Table of Contents
1 INTRODUCTION
1.1 What is Blockchain?
Blockchain is a decentralised ledger, synchronised transaction and data management solution, acclaimed for being the technology behind the success of Bitcoin cryptocurrency. Its main goal is to create a decentralised environment with no third-party manipulation over transactions and data. This technology is now mainstream as it is devoted to transactions-management in an unprecedented way featuring complete trust-based, anonymous contracts processing. The prime reason is the flourishing widespread adoption of blockchain in financial transactions and cross-border payments.
After all, blockchain is not a silver bullet, and every application presents tradeoffs that are not trivial in certain usage scenarios. For example, when looking for low latency or near real-time computations, the blockchain introduces sensitive delays due to the computational performance related to the (intentionally) heavy processing required. Similarly, when privacy is needed, information on a blockchain is typically available to all participants.
Figure 1. How a blockchain works. Source: https://onlinelibrary.wiley.com/doi/epdf/10.1002/er.7109
Throughput scalability is also a point in question, as mainstream public blockchains can only handle on average 3–20 transactions per second, two orders of magnitude behind traditional payment services such as world-famous credit cards. Last but not least, blockchain has its inherent energy consumption, depending on its many configurations and variants, that should be weighted as well. There’s a huge challenge in today’s energy market: early protocols such as Bitcoin use massive amounts of energy, both from fossil fuels and green sources.
1.2 Protocols and Energy Demand
A blockchain is a distributed register in the form of a perfectly ordered, back-linked list of blocks. Each block contains transactions fingerprinted into a binary tree (a Merkle tree), with the hash (the genesis block) stored alongside. Each block also encloses the previous block’s hash, hence guaranteeing integrity, replicability and determinism. Any node mirroring all transactions starting from the first block will arrive at the same position as any other node.
Decentralisation also needs a consensus mechanism for trust construction and for agreeing on the next block to append. Cryptocurrencies were the first envisioned application of blockchain technology, as digital currencies founded on cryptography techniques and peer-to-peer networks. The first and most famous example is Bitcoin.
Transactions are the way to cooperate with the blockchain in the form of data packages that store information; they are grouped in blocks of a regular size that are added to the existing chain in the procedure known as mining. Nodes in the network aim to reach an agreement regarding the next block to append through a Consensus Protocol. Such convention is the core of the blockchain, as it ultimately ensures decentralised governance, authentication, quorum, integrity, performance, and fault tolerance.
The de facto convention (Bitcoin and Ethereum) is Proof-of-Work (PoW). PoW miners solve a hash function that should be efficiently verifiable but quite expensive to compute. Though, due to the vast energy consumption of PoW [1], and the centralisation arising in practice due to nodes colluding into mining pools, newer blockchains implement greener but rather centralised algorithms, such as Proof-of-Stake (PoS), where miners obtain the right to mine blocks conforming to their ownership stake of the token. More recently, other blockchains implemented their own hybrid or ad hoc protocols.
2 THEORIES OF CRYPTOCURRENCY, BLOCKCHAIN AND DISTRIBUTED SYSTEMS
2.1 Theories of Blockchain
According to Don & Alex Tapscott [2], “the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.”
In the simplest of terms, a blockchain is a timestamped, immutable data series record managed by a cluster of workstations not owned by any single entity. Each of these data blocks is protected and bound to each other using cryptographic principles. The industry-disrupting capability of blockchain is simple: it does not have a central authority. As a shared and immutable ledger, its information is public for anyone and everyone to access. Hence, anything built therein is transparent by its very nature, and everyone affected is accountable for their actions.
A blockchain brings no transaction cost, but there is an infrastructure cost. Blockchain is also designated as a ledger of facts. In this, several computers are grouped in a peer-to-peer network. Communication inside this network obeys cryptography, and members of this network are called nodes.
