Digital currencies, as in so-called cryptocurrencies like Bitcoin and Ethereum, may represent the future of our monetary system, but so far they have been terrible for the environment.
This is the conclusion of the researchers of the Oak Ridge Institute for Science and Education (ORISE) in Cincinnati, Ohio. In a new relationship they estimate that the amount of energy required to "extract" the value of a dollar of Bitcoin is more than twice the amount required to extract the same value of copper, gold, platinum or rare earth metals.
Cryptocurrency "mining" is the process by which new transactions are added to the digital ledger, also known as blockchain, and a new currency is created. Mining is described in the report as "a consensus or agreement process, [that] is performed by & # 39; miners & # 39; through repetitive calculations using specialized hardware. The first miner to determine the & # 39; response & # 39; correct adds a new block to the chain and is rewarded for this intensive energy calculation with several newly generated coins. "
Just like the extraction of gold in the Wild West, mining currencies like Bitcoin are a competitive process. But instead of using a pickaxe and shovel, cryptocurrency miners use powerful, energy-hungry computers. The miner with the fastest computer is more likely to win and collect more coins.
Without a doubt, blockchain technology is gaining a lot of attention due to its ability to create secure, transparent and virtually incorruptible transaction logs. The ORISE report, which is the first a quantify energy requirements on a cost-per-dollar basis, describes blockchain as a "new potentially revolutionary technology to transfer money safely". At the same time, the authors hope "to encourage the debate about whether these energy demands are both sustainable and appropriate".
The researchers estimated the amount of energy needed to extract four popular cryptocurrencies – Bitcoin, Ethereum, Litecoin and Monero – in the period from 1 January 2016 to 30 June 2018. For example, Bitcoin, which is currently the largest existing blockchain, is estimated to be consumed about 17 megajoules of energy for mine, almost four times the amount of energy per dollar compared to gold and three times the amount compared to platinum.
With the consumption of energy the related CO2 emissions are emitted, that during the period of study of these four currencies have been estimated at 3-15 million tons of CO2, of which the bitcoin is again the major contributor. The high end of this estimate would be equivalent to the annual emissions of about three million cars, according to the The EPA calculator.
This problem is amplified by the fact that a large part of the cryptocurrency extraction takes place in China where the generation of electricity produces higher carbon emissions than in other countries.
To give an idea of the scale of the Bitcoin network, consider this number to be staggering from the ratio that estimates the transaction rate. These computer transactions are measured in "hash" functions and referred to as "hash rate". As of August 2018, there are about 50 quintillion (ie 50 with 18 zeros after it or 50 million billion) the hashes performed on the Bitcoin network every second of every day.
As cryptocurrencies continue to grow in popularity, expect the number of transactions to increase. While this may suggest even worse news for the environment, some of these cryptocurrency companies are exploring alternative mechanisms for mining.
Bitcoin, Ethereum, Monero and Litecoin all use a "work proof" scheme to track changes to the blockchain. An alternative method, known as "proof-of-quota"It is explored by great actors like Ethereum, which would greatly reduce the demand for energy.
The blockchain registers also have many other applications in addition to the currency. You are starting to see the technology used for digital homes, car titles, driving licenses, birth certificates and medical records.
These types of industry-specific applications have not been studied in ORISE research. However, Dr. Max Krause, one of the co-authors of the report, told TriplePundit that he expects these "utilitarian" blockchains to be "significantly less energizing" because there would be little or no competitive element involved in building the blockchain.
This is good news as more and more organizations are looking to use blockchains to promote sustainable business practices. For example, 3p recently highlighted a plastic recycling program in Indonesia that uses a blockchain register to track transactions between collectors and recycling plants. Even Blockchain is used to it bring transparency to the diamond supply chain to prevent "blood" diamonds from reaching the market.
Organizations such as these should be assured that they are getting the benefits of the blockchain, creating secure and transparent records of their business operations, without the negative environmental impacts.
Image Credit: BTC Keychain /Flickr