Renewable energy won't make Bitcoin 'green,' but tweaking its mining mechanism might

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The cryptocurrency Bitcoin is known for its massive energy footprint. Now, researcher Alex de Vries, from PricewaterhouseCoopers (PwC) in the Netherlands, suggests that renewable hydropower production cannot supply the large quantities of energy needed to power machinery used to validate Bitcoin transactions. In a Commentary publishing March 14 in the journal Joule, he also highlights the vast quantities of electronic waste produced by the Bitcoin network and calls for alternative strategies to curb the cryptocurrency's environmental impact.

de Vries, a senior consultant and blockchain specialist at PwC and founder of Digiconomist (@DigiEconomist), found that Bitcoin's consumption is more than 1,200 times greater than the maximum footprint of a transaction processed by the banking industry. He also estimates that Bitcoin consumed as much electrical as all of Hungary in 2018.

"Proponents of this digital currency have argued that, even if Bitcoin is using a lot of energy, it's not that harmful because they claim Bitcoin mining facilities use mostly excess renewable energy," says de Vries. "I decided to deep dive into this claim."

The problem lies primarily in the Bitcoin mining mechanism, in which "miners" use high-powered technology to search for valid numerical signatures that allow Bitcoin blocks (files recording Bitcoin transactions) to join the growing list of Bitcoin transaction records known as the "blockchain." In return for their efforts, miners may (but don't always) receive Bitcoin currency.

Using publicly available information about the computational power of the Bitcoin network and the efficiency and material composition of mining machines, de Vries identified major problems with reliance on renewable energy. Once a Bitcoin machine is activated, it is not shut down until it fails to continue operating profitably. Nevertheless, while this elevated electricity demand remains constant, the hydropower used to fuel it fluctuates. The Sichuan province of China, where miners are primarily located according to Bitcoin proponents, is generating three times more hydroelectricity during the wet summer months than during the dry winter months. Climate change is only expected to exacerbate this volatility, and coal-based energy is typically used to balance out these fluctuations.

"Based on these findings, the renewable energy currently going into Bitcoin mining cannot be considered 'green,' and this challenge of combining a constant energy requirement with variable renewable production will always exist," says de Vries. "It might even provide an incentive for the construction of new coal-based power plants in order to meet the higher base demand."

But de Vries also notes that even if Bitcoin mining devices could run on renewable energy alone, they would still be discarded as at the end of their lifespans. The most popular machine on the market, an Application-Specific Integrated Circuit (ASIC) miner, cannot be repurposed because it is hardwired solely for mining Bitcoin. This means it is likely to wind up with other cast-off electronics in a landfill or incinerator, causing damage to the environment. Altogether, the study shows that Bitcoin currently generates as much electronic waste as a small nation, such as Luxembourg.

Even though Bitcoin still only constitutes a small portion of all currency transactions, de Vries thinks there is already cause to be concerned. "Its energy consumption and electronic waste generation are certainly not negligible at the moment, and they will likely escalate quickly to even more extreme amounts if Bitcoin manages to become widely used," he says.

However, de Vries believes these sustainability concerns can be averted by replacing the mechanism used to mine Bitcoin. An alternative "proof-of-stake" mechanism already used by the cryptocurrencies Dash and NXT (and soon to be used by Ethereum, which is transitioning away from a mining mechanism similar to Bitcoin's) does not depend on computing power to build the blockchain. This adjustment would cut Bitcoin's energy consumption by a striking 99.99% and would eliminate the need for specialized, non-repurposable hardware.

"Ultimately, Bitcoin is just software," says de Vries. "The mechanism can be replaced. The challenge is that the entire network needs to agree to this change."

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More information: Joule, de Vries: "Renewable Energy Will Not Solve Bitcoin's Sustainability Problem" , DOI: 10.1016/j.joule.2019.02.007
Journal information: Joule

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Citation: Renewable energy won't make Bitcoin 'green,' but tweaking its mining mechanism might (2019, March 14) retrieved 21 July 2019 from
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Mar 14, 2019
"de Vries, a senior consultant and blockchain specialist at PwC and founder of Digiconomist (@DigiEconomist), found that Bitcoin's consumption is more than 1,200 times greater than the maximum footprint of a transaction processed by the banking industry. "

I really want to see his calculations for this figure. I have a hard time to think that if you consider the energy used for the building that houses the databases that contain the information on your funds + the energy used for the network infrastructure + all the PC's monitoring said transactions + the gaggles of IT security teams with their servers and desktops constantly monitoring all transactions + the dev teams that are always working on front end and back end software + the energy used for their web server farms + the energy of all the help desk call centers and their servers and PC's...

Mar 14, 2019
I'm putting all this into perspective, you can look at what it cost for this specific transaction (the machine your using with your card with... ATM, pay terminal) but without the integrity and security part not calculated in energy consumption is monumentally ignorant.

What cryptocurrencies provide is the integrity and security all wrapped into one package. This 1200 time more comment is completely wrong I would argue it costs less, by how much I can't say since I have a day job and this would take a considerable amount of time. The solution is either correct or not and if not don't do. It is less corrupt and less prone to manipulation and the most important thing is that it is designed with no trust in mind whereas fiat is based on good faith and who can say honestly that the current system is good faith.

You can't bribe math but you can bribe people in good faith positions within the banking sector which defeats everything people depend on banks to maintain.

Mar 14, 2019
I will also say to my comments above, Proof-of-Stake can be much more easily manipulated thus defeating the whole purpose of cryptocurrencies... it brings over the bribing aspect of the fiat world into cryptos.

If someone with a big stake in any crypto can be bribed to either sell or buy huge amounts of said coin/token thus artificially manipulating that currency. Yes transactions will be much more secure than currently but you still have to trust people in good faith which is what is one of the major wrongs with our economy.

I'm still not sure of hybrid coins/tokens (PoW and PoS) since stake holders are more involved in development of the ecosystem then in playing swings. Pure PoS is not the way forward in my opinion and for sure centralized cryptos are completely wrong, again it requires good faith.... looking at you ripple

Mar 14, 2019
One last thing is this is that a limited supply will only bring value over time but having no limit (again looking at you ripple) we can have the in/deflationary or better put devaluation of currency that has happened several times in the last decade which goes by the name quantitative easing (QE) in other words printing money from nothing with nothing to back it.... there are rules to the economy and this practice will have to face reality eventually and many are saying soon.

I'm sure when this occurs people will reconsider if they can trust the bankster and if they are operating in good faith. And when this day comes people will have a better understanding of the consequences of good faith policies.

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