreliable. Yet, the more centralized and dominated by a small number of entities a blockchain network becomes, the less the consensus protocol can function as a solution to this problem. The rise of massive ASIC farms enables a handful of powerful players to exert control over the blockchain infrastructure, thereby threatening its ability to remain distributed and decentralized — and, ultimately, trustless.
This “late-stage” issue of the PoW consensus arises through how miners are incentivized through competition for the block reward. Although an essential part of the game-theoretic structure for keeping the network secure, this all-or-nothing race to the top also creates serious issues. In particular, it gives rise to the allegorical “cheating athlete problem,” which describes how when the reward for a race is worth a great deal, participants will do just about anything to win, including cheating. Imagine a group of athletes at the starting line of the first of a series of races, wherein each one will try to cross the finish line first and win a prize.
There is a certain amount of luck involved in winning each race (it is not simply the fastest who triumphs), but the chance of winning increases with the speed of the athlete. Cheating, in this case, is defined as gaining a substantial advantage over the other runners through the use of technology and/or collusion, such that the winner of each race is not sufficiently random as to provide a solution to the Byzantine Generals’ Problem (namely, distributed consensus through a sufficiently randomly distributed resource commitment).
It is in a similar vein that the PoW race leads to the development of ever more energy-hungry machines and larger mining farms, reducing the decentralization and distribution of the network, and preventing the resource commitment from acting as a means of trustless verification. Additionally, it drives the overall energy usage of the network, potentially to a point where it could impact the environment negatively if left unchecked.
Related:Measuring success: Offsetting crypto carbon emissions necessary for adoption?
Balancing the protocol for blockchain mining networks
To develop a solution to the cheating athlete problem, it is necessary to begin with the realization that it is not the total hash rate of a blockchain network that gives it security; rather, it is how that hash rate is distributed. To this end, one seeks a solution where re-distribution of hash rate is a fundamental feature of the protocol (rather than being left to politics, or centralized committees — no matter how well intentioned).
It is possible to balance the chances of winning “the race” by applying a handicap to those runners who are significantly faster and giving an edge to those runners who are significantly slower. In a blockchain network, this can be implemented through a peer-to-peer, thermodynamic-like balancing process that adjusts the individual hashing difficulty for miners smoothly and verifiably. This allows the network to move toward equilibrium in the effective hash rate and circumvents the worst excesses of centralization of mining power on the network, all while continuing to operate autonomously with no trusted third-party involvement.
There are vast many implementations of blockchain technology currently in existence, the majority of them possessing some form of economic or monetary value and employing an underlying technology that aims to best ensure the security and efficiency of the network. However, an algorithmic balancing protocol, which pushes the network closer toward a homogeneous distribution (although not all the way — a completely “flat” network would bring its own economic and security problems) can achieve the optimal balance between the distribution and economic incentivization. This can substantially reduce monopolistic mining practices while keeping the carbon footprint of the network to a minimum by disincentivizing the continuous ramping up of processing power through costly technologies and the building of large ASIC farms.
A greener, fairer, more secure future
The issues posed by the widespread mining re-centralization we see commonly today pose a significant challenge for the PoW consensus, but they shouldn’t spell its end. Emerging as revolutionary technology innovation, PoW solved a longstanding mathematical and computer science problem that paved the way for the success of Bitcoin and many other cryptocurrencies, while promising an entirely new means of economic exchange. There is a danger that we won’t fully explore the transformative power of PoW if we cast it aside too hastily.
Related: Staking will eat proof-of-work for breakfast — Here’s why
There are similarities here with humanity’s exploration of economic systems. Capitalism is one of the greatest, most progressive systems ever developed in human history — improving innovation, lifespan, opportunities and quality of life for billions of people. However, left unchecked, it can drive unprecedented wealth, inequality and potentially even take us to the brink of climate catastrophe. Rather than abandon it entirely, what societies typically try to do is to balance the pros and cons of this system — to create a form of tempered capitalism in which greed and monopolistic endeavors are not allowed to dominate entirely, so that a more responsible, functioning, fairer society can emerge and flourish. This is largely what societies have tried to implement (to varying levels of success) in the form of wealth redistribution through, for example, taxation, anti-monopoly laws, etc.