The technical definition of blockchain is a linked list built with hash pointers instead of regular pointers. A sociopolitical-economic-semi-technical libertarian description is that a blockchain is an open, borderless, decentralised, public, trustless, permissionless, immutable record of transactions. The financial accounting definition is that a blockchain is a public, distributed ledger of peer-to-peer transactions.
Others refer to blockchain as a growing list of documents, called blocks, assembled using cryptography. Block contain a cryptographic hash of the previous element, a timestamp, and transaction data (generally represented as a Merkle tree). By design, such a feature is resistant to modification of the data. As mentioned before, it is an open, distributed ledger that can methodically record transactions between two parties in a verifiable and permanent way.
2.2 Evolving Terminology
The term “decentralise” has become universal over the years with increased excitement around Bitcoin. A distributed database is scattered across several nodes or computing devices involved in replicating transactions/data across the nodes. Distributed ledger technology (DLT) is decentralised and has different types of consensus mechanisms.
The first fully functional DLT combines the existing mature concepts of cryptography and distributed database. It is a chain of blocks that allows valid and secure shared consensus and holds an append-only data structure in DLT. Blockchain technology is therefore well-suited for processing transactions, tracing assets, recording events, managing records, and voting.
Figure 2. Distributed communications networks. Source: https://iota-untangled.com/why-decentralization-part-i/
How is Blockchain Revolutionary?
- Enhanced security: this is a hacking-proof technology; it does so by decentralising the data storage layer. It spreads the data thin, making it more difficult to attack.
- There are no updates and deletes, making it an immutable record of historical facts. Provides proof of stake.
- It can be adopted to store anything of value that can be digitised.
- It is trustless. No central authority implies no central trust; the blockchain itself provides digital trust.
- It promotes efficiencies in transaction clearing, especially when dealing with multiple agencies.
- Since all transactions in history can be seen, tracked, and validated by anyone, it is open and transparent.
- Lowers transaction fees.
- May become the ultimate proof of value ownership, bypassing governments, corporations, individuals, and crime.
- Provides powerful audit trails
Bitcoin: In Code We Trust
Bitcoin is a brilliant invention. It combines several advances in technology (namely, cryptography, blockchain, economics, decentralised consensus, and game theory) in a totally unique way.
On October 31, 2008, Satoshi Nakamoto published the Bitcoin whitepaper to a cryptography mailing list. The mailing list message title was called “Bitcoin P2P e-cash paper”, and Nakamoto explained that he had been “working on a new electronic cash system with no trusted third party, it was fully peer-to-peer.” The anonymous creator also revealed that the paper was hosted on the website bitcoin.org.
Main bitcoin properties are:
- It is a peer-to-peer electronic cash system
- Double-spending is prevented with a peer-to-peer network.
- Participants can be anonymous.
- No mint or other trusted parties.
- New coins are obtained from Hashcash style proof-of-work.
- The proof-of-work for making new coins also powers the network to prevent double-spending.
An electronic coin is defined as a chain of digital signatures. Each holder transfers the coin to the next by digitally endorsing a hash of the previous step and the public key of the next owner and appending these to the end of the coin. A payee can check the signatures to verify the chain of ownership [3].
Members of the Blockchain network exchange facts. Peer-to-peer (P2P) networks solve a problematic concept of reconciliation. Relational databases offer relational integrity, and an ordering of attributes proves integrity over a P2P network. Blockchain implements proof-of-work consensus using blocks. Blocks order events in a network of peers. When events are grouped in blocks, only a single chain replicates in the entire network. Each introducing block refers to the previous one.
The process of scanning for blocks is called mining. Block mining yields some form of money. Those who administer nodes in a blockchain are called “Miners.” It’s a voluntary process to a turn node into a miner spot. Each miner node in a Blockchain tests thousands of random strings to form a new block. Reading facts is easy, but storing facts in blockchain comes with a price. Each blockchain has its own cryptocurrency. It is called Bitcoin in the Bitcoin network and Ether in the Ethereum network. Blockchain generates its own money. Cryptocurrency can be readily converted into real cash.
