Open-source “Green Hashrate” software solution will track and verify green Bitcoin mining
Tesla recently proclaimed it will resume accepting Bitcoin as payment once the cryptocurrency’s miners achieve 50% sourcing from renewable energy. Tesla’s position is demonstrative of growing demands among crypto investors (and investors more generally) to prove the environmental, social, and governance (ESG) credentials of investment options.
In response, today nonprofit Energy Web is releasing an open-source architecture for a “Green Hashrate” application that will enable Bitcoin miners to claim and verify the amount of renewable electricity used in their operations from the bottom-up. There are several expected market applications, including:
- Enabling green mining pools to require proof of renewables for any miners as part of the know-your-customer (KYC) process to join a green mining pool;
- Helping miners deliver proofs of renewable energy sourcing to local regulators and/or investors to meet ESG criteria;
- Over time, proving to crypto investors (like Tesla) and regulators the actual amount of renewable electricity powering an entire cryptocurrency network at any time.
The first version of this solution will be manual and is designed around the KYC process for green mining pools like Terra Pool, a green mining pool spearheaded by two Crypto Climate Accord Signatories, Argo and DMG Blockchain. The next step is to automate the application making it possible for miners, utilities, and in some cases regulators to trust that a given Bitcoin mine is in a specific part of a grid with a particular mix of renewables. To accomplish this, the solution will leverage the Energy Web Decentralized Operating System (EW-DOS) and in particular decentralized identifiers so as to protect proprietary miner information in compliance with GDPR and other privacy-protecting regulations around the world.
Technical Architecture for Blockchain-Agnostic Proof of Green Solution Stack
In this solution architecture, a Bitcoin miner creates a decentralized identifier (DID) that is anchored on the Energy Web Chain, a public blockchain built for the energy sector. In order to deliver the required KYC credentials to join a green mining pool (or for that matter, to make any legitimate public claims about sourcing from 100% renewables), miners must provide verification from the appropriate market authority, such as an electric utility and/or energy attribute certificate issuing body, to prove its renewable energy sourcing. This verification is then linked to the miner’s DID and documented on-chain.
The most immediate users of this solution will most likely include miners located in geographies already using 100% renewably-generated electricity — namely, geographies with 100% hydro (or even volcanoes) that are becoming increasingly appealing to miners— and miners that procure and claim energy attribute certificates at a 100% proportion to their electricity use. Some miners may also want to show that their electricity purchases match electricity use on an hour-by-hour level in line with the emerging EnergyTag certificate standard currently being defined and tested in various demonstrations.
In setting the vision for the Green Hashrate application, several requirements were considered to ensure it is poised for adoption across the global Bitcoin mining community. For example, the application does not impact the fungibility of Bitcoin — a core requirement for any realistic solution — and provides privacy protections around a given mining facility’s actual energy use and precise location. This solution must also eventually illustrate the overall adoption of verified renewable energy use as a percentage of overall Bitcoin hashing across the entire Bitcoin mining network at a given time, which would set a new example of industry-wide ESG transparency for other industries to follow.
“I am excited to see the speed in which Terra Pool is actively working with CCA to develop and implement clean energy standards that are pushing forward the positive momentum that the CCA is driving in moving blockchains to net zero carbon,” commented Sheldon Bennett, CEO of DMG Blockchain Solutions.
“Our vision is for any crypto miner in the world to be able to download the Green Hashrate application and show to the rest of the world exactly how much renewable electricity that mine is using,” said Jesse Morris, CCO of Energy Web. “And by using technologies like blockchain paired with decentralized identifiers, we can pull this off in a way that guarantees privacy of sensitive information for all parties involved.”
Since the Green Hashrate application is open-source, once developed any Bitcoin miner or green mining pool can use and build on top of it to meet their respective needs. This solution could also be easily extended to other industries to streamline the verification of renewable energy sourcing, from data centers and factories to electric vehicle fleets and commercial buildings.
Looking forward, there are two design questions being considered that will need to be solved in order to scale the solution:
- How can we streamline, digitize, and automate utility verification of miner location and grid mix?
- Beyond increasingly widespread global demand for 100% renewable Bitcoin, how can we create additional incentives to promote widespread adoption of the Green Hashrate application beyond miners who are already 100% renewable?
This Green Hashrate solution is already attracting interest from additional mining companies. “This Green Hashrate software can be instrumental for miners like ourselves to provide auditable tracking and traceability of the provenance of our 100% renewably powered mining facilities. Building regulatory trust and investor confidence in our company’s, and industry’s, commitment to sustainability is more important now than ever before as this topic takes hold of the public conversation around the future of blockchain technology,” said Brittany Kaiser, Chair of the Board at Gryphon Digital Mining, which is also a CCA Signatory.
We will report back in the coming weeks with updates on the technical development and tests of this Green Hashrate solution.
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Together, we can #MakeCryptoGreen!