Wasted Energy and the Blockchain
Over the past few years, the amount of energy used by cryptocurrency miners has gone from “surprising” to “maybe deeply affecting the world and climate change”.
At Bitcoin’s peak prices, reports following its exponential growth claimed:
By July 2019, the bitcoin network will require more electricity than the entire United States currently uses. By February 2020, it will use as much electricity as the entire world does today. — https://grist.org/article/bitcoin-could-cost-us-our-clean-energy-future/
A recent study resurfaced the story with more conservative but still shocking numbers:
Counter-take: replacing Proof of Work
Ethereum and other currencies are considering “Proof of Stake” to replace “Proof of Work”, the fundamental reason why almost all public blockchains consume so much energy today.
The problem is that a Proof of Stake switch has been discussed for a long time without being implemented yet in Ethereum. The FAQ page appeared in September 2016. There is skepticism about whether it will be as trusted:
Also note that Ethereum has clear founders and a relatively healthy EIP (Ethereum Improvement Proposal) process. Bitcoin split into two coins about a year ago due to disagreements about block size and technical sustainability. It would be likely just as controversial or more controversial to move away from Proof of Work.
One recent development is the launch of EOS, which will use Delegated Proof of Stake:
Explain Delegated Proof of Stake Like I’m 5
I like to think of Delegated Proof of Stake as technological democracy. Just think about how many asshole bosses there…
Counter-take: Bitcoin will grow global clean energy
One of the pro-Bitcoin takes which I’ve seen on this came from “Bitcoin and meat maximalist” and Nakamoto Institute president Michael Goldstein, who is more known for his quotes describing plants as “fiat food”.
Bitcoin mining will also incentivize an energy arms race, which will result in magnificent innovation in energy production, through nuclear power and other clean energies. Bitcoin miners do not want a single joule to go to waste.
Let’s see what he means by that (these are from separate but related Twitter threads also in late 2017).
These types of changes require huge capital investments, R&D, and construction time which take significant time. As of July 2017, there were only two new nuclear power plants under construction in the United States:
U.S. Nuclear Comeback Stalls as Two Reactors Are Abandoned
In a major blow to the future of nuclear power in the United States, two South Carolina utilities said on Monday that…
So as interesting as this Bitcoin-backed pro-energy future might be, I don’t see how it can come quickly enough to offset near-future costs.
Counter-take: private blockchains
From another angle, IBM’s blockchain division acknowledges Bitcoin is unsustainable, and appears to advocate for private blockchain solutions, where you don’t have the competition and Proof of Work requirements of a public blockchain.
When I first heard the energy-consumption argument in early 2014, an economics professor from the University of Chicago urged me to get out of Bitcoin. The argument then was that Bitcoin consumed so much power, that it couldn’t be worthwhile to use and mine.
I asked that if golf courses use so many resources (power, water, land) does that make them have no value? Clearly not. In a world with ruthless efficiency, no one would build a golf course. In a world with absolute trust, we could use private databases and private blockchains without concern. In a capitalist society, we are incentivized to make both.
I believe that public blockchains have an unmatchable ability to solve problems in banking and identity. There are projects to give ID cards to refugees and migrant workers, where no one country could claim authority and take responsibility for them. There are transactions happening across borders which were not otherwise possible (I know this from personal experience). There are people today paying high fees to have a savings account or with no financial records at all, who use cryptocurrency-capable phones. Smart contracts could make a real difference in transparent charitable giving, and reliability and efficiency of financial institutions.
Even when cryptocurrency users are aware of efficiency and power consumption issues, the feeling is that someone in leadership will take care of it. In the past few months I’ve been pitched about cryptocurrency as a financial incentive for recycling or home solar panels, without analysis of whether the micropayments cost more. There are ideas for technical solutions, there are ideas for IRL construction. Beyond individual investors, is there a cryptocurrency fund for the community to support sustainable energy? Is there a bounty or marketplace for cryptocurrency developers to explore alternatives to Proof of Work? If cryptocurrency-hodlers don’t like being vilified and contributing to environmental destruction, the solutions need to come from within. What’s our best shot at changing the world for the better?