The blockchain is capable enough to execute programs, and a few blockchains recognise each fact with a mini-program. These programs are replicated together with existences, and contracts and databases are replicated across all the nodes. When interfaced with the real world, preprogrammed conditions and broadcasted to everyone are known as a “Smart Contract.” It is technically enforceable and, eventually, smart contracts extend to property and other intelligent things.
Blockchain mainly relies on three concepts: distributed consensus, peer-to-peer network, and public-key cryptography. It is the unification of these three concepts that enable a computing breakthrough.
Proof-of-Work vs. Proof-of-Stake
The standard method of public (decentralised) blockchains to allocating who gets to update the blockchain, attaching new blocks of transactions, is by “proof-of-work.” All miners attempt to solve computationally complex problems. When a miner finds a result, they get to add a block; the issues are such that their answer is easily verifiable by other miners.
The more processing power available to miners solving these challenges, the more problems they will crack. Still, the difficulty of the queries is determined so that the higher the combined total computing power of all stakeholders, the more complex the obstacles. Since an equal number of blocks are being created in a given time, and computing power is costly, both in terms of the charge of electricity and the associated carbon emissions, it is in the public interest to use the minimum expense of electricity necessary.
For a single miner, using more computing power increases their chance of successful mining. Anyone using more computing power means that the total computing power increases, so everyone else’s chance of lucky mining decreases: a negative externality on everyone else. This negative externality leads to the overuse of computing power and misused resources. If all the miners could permit a binding agreement to use less computing power, they would want to do so.
What alternatives are there to proof-of-work? One is centralised blockchains, but these are different concerns. The principal suggested choice for decentralised blockchains is proof-of-status. PoS works by randomly assigning a new block to the chain to current holders of cryptocurrencies based on their holdings of that currency at that moment. Chunks of code would be added at pre-established time intervals, and, for example, someone who held 1% of all existing currency would have a 1% chance of being chosen to be the one who adds the new block.
The main problem with the conceptual objection is that there is nothing at stake, so if a fork occurs, there is an incentive to keep contributing blocks to both the blockchains rather than dwelling on one “true” blockchain. The worry is that this starts a proliferation of different blockchains, which would dilute their value for cryptocurrencies, and other blockchain applications would render them useless.
Theories in economics and computer science explore the conditions under which a proof-of-stake mechanism for allocating the right to edit would work. The Ethereum currency has long discussed turning to proof-of-status; however, existing implementations have remained marginal. Implementing a practically proper proof-of-status performance or another decentralised alternative to PoW, such as proof-of-network-centrality or proof-of-contribution, would solve many of the inefficiencies resulting from excess electricity use and the significant environmental opposition to cryptocurrencies and decentralised blockchains more generally.
3 THE ENVIRONMENTAL IMPLICATIONS
3.1 Bitcoin Carbon Footprint
Bitcoin’s soaring energy consumption has started a passionate debate about the sustainability of digital currency. And yet, most discussions have thus far ignored that miners cycle through a growing amount of short-lived hardware that could exacerbate the growth in global electronic waste. E-waste represents an emergent threat to our environment, from air and water pollutions caused by improper recycling to toxic chemicals and heavy metals leaching into soils. New research [4] noted that Bitcoin’s annual electronic waste generation (30.7 metric kilotons or 272g per transaction on average) is similar to the small IT equipment waste generated by a country like the Netherlands.
Bitcoin mining has consumed as much energy as small countries, which translates into a significant carbon footprint. However, studies have charted a wide range of results: some found annual emissions ranging from 22.0 to 22.9 million metric tons of carbon dioxide (MtCO2), while others provided an estimated range from 3 to 15 MtCO2. One study even claimed that Bitcoin mining could cause emissions incompatible with the goal of the Paris Agreement to limit global warming to below +2 °C [5].