Similarly, the PoW consensus is a revolutionary invention but needs tempering to curb the worst excesses of greed within the system. Collectively, we have a chance — and the responsibility — to align the PoW consensus protocol more with the needs of society and with its original purpose by reducing monopolistic tendencies and preventing crypto mining re-centralization. Simply put, instead of reinventing the wheel (abandoning PoW in favor of risky alternatives), what is needed is a way to harness the wheel more effectively to build a machine that connects and changes the world.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Alexander Hobbs is the director of science at Zenotta. Alexander is a Ph.D. graduate in theoretical astrophysics and has authored numerous scientific publications in the areas of supermassive black holes, galaxy formation and dark matter and has spoken at a number of international conferences and workshops. Prior to joining Zenotta, he held postdoctoral positions at the Institute for Astronomy at ETH Zurich in Switzerland and the Institute for Computational Science at the University of Zurich.
The cryptocurrency market got off to a slow start on Aug. 19 after stimulus tapering talks from the U.S. Federal Reserve put pressure on global financial markets, but momentum within the crypto market picked up in the afternoon session as Bitcoin (BTC) bulls finally managed to break above the $46,000 level.
While most altcoins were slow to warm up on Thursday, several altcoins led the way with gains in excess of 20% due to major protocol upgrades and exchange listings.
Top 7 coins with the highest 24-hour price change. Source:Cointelegraph Markets Pro
Data from Cointelegraph Markets Pro and TradingView shows that the biggest gainers over the past 24-hours were Voyager Token (VGX), SwissBorg (CHSB) and Energy Web Token (EWT).
Voyager 2.0 excites investors
VGX is the native coin of the Voyager platform, a cryptocurrency broker that provides trading services to retail and institutional investors.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for VGX on Aug. 16, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
VORTECS™ Score (green) vs. VGX price. Source:Cointelegraph Markets Pro
As seen on the chart above, the VORTECS™ Score for VGX turned green on Aug.15 and proceeded to climb to a high of 85 on Aug. 16, around 46 hours before the price increased 100% over the next day.
Excitement for the project comes as VGX and the platform are undergoing a token swap and upgrade to Voyager 2.0.
SwissBorg pumps after a new exchange listing
SwissBorg is another platform focused on wealth management and it provides a community-centric environment where users can exchange and store their crypto assets.
Data from Cointelegraph Markets Pro and CoinGecko shows that after hitting a low at $0.714 on Aug. 18, the price of CHSB spiked 35% to an intraday high at $0.973 as its 24-hour trading volume surged 445% to $16.1 million.
CHSB/USDT 1-hour chart. Source:CoinGecko
The sudden boost in momentum for the project was the result of the CHSB token being listed on the Bitfinex exchange on Aug. 18 and the growing strength of the ecosystem is evidenced by the recent revelation that the SwissBorg community now has 450,000 verified users.
Related:Stablecoin adoption and the future of financial inclusion
Energy Web Token staking attracts users
The price of Energy Web Token also rallied today after the project debuted new staking features. According to data from Cointelegraph Markets Pro, market conditions for EWT have been favorable for some time.
VORTECS™ Score (green) vs. EWT price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for EWT began to pick up on Aug. 13 and reached a high of 77 on Aug. 14, around 84 hours before the price increased 33% over the next day.
Interest in the project has begun to rise thanks to an ongoing series of team member-led discussions that explain the different aspects of the protocol, including staking and the ‘switchboard’ user interface.
The overall cryptocurrency market cap now stands at $1.954 trillion and Bitcoin’s dominance rate is 43.9%.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
In a little more than 40,000 days — or over a hundred years — we have gone from the first terrestrial flight to the first flight on another planet. Within that short time, the amount of fuel burned and, unfortunately, even lives lost have been immense. In exchange, flight has completely transformed everything from commerce to warfare and has led to the birth of completely new industries. As aviation progressed, fuel efficiency improved and mortality rates also dropped immensely.
In the digital realm, blockchain technology could be equally as transformative, with applications in everything from trade, exchange, cooperation, identity, and resource usage management. At the moment, these advancements come at the cost of high levels of electricity usage. This is a concern that should and will be addressed.
Related:Ignore the headlines — Bitcoin mining is already greener than you think
The issue is that the current narrative uses this high electricity usage to call blockchain projects, and especially Bitcoin (BTC), unsustainable. This is not only detrimental to blockchain projects — especially from an investment and adoption perspective — but it is also untrue.
Sustainability is judged on the three broad metrics of ESG — environmental, social and governance. The current debate — characterized by lack of nuance on the one side and needless finger-pointing on the other — has only focused on the environmental aspect of sustainability. The social and governance aspects have been widely ignored, which leads to an inaccurate sustainability perception for both Bitcoin and blockchain projects in general.
Related:Bitcoin miners can prove green potential by undergoing ESG ratings check
Social
The social aspect should be seen in the broader context of the economy-wide shift to platforms. Everything from ride-hailing to buying books to ordering take-out is now taking place on platforms. In this winner-takes-all world, the market power of successful platforms allows them to eventually dictate unfair terms to their workers.
