Bitcoin will burn the planet. The question: how fast?


It was Max Krause thinking of buying a bit of bitcoin, as you do. But Krause is an engineer, especially working on modeling greenhouse gas emissions from landfills, so his first step was to run the numbers. He looked at the price, of course, but also at the speed with which the world's bitcoin miners create new bitcoins and the ledger that takes them into consideration. And he looked at how much electricity it would seem to require.

"I thought, buddy, this is a lot of energy," says Krause. "I thought, it can not be true that people are using this much energy, but it is."

Krause's calculations are not just the back-of-the-envelope noodling, the trolling of cryptocurrency blogs or the crossfire of white paper. His calculations on how much energy and carbon emissions of the planet – the first four cryptocurrencies could be responsible appears in an article in the newspaper Sustainability of nature today, joining a growing peer-reviewed canon and rigorous work that tries to put the numbers to a problem with which the world of cryptocurrency is grappling with years: how much energy do currencies use to blockchain and how much does the answer matter?

Whoever is Satoshi Nakamoto, the genius of his, or their idea of ​​bitcoin – published almost exactly a decade ago – was in solving the key problem of digital money: it is possible to generate more simply by copying and pasting. The idea of ​​Nakamoto was to indelibly mark every transaction on a continuous chain. Perform very difficult mathematical calculations, find a number that you can "hash" with an algorithm called SHA-256 to produce a response that all those on the network agree, and not just create a new block in the chain, but you also get a reward: bitcoin. That system is called "proof of work", as in, you have to prove that you have done the calculations to get the money.

In their new work, Krause and his coauthor follow, at least for the first part, what in recent years has become a fairly standard method. Start by querying the blockchain network or aggregation websites for how many of these calculations occur in a given time frame, every day or every second. This is the percentage of hashes. (Krause says that in August 2018 there were 50 quintillions of hashes per second on Bitcoins.) Then find out how much energy they use top-of-the-line flagship computers, often in joule for hashes. That measurement is more complicated, for reasons that I will arrive in a moment. Multiply those together and know how much energy the net is using.

With that number in hand, you can calculate how much electricity a cryptocurrency consumes. They are 3.6 million joules to 1 kilowatt hour. Past estimates for Bitcoin have varied from 4 or 5 terawatt-hour in the year up to 44 TWh / year, as much as Hong Kong used in 2017. Krause says it is more like 8.3 TWh / a, about the use of energy 39, Angola.

But Krause went further, adding estimates for the use of energy by the three most popular cryptocurrency networks – Ethereum, Litecoin and Monero. Collect all that and line up the dozens of smaller voices and double the number, 16.6 TWh / a, putting the use of electricity in cryptocurrency on a par with Slovenia (with the goal of overcoming Cuba).

The carbon footprint of a cryptocurrency varies depending on the amount of energy used by the network and the type of energy used where the coin is extracted.

Max J. Krause; Thabet Tolaymat; Research on nature

Other similar estimates are in line with these numbers and their estimators agree that they are probably in the low end. As Krause points out in the paper, most of the bitcoin mining is done industrially, with large agglomerations of computers. This means a lot of heat and its number does not take into account the energy used for cooling. Like many other people who do this kind of assessment, they are also making some assumptions about what gender of computers that use cryptocurrency miners. "This is a top-down analysis where we are only taking estimates of the entire network," says Krause. "What would really help to bridge the gap is from the bottom to the top, looking at a single site that is introducing or eliminating new equipment."

This type of data is rare. Alex de Vries, economist of PricewaterhouseCoopers who runs the Digiconomist blog that tracks the consumption of bitcoins, has aggregated part of it in a newspaper article Joule last spring. It matters; as he wrote, a high-end Antminer S9, designed for bitcoin mining, could perform 14 terahashs per second with only 1,372 watts. It would take half a million Playstations 3 and 40 megawatts – 30,000 times more power – to do the same. Not even this is the only uncertainty. "The cooling equipment does not have computing power, but if you build up thousands of machines, there's a lot of additional cooling and additional costs," says de Vries. "And the whole network is not made up of the most efficient machines.There are many reasons why people would be mine with the less efficient ones."

The real question, however, is whether this use of power is important. Krause's document tries to establish the link between the extraction of metaphoric bitcoins and the real one, extraction minando comparing the energy needed to obtain the equivalent of $ 1 of cryptocurrency and $ 1 worth of various precious metals: gold, platinum, rare earth and so on. The answer: it takes more energy to get a lot of bits. They were 17 megajoules for a dollar of bitcoins but only 4 MJ for a dollar of copper.

In general, it takes more energy to extract $ 1 of cryptocurrency, rather than extracting $ 1 of precious metals and raw materials. Aluminum is an exception; he is extremely hungry for energy.

Max J. Krause; Thabet Tolaymat; Research on nature

Concerns about greenhouse gas emissions are implicit in all these energy-related questions. Supporters of cryptocurrency and opponents also want to know if their decentralized, secure and government-free money is destroying the planet. And this depends on where the power comes from. Obviously a renewable source such as geothermal or hydroelectric would not emit carbon, although it could subtract energy from other people for less cryptic uses, such as lights and air conditioners, which could mean an increase in energy production. in general. Krause numbers show that bitcoin produces much more CO2 compared to other currencies, but also that a bitcoin extracted in China emits four times the CO2 of a bitcoin grown in Canada.

This is the real concern. Last year, an article in Grist calculated that the bitcoin network would use more US energy by next summer, and more energy than that generated by the entire planet by 2020. Although this is not plausible, an article by a group of Hawaii researchers in the magazine Nature Climate Change last week he did the same kind of calculations as de Vries and Krause and discovered that the use of bitcoins produced the equivalent of 69 million metric tons of CO2 in 2017. If bitcoins grow like other technologies, the authors said, they would cough enough greenhouse gases to heat the planet by 2 degrees Celsius by the middle of the 30s.

Everyone knows that cryptocurrencies are a planetary burner. But so many things. Making real money, physical also has a carbon footprint, for that matter. "The market does not really care about elaborate research documents," says Joseph Bonneau, a cryptocurrency researcher at New York University. "In the end, I think it will be cheap, and as long as there is a need for bitcoin and a blockchain proof-of-work, people will show mine."


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It is not even clear that there is a way to stop it. Even when cryptocurrency values ​​have started to freeze this year, network hash rates have increased. On the one hand, this kind of decoupling between price and hash rate seems a