These numbers become even more impressive given that the actual use of the Bitcoin network has remained limited. Over 2019, the network processed 120 million transactions; dividing emissions estimates by the number of transactions yields a carbon footprint in the range between 233.4 and 363.5 kg of CO2 per Bitcoin transaction. It’s worth noting that such yearly estimates are frequently based on data from a single day, assuming that the daily conditions are maintained for a year to make comparisons with other emitting activities or national emissions at the country level easier.
Although we are unable to predict the fate of Bitcoin, common sense suggests that if its rate of adoption follows broadly used technologies, it could create an electricity demand capable of producing enough emissions to exceed any climate goal in just a few decades. Given the decentralised nature of Bitcoin and the need to maximise economic profits, its computing verification process is likely to migrate to places where electricity is cheaper, suggesting that electricity decarbonisation could help to mitigate Bitcoin’s carbon footprint — but only where the cost of electricity from renewable sources is more affordable than fossil fuels.
Figure 3. Source: https://digiconomist.net/bitcoin-energy-consumption
3.2 What’s wrong with Bitcoin Energy Use?
Let’s first state that for bitcoin detractors, cryptocurrencies and digital assets generate profits rather than social benefits. Usually, opponents of renewables use the following gambit: ‘assume the only high-penetration-integration tool for renewables is a battery’. Recently, it has been used by pro-Bitcoin people to try and carve out a grid function of massive, always-on demand sinks like crypto mining. The trick lies in this specific assumption: the only two options available in their model are “Burn through power to make profit” or “store it inside a lithium-ion battery”. Demand response, transmission, hydrogen production, hydro pumping don’t feature — the economics of grid integration for both solar and wind are solved problems. These 100% RE bitcoin mining concepts “stay cheap” even when paying for the tools needed to integrate very high quantities of wind and solar in grids.
There doesn’t seem to be anything special about Bitcoin here. Why not use surplus renewables to power steel manufacturing and earn cash? Or power an always-on data centre? In fact, both are already happening. In models, around half the total solar power goes to making bitcoins, and the other half goes to serving electricity demand. But in a real-world power system, fossil fuels would be present: fossil fuels that the solar power should displace.
Finally, Bitcoin does not incentivise renewable energy. Bitcoin critics say there is no real-world example of a crypto mining facility verifiably flexing its demand relative to wind and solar output. It hasn’t happened already because no miner wants to fall behind in the competition for more money. Renewables are not held back because the generation profile doesn’t match demand; they’re held back by the incumbency of fossil fuels and governments failures to orchestrate rapid transition.
The argument heard this year that PoW energy demands would catalyse the renewable industry, turbocharging capital investment, innovation, and supply might also be spurious. The idea that PoW crypto could enable a never-ending use case for hydrocarbons is a nightmare scenario. Fossil fuels need to stay in the ground in a climate crisis scenario, not be burned for crypto rewards.
3.3 Towards a Comprehensive Impact Assessment
Despite the fact that the strong interdependence between energy, carbon dioxide emissions and blockchain technology, their dynamics and economic interlinkages have been scarcely investigated.
Research findings [6] incur significant policy implications for cryptocurrency energy management in terms of pursuing suitable environmental policies associated with its usage. Specifically, the stronger negative relationship between miner’s revenue and carbon dioxide emissions in higher quantiles suggests that the lower (higher) miner’s Bitcoin revenues, the more abrupt (gradual) the effect on environmental degradation.
As a result, a suitable energy strategy focussing on the penetration of renewable energy sources will diminish carbon dioxide emissions. Moreover, the use of cheap energy sources and the promotion of energy-efficient mining hardware may reduce global energy costs inducing positive environmental effects. Lastly, the slow speed of adjustment to the steady-state equilibrium indicates that a shock in the cryptocurrency market has a transitory impact on the BTC carbon footprint, allowing for certain energy conservation policies to be implemented at least in the long run.
