Blockchain technologies usher in an area of transparency and security by allowing for a decentralized ledger that everyone can see but no one can change. Many industries, (such as banking, social media, and the art market) are excited about utilizing Blockchain’s capabilities to promote trustworthiness in their infrastructures. However, where Blockchain excels at in terms of security, it stumbles in efficiency. The truth is, the average Blockchain requires an enormous amount of energy to maintain. The question becomes, is Blockchain worth it from an environmental standpoint and is there any way to lessen its energy usage?
To create a new entry on a Blockchain, an entity known as a miner must solve an incredibly complicated math problem. Solving this problem requires a high degree of computational power. In 2018 the amount of electricity utilized by Bitcoin could power all of Iceland. In fact so much funding and energy are put into mining Bitcoin that during market dips the cost to mine a single Bitcoin often exceeds the value of the coin itself. It is estimated that around 0.13% of all energy consumption in the world is taken up by Blockchain and that a single transaction utilizes as much energy as the average household does in a day.
Many of the Blockchain giants, such as Ethereum, are aware of Blockchain’s large carbon footprint and are attempting more energy efficient approaches. For example, changing the central algorithm that powers Ethereum, known as Proof of Work (P.O.W.). With P.O.W. miners are all given access to each transaction problem and compete against each other to finish it first in exchange for cryptocurrency. The unintended result of P.O.W. is that miners are rushing to get the most powerful computational equipment to beat other miners. Ethereum plans to utilize a new algorithm called Proof of Stake (P.O.S.), which aims to utilize just 1% of the energy that P.O.W. currently uses. P.O.S. randomly selects one miner to mine the coin and utilizes other miners to validate their work. Instead of draining large amounts of energy by sparking competition, P.O.S. aims to draw as little energy as possible through a more selective process.
Besides changes to the core algorithm, many companies that utilize Blockchain are trying to come up with greener ways to generate the energy required to power a Blockchain. Intel, a large tech giant in the United States, recently released a patent for energy efficient mining technology that reduces electricity uses by around 35% and takes up significantly less space than the typical mining setup. In China, where Crypto mining is very popular, miners are using hydroelectric power because of its cheaper cost and lower carbon footprint.
While many environmentalists are understandably cautious about Blockchain, others think it could be a force for positive environmental change. Utilizing distributed ledger technology could provide users with openly available energy reports that cannot be changed or corrupted. In an industry where false reporting and government cover-ups are prevalent, distributed energy and emissions reports could allow people to make more sustainable energy choices. Trustworthy and transparent emissions reporting could indeed be a force of positive environmental change. However, until Blockchain can curb its energy uses, the energy used to generate these reports could outweigh the benefits.
As more and more exciting uses for Blockchain technology are being developed every day, some of the negative aspects of Blockchain, such as its large carbon footprint, need to be addressed. Mining is the main source of energy consumption largely thanks to the energy intensive Proof of Work algorithm. The new Proof of Stake algorithm aims to reduce mining energy consumption to 1% of its current state by drastically reducing the number of miners mining a single transaction at once. Energy efficient alternatives, such as hydroelectricity, provide avenues of reducing the energy caused by mining. If more companies such as Ethereum and Intel find solutions to lighten energy usage, Blockchain could easily become a positive environmental force through distributed emissions reports.
— Article by: Chris Rahmeh