Tokenized blockchain projects have the potential to address this wrong by making possible the ownership of a platform based on a worker’s contribution. The result being workers benefiting from the growth of the platform instead of getting oppressed by it.
Related:Understanding the systemic shift from digitization to tokenization of financial services
Governance
Blockchain technology enables the transparent and automated execution of rules/procedures on a global scale. This capability is based on a combination of immutability, transparency, censorship-resistance, decentralized software execution and economic incentive exclusive to the blockchain.
This makes the blockchain a rich proving ground for governance in the digital age — a proving ground which, as we have seen in the decentralized finance space, is making interesting progress on an almost daily basis. It is only a matter of time until the lessons learned spill over into helping us better manage the global commons.
Related:Decentralized parties: The future of on-chain governance
Conclusion
A piece of fabric and wood from the original Wright Flyer was taken to the surface of the moon by the Apollo 11 astronauts. The fabric and wood had no functional purpose beyond the symbolic tying of these two historic events together.
It has been around 4,600 days since the Bitcoin whitepaper was published. With the breakneck speed of innovation in the blockchain space, the current blockchains — and their energy consumption — will also be icons of the past.
It would therefore be more productive to take a more holistic view and steer toward a sustainable end result, rather than being overly judgemental of a work in progress — and losing possible social and governance gains, opening blockchain up to grifting and profiteering in the process.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Gys Hough is managing partner at Coinstone Capital — a Dutch digital asset investment advisor that focuses on customized crypto assets portfolios for retailers, HNWIs and family offices. Gys writes and lectures on blockchain and society with a special focus on tokenization, inclusive platforms and CBDCs.
Elon Musk is definitely interested in digital currency, but it seems that he doesn’t want to understand it. At least, I worry that he doesn’t have a deep enough understanding of Bitcoin (BTC) and decentralized systems in general.
A decentralized system has to be secure, and proof-of-work (PoW) is the solution for Bitcoin to secure its digital asset. The more successful Bitcoin is, the more energy is required for PoW to secure the network. In other words, the reason that Bitcoin uses up so much more electricity than Dogecoin (DOGE), for example, is because BTC is much more secure than DOGE.
Related:Experts answer: How does Elon Musk affect crypto space?
The irony of Elon Musk
From a power perspective, BTC uses up more energy in Bitcoin mining. This is due to the fact that Bitcoin is in a leadership position. The irony is that electricity is amorphous — amorphous in the sense that you don’t know where it comes from. Just by looking at a kilowatt of electricity transmitted to you, unless someone told you, you don’t know where it comes from. You have to track the origin source, where sometimes the source is green and renewable — such as solar, wind, hydro or geothermal — but sometimes the energy is dirty coal, nuclear and other dirty energy supplies that are out there.
The main issue is that energy itself is neutral. Energy doesn’t know where it came from. Energy is just energy — electricity. So, the irony is that with Elon Musk, the electric cars that he sells at Tesla are powered by the same energy that’s used in the coal-powered BTC mining machines. It is ironic that he’s been criticizing the mining machines for using up a lot of energy, as the Tesla cars are powered using a lot of energy that comes from all over the world. If you get to build and sell 10 million cars, they are going to use a lot of energy as a principle.
Who’s right, who’s wrong?
The way to truly get rid of dirty energy is to shut down production at the source: the power plant. This is the only way to get rid of unsustainable sources of energy. If Bitcoin mining is necessary, you may think that Christmas lights are okay or turning on the air conditioning is okay when in reality, Christmas lights — in my opinion — are truly unnecessary. I can also argue that air conditioning is also unnecessary. On the other hand, washing machines and dryers are necessary, but if you really wanted to, you could try to do the laundry naturally, by hand and in the creek behind your house.
These subjective concerns about what’s right or wrong, or how one uses their electricity, come down to society. Do we allow society and the mature adults who live in it to choose how they want to use electricity? Should there be some standards, rules or even laws that would regulate it?
If you can use washing machines or air conditioners, why can’t you use Bitcoin mining machines? All of these appliances are wasting energy, but these examples are designed to make our lives easier and better.
Whether it’s the Paris Agreement or some other important international decree, the goal must be to eliminate dirty energy at its source, at the power plants, as mentioned previously. To be completely fair, many of the other industries use a lot of electricity: aluminum, steel, gold and silver mining — they all take up a lot of electricity and use a lot of energy, whether it’s electricity or fossil fuel energy. In the end, it’s a matter of judgment on which activity is good or bad. The answer here would be entirely subjective: For some, it’s good to mine gold or process steel, while mining Bitcoin is environmentally destructive. Conversely, I would argue that mining Bitcoin is good, and processing gold and steel is wasting money, energy and resources. After all, it’s subjective.