Based on the above considerations, projects could be extended to capture possible effects (e.g., integration of renewable energy, power grid optimisation, smart management of electricity consumption, integration of distributed energy sources and data management) of the environmental consequences of the Information and Communication Technologies (ICT). It is noteworthy that the ecological implications of ICT have not been heavily weighted, and the ongoing analysis targeted at the energy/environmental impacts of ICT is still limited.
3.4 Decentralised Carbon Emissions Trading Infrastructure (D-CETI)
Not every ecological outcome of Bitcoin has to be negative. Some years ago, a group of experts presented a system-of-systems architecture model for a Decentralised Carbon Emissions Trading Infrastructure [7].
D-CETI is designed to serve as a marketplace for carbon emissions traders regardless of their compliance type, emission limits, or regional constraints. It allows for carbon credits to be transacted independently from their underlying protocols; that is, carbon emission reduction protocols provide the specification and limits of carbon emissions reduction plans, but carbon credit prices and trades can be managed independently.
D-CETI provides a trading environment for two general types of stakeholders: buyers and sellers. The stakeholders do not have to reveal their identities to be able to participate in the marketplace. Such anonymous trading enables companies and governments, as well as individuals and households, to participate in the trading process and reduce carbon emissions.
To enable secure and private trading of carbon emissions, it provides the following services:
- carbon credits generation,
- registration of participants, and
- transaction initiation and management.
D-CETI either interacts with or is influenced by the following actors:
- Smart Meters are external, technical components that provide the required data about carbon emission reductions, which are converted to valid carbon credits ready to be offered for trading via the D-CETI.
- Each credit used in the D-CETI marketplace is mapped originally from a Carbon Emission Reduction Installation that implements a carbon emission reduction plan. Those installations interact indirectly with D-CETI via the smart meters.
- Other Carbon Emission Markets, which can be complex systems by themselves, do not interact directly with D-CETI; however, they can affect the behaviour of the D-CETI marketplace. The crucial external market properties are the protocols under which carbon emissions are managed, compliance types (governmental or personal), and demand and supply control parameters. These properties affect D-CETI price signals and trader incentives.
- The current carbon emissions market requires the carbon credits to be certified by trusted Certifying Bodies. Both compulsory and volunteer systems have certifying and validation entities to issue valid carbon credits that map back to real and acceptable emission reductions. D-CETI eliminates the need for such bodies since it serves as a carbon credit-issuing facility. Any node participating in D-CETI, which is attached to carbon emissions reduction installation (e.g., using smart meters), will be able to issue carbon credits. Potentially, D-CETI will compete with the certification companies, and it needs to be at the same or higher level of trust. The certification companies represent centralised storage of carbon credits, which is contrary to the decentralisation and privacy that D-CETI provides. D-CETI will be able to register credits issued externally and accepted by traders. One of the main challenges is to enable the compatibility of carbon credits generated from D-CETI with external market credits. Another challenge is the certification of the smart meters and the emission reduction installations.
- Carbon Emission Traders are the fundamental human actors in D-CETI that participate in the carbon trading processes.
4 INTEGRATING SOLAR ENERGY WITH BITCOIN
4.1 Demand and Generation
At first blush, solar energy and cryptocurrency may seem pretty different. In many aspects, however, they have a lot in common and are converging by the day. Both are based on the belief in decentralisation. Both are disrupting old-fashioned, opaque industries with enormous societal externalities (energy and banking). Both follow exponential adoption curves. And at an even more elementary level: bitcoin is energy — the process of mining, as described above, is the process of converting electricity to work or value.
Increasingly, that electricity is coming from solar. Over the last decade, the cost of solar energy has plummeted to the point where, in many regions of the world, it is now cheaper to install new solar than to operate existing coal/natural gas facilities [8]. This is a huge step forward! As solar becomes an increasingly large part of the global electricity supply, mining becomes a process for directly converting the sun’s energy to value stored as bitcoin.
