Before reading, if you’re unsure about how blockchain technology works, have a look at this two-minute video to get up to speed:
You know it’s big when it’s Googled more times than the word ‘Trump’. In 2017, bitcoin took off like a SpaceX rocket ship. Blockchain technology certainly will change the world just as the internet did so. And for the most part, it’s all good. Except for one major flaw…
The Bitcoin Network Uses a Massive Amount of Energy
Bitcoin has already grown 17x in 2017, from $1,000 to $17,000. The explosive growth in bitcoin has been accompanied by enormous electricity usage.
Mining bitcoin, or writing new blocks of the blockchain by dedicating computer power as “proof of work”, is necessary to make the system work. But as bitcoin goes up in value, more miners are getting involved to profit off this digital gold rush. And as more miners set up and dedicate new server farms to reap the monetary rewards, more energy is required.
This is the fundamental flaw. It’s a major bummer.
How Much Energy are we Talking?
A Grist article has been floating around lately stating that the Bitcoin network already uses as much energy as the country of Denmark! It’s projected to use as much energy as the U.S. in 2019 and as much electricity as the entire world in 2020.
The Grist article implies that each bitcoin transaction requires as much energy as a U.S. home would use for nine days! Can you imagine paying for coffee with bitcoin and using that much energy? That’s laughable.
Another estimate states that “concerns about the cryptocurrency’s energy use are overblown”. The Bloomberg article suggests that bitcoin uses less than an eighth of the energy that U.S. data centers use.
Any way you slice it, it’s not sustainable. There’s already been so much energy efficiency progress over the past decade with LED lights, thermostats, and building designs. Shouldn’t bitcoin follow suit?
New Methods for Mining
Some solutions have been developed. Miners use computing tools that are “100 million times as fast and with one-millionth the energy of a 2009-vintage” computer. These efficiency gains could ensure bitcoin’s sustainability, allowing it to exist in the clean future.
Additionally, an innovative company named Envion has re-envisioned the process of mining by utilizing abundant solar energy. Envion has mobile mining servers housed in shipping containers that travel to solar farms to run off the excess solar power that would otherwise go unused without energy storage. A clever concept.
Finally, not all blockchain technologies use the same “Proof of Work” consensus algorithm that we associate with bitcoin mining.
Enter, Chia, a cryptocurrency created by the inventor of BitTorrent, a technology that paved the way for bitcoin. Chia acts as a sustainable substitute for bitcoin by building a blockchain based on proofs of space and time to make a less wasteful cryptocurrency. See the founder’s talk at Berkeley to learn more.
Companies are racing to take advantage of this digital gold rush. But companies with sustainability in mind will likely outlast the energy intensive technologies in the long run.
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Brought to you by Yair Crane in Los Angeles, CA
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