Why did Musk choose Dogecoin?
Elon Musk likes being famous, and he likes power — many people probably do. What’s interesting is that with Bitcoin, he doesn’t have influence on it, due to Bitcoin’s already strong following. In other words, he could not take over Bitcoin and set the direction for it, as it’s already too strong for that.
Look at some of the top cryptocurrencies apart from Bitcoin: My brother, Charlie Lee, is the public face of Litecoin (LTC). Ether (ETH) has a very public founder, Vitalik Buterin. Behind Tether (USDT) is Jean-Louis Van Der Velde. Binance Coin (BNB) has Changpeng Zhao, so on and so forth, and they cannot be taken over because there are notable people in the driver’s seats, so to speak. Finally, you have Dogecoin, which was created to be similar to a hobby project, but then the founders of Dogecoin seemed to have disappeared, and DOGE was not actively maintained.
Here is an interesting theory: Elon Musk found out about the tragedy of Dogecoin and realized it could be something that he could take control over. He could become the new head of Dogecoin. (That’s why I think he didn’t choose any other cryptocurrencies, as they had their own beloved founders and leaders). With such a strong, famous leader of Dogecoin, the price skyrocketed. That’s my theory, but in general, I don’t like centralized digital currencies. The fact that you can take over Dogecoin and set the direction single-handedly is a bad sign for Dogecoin. To me, that’s not very interesting.
This article is from an interview held byMax YakubowskiwithBobby Lee. It has been condensed and edited.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Bobby Lee is the former CEO of China’s first cryptocurrency exchange, BTCC, founded in 2011. Lee received both his bachelor’s and master’s degrees in computer science from Stanford University, and started his career in tech as a software engineer at Yahoo. His current venture is Ballet, a cryptocurrency hardware wallet designed for accessibility and adoption by the masses. Lee is also vice-chair of the board of the Bitcoin Foundation and the brother of Litecoin founder and advocate Charlie Lee.
Is it possible to mine Bitcoin (BTC) using only 100% renewable energy sources and deliver the same economic returns as those using carbon-based sources? The answer is yes, according to Square’s recent analysis on the cost of renewables and their impact on Bitcoin mining.
Unfortunately for our industry, the number of headlines and headline-making tweets about Bitcoin’s energy use and potential environmental impact has followed its rise in value in recent months. The increased media scrutiny has led to increased calls for regulatory action and even a proposed bill in the New York State Senate that would place a three-year moratorium on non-renewable Bitcoin mining in the state.
Related:Green blockchain should work smarter, not harder
This is one debate where both sides have a point. Critics are correct: Bitcoin mining does use a lot of electricity. The Cambridge Center for Alternative Finance estimates that the total electricity used worldwide by Bitcoin miners is an average of 113 terawatt-hours per year. This would place Bitcoin’s energy use somewhere between the United Arab Emirates and the Netherlands, two countries with a combined population of approximately 170 million people, which is admittedly a lot. However, the Cambridge Center for Alternative Finance’s recent “3rd Global Cryptoasset Benchmarking Study” shows that 76% of miners are using at least some renewable energy in their operations and that 39% of all energy consumption used in proof-of-work mining, such as mining Bitcoin, is from renewable sources.
Related:Is Bitcoin a waste of energy? Pros and cons of Bitcoin mining
Now that we have discussed Bitcoin mining’s energy consumption and carbon footprint, let’s try to put those figures in context. By looking at three directly relevant comparisons: the United States electricity grid, the traditional finance system and gold mining.
The electricity grid, traditional finance and gold mining
Let’s start with comparing Bitcoin mining to the electrical grid as a whole. Data from the U.S. Energy Information Administration shows that approximately 20% of U.S. electricity generation for 2020 was from renewable sources. This means that with 40% of its energy consumption coming from renewables, Bitcoin mining is twice as green as the national grid as a whole, reflecting the conscious decision-making of the industry to minimize its carbon footprint.
Moving on to traditional finance, there are two critical lenses to evaluate the industry through: 1) the financing of fossil fuel projects and 2) the industry’s carbon footprint. The former is a critical piece of the discussion, as shifting deposits away from traditional financial institutions reduces their capacity to fund environmentally destructive activities.