However, the only issue with solar is its availability, and this is both a recurrent daily and occasional, unpredictable challenge. Day after day, there’s a known mismatch between when solar panels produce the most (midday) and when demand is highest (early evening when there is no sunlight and people return home from work). This mismatch was famously described by the National Renewable Energy Laboratory (NREL) as the “duck curve” based on its duck-like appearance.
In the meantime, there are also less predictable seasonal challenges. The grid needs a low amount of baseload energy, but sporadically, demand spikes massively. These peaks can be difficult to forecast with accuracy and granularity. Some venture companies offer services to do just that: avoiding only a small handful of bounces each year can save solar-powered businesses millions of dollars.
Figure 4. Solar daily “duck-curve”. Source: https://www.nrel.gov/news/program/2018/10-years-duck-curve.html
4.2 Bitcoin as an Energy Sink
Today, there are three leading solutions to variability problems with solar photovoltaic generation.
Peaking plants
Grid operators can turn on natural gas “peaking plants” for peak hours through open-cycle-gas-turbines (OCGT); this is especially true in periods when simple-cycle gas turbines are also needed to meet peak demand. The most common solution to the variability management problem to date has been the use of generators like OCGTs. Due to their relatively low capital cost, flexibility, and well-understood operating processes and construction, investors have chosen these.
However, running these plants for such short periods is very inefficient and costly. Although natural gas peakers and combined cycle plants have met these demands in the past, grid-scale energy storage might be able to provide similar benefits. Moreover, during peak load demand, it is required to divert most of the power produced to the consumer. Thus, less/none will be available for stripping the solvent in the capture plant resulting in increased emissions of CO2. This could have financial penalties depending upon the regulations of the country.
Demand Response
Officials pay end users to shut down assets during peak periods, thus decreasing the grid’s total amount of energy needed. In broad terms, demand response refers to retail customers participating in electricity markets by responding to varying prices over. DR is otherwise defined as “changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardised” [9].
In this direction, DR techniques have been applied in various settings to optimise the operation of building energy systems (i.e. HVAC), to perform active load management and to minimise energy from the grid as well as the respective costs on the demand side. Accordingly, data monitoring, i.e. the provision of meaningful information along with practical tools for managing energy consumption, in combination with specific incentives, provides the fundamentals for actively engaging users in realising the potential of DR wide-scale environmental and social benefits.
Conventional demand response is a logical choice but is expensive and not pretty efficient or granular in control (e.g. conceive trying to shut down an entire factory for exactly 2 hours).
Storage
As the cost of batteries continues to fall, utilities are increasingly building edge of grid storage instead of new peaker plants. Li-Ion batteries are the most superior short-term storage technology primarily due to their plummeting costs and high potential. Prices are expected to decrease even further, although to what extent remains uncertain. While today batteries typically act as a short-term operational reserve and provide ancillary services, with increasing VRE shares, particularly solar PV, they generate income through arbitrage in intra- day markets and thus provide diurnal balancing of load and VRE supply and reduce curtailment (at high solar shares).
Elastic demand from temporally shifting electricity demand (e.g. households or industry) can also provide short-term flexibility at lower costs. However, demand-side measures are constrained in flexibility and potential. Not all end-use services (or their associated electricity input) can be shifted in time; consumers have limits in accepting; for example, a delay in end-use services and implementation is often challenging. Hence, it seems likely that both low-cost demand-side management with limited potential and higher-cost scalable batteries will be part of the solution.
In terms of providing certainty to consumers and system operators, energy storage technologies are the most stable and least risky solution under commodity price deviations. At the same time, peaking generators bring increased uncertainty to investors.
Bitcoin mining offers a fourth option: real-time, virtual batteries that can be turned on or off at a moment’s notice to provide both conventional Demand Response as well as Supply Response. The grid can pay Bitcoin miners to shut down whenever demand spikes on the DR side, thus smoothing out the duck’s head.
4.3 The Economics of Solar + Bitcoin
As long as the utility’s cost per kWh paid to Bitcoin (BTC) miners is more than the projected value of BTC/kWh mined, it’s always a good idea to turn them off as they receive clear price signals. What’s more, bitcoin miners can be shut down at a highly granular rate. And unlike other critical cloud computing services (e.g. AWS), no end customers rely on maintaining a specific virtual machine instance. Hashrate is essentially exchangeable, so you can always shut down miners whenever it’s economical to do so — this demand response property effectively turns BTC miners into virtual power plants.
While engaging BTC miners for demand response makes much sense in the near term, the long-term value may lie in the so-called “supply response.” As more solar — and wind — flood the grid, we will see negative electricity prices more frequently – i.e. the stomach of our duck will only grow bigger. Unless we can find some reliable, productive use of the excess energy that is always available as a last-chance buyer, which is what Bitcoin crypto miners are poised to become. In short, they could provide a price floor for electricity by eating the duck’s belly, making it easier for both grid and decentralised energy resources operators to plan, which ultimately increases market efficiency.
One critical short term question turns around the amortised capital expenditures (CAPEX) of a Li battery vs a Bitcoin miner. Suppose modern systems are genuinely approaching the limits of Moore’s Law. In that case, that means the need to substitute BTC mining equipment will become less and less over time (meaning less total cost), while Lithium-ion batteries will still exhaust every five or so years. This could quickly shift the value proposition further toward investing in BTC mining vs energy storage until some breakthrough battery technology is available.
Many entrepreneurs are starting to recognise this trading opportunity. Layer1 [10] is taking a full-stack attitude and building their own custom chips, cooling hardware, and enrolling directly in demand response programmes on the Texas grid (ERCOT). Satoshi Energy [11] is building a financial platform to turn existing energy asset owners into “behind the meter” miners. Crusoe and Rosseau are going after the flared natural gas market (with room to expand to other stranded energy assets).
This prophecy might have a lot of second-order consequences. For example, many networks are likely to overbuild solar capacity rather than invest in or operate peaker gas plants since they know Bitcoin miners will always be a flexible buyer of last resort. What’s more, this will further fast-track the virtuous feedback loop for both solar and Bitcoin as the capacity of solar panels/inverters and ASICS produced increases, pushing both further down their learning cost curves.
Figure 5. Bitcoin energy consumption.
5 CONCLUSION
The blockchain is the backbone of Bitcoin and the world’s digital currency. The energy for mining crypto is significant, and most of the current farms use electricity from nonrenewable, GHG-emitting sources (coal, natural gas, and other fossil fuels).
The adoption of blockchain technology should not be synonymous with environmental degradation and high energy costs. We need to enrich ourselves with innovation and equality without detrimental effects on nature. A practical solution needs to be created which allows blockchain to build a greener, more sustainable future.
Using solar energy and solar-powered datamining centres on a self-financing network, we have the responsibility of not just providing innovative solutions for cryptocurrency mining but clean energy in all forms. And as more energy generation is distributed and we all become “prosumers”, maybe we’ll see a wave of startups designed to help all grid members decide what to do with every electron produced: use it, inject it into the grid, sell it to a neighbour, store it, or perhaps mine crypto.
6 REFERENCES
[1] https://digiconomist.net/bitcoin-energy-consumption
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[4] de Vries, A., & Stoll, C. (2021). Bitcoin’s growing e-waste problem. Resources, Conservation and Recycling, 175, 105901.
[5] Mora, C., Rollins, R. L., Taladay, K., Kantar, M. B., Chock, M. K., Shimada, M., & Franklin, E. C. (2018). Bitcoin emissions alone could push global warming above 2 C. Nature Climate Change, 8(11), 931-933.
[6] Polemis, M. L., & Tsionas, M. G. (2021). The environmental consequences of blockchain technology: A Bayesian quantile cointegration analysis for Bitcoin. International Journal of Finance & Economics.
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[8] https://versionone.vc/the-solar-bitcoin-convergence/
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