According to the Rainforest Action Network’s “Banking on Climate Chaos — Fossil Fuel Finance Report 2021” released in March, the world’s 60 largest commercial and investment banks have provided $3,800,000,000,000 — yes, 3.8 trillion U.S. dollars — worth of financing to fossil fuels since the signing of Paris climate accord in 2015. Think about that for a minute — the Paris Agreement is the world’s definitive step toward combating climate change, and yet, the world’s largest banks have provided financing equivalent to the GDP of Germany, the world’s fourth-largest economy, to fossil fuels since its signing.
For all of the outdated, exaggerated criticism of Bitcoin as a means of money laundering, terrorist financing and many others, the traditional finance industry has an incredible amount to answer for as far as its capital being used for destructive activities.
Looking at traditional finance’s carbon footprint, Galaxy Digital published in May “On Bitcoin’s Energy Consumption: A Quantitative Approach to a Subjective Question,” which is a breakdown of the energy consumption of Bitcoin mining and the two industries to which Bitcoin is often compared: traditional banking and gold mining. The traditional banking system analysis looks at the energy consumption of the world’s top 100 global banks, breaking down their energy consumption across four primary categories: data centers, branches, ATMs and card network data centers. Using publicly available data from industry leaders, Galaxy estimates the energy consumption to be around 260 TWh per year. This is more than double Bitcoin mining’s energy consumption and notably excludes key pillars of the system, including central banks and clearinghouses, due to lack of reliable data sources, suggesting the multiple may be materially higher.
As with its analysis of the traditional banking system, Galaxy’s analysis of gold mining captures what is likely to be only a subset of the industry’s total energy consumption. Using the World Gold Council’s own analysis contained in the 2019 report titled “Gold and Climate Change: Current and Future Impacts,” and limiting the scope of the analysis to direct greenhouse gas emissions, greenhouse gas emissions from electricity purchased by gold miners, and greenhouse gas emissions associated with the refinement and recycling of gold, Galaxy estimates the industry’s electricity consumption associated with greenhouse gases to be 240 TWh per year. At a base level, that means gold consumes around 85% more energy per year than Bitcoin mining. However, given that the Cambridge Center for Alternative Finance estimated that approximately 40% of Bitcoin mining’s energy consumption is from renewables, that means gold mining’s consumption of non-renewable energy is 3x that of Bitcoin mining.
Bitcoin’s green potential
Being better than your worst comparisons is not enough. For Bitcoin and Bitcoin mining to realize their full potential, we absolutely have to do better as an industry. We believe that the two key levers to do so are thoughtful regulation and industry action, but the inclusion of the former may surprise you. Isn’t Bitcoin supposed to be full of people who reject regulations?
The truth is, regulation on its own is neither good nor bad, but depends how it is crafted. Thoughtful, specific regulation can oxygenate an industry by supporting innovation, incentivizing good actors while disincentivizing poor actors and giving the public confidence. Look no further than the state of Wyoming, where legislators have been working with blockchain industry leaders since 2017 to pass 22 laws that provide a clear and encouraging regulatory environment that has since brought tens of billions of dollars of business to the state.
At the same time, overly broad, blunt regulation, like the anti-mining law proposed in the New York State Senate, can kill an industry. We look forward to working with regulators to help craft a regulatory regime that oxygenates the industry while addressing the very legitimate public interest concerns at the same time.
Related:Blockchain will thrive once innovators and regulators work together
Finally, we come to the stakeholders who bear the greatest burden but also have the greatest ability to enact change in decarbonizing Bitcoin mining: the industry itself. With an estimated total of 40% of the industry’s energy coming from renewable sources — which is twice the share of the overall electrical grid in the U.S. — we should be proud of the progress we have made.
However, we are unequivocal in saying that more has to be done. We believe that the Crypto Climate Accord is a brilliant first step. We encourage all in our industry to not only sign the accord and satisfy its goals of reaching net-zero emissions from electricity consumption by 2030 but to surpass those goals as soon as possible. We believe this will happen, not only because it is the right thing to do but because those in the industry who adopt 100% renewable strategies will be rewarded.
Related:Bitcoin mining’s future is green, and Russia has the best chance
The market is the ultimate arbiter of success, and we believe that the era of responsible capitalism is upon us — investors and consumers vote with their wallets, supporting responsible actors while shunning those whose actions drive negative externalities.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Dan Tolhurst co-founded Gryphon Digital Mining in 2020 with the vision of creating the ESG-driven Bitcoin miner, and looks forward to the day that all Bitcoin mining is done using renewable energy sources. He has deep expertise as a strategy executive from his time at Netflix, The Walt Disney Company and Booz & Co., in a career spanning five continents. He holds both an HBA and an MBA from the Ivey Business School at Western University and a JD from Osgoode Hall Law School at York University. He spends his free time exploring London’s parks, travelling and cheering on his beloved Toronto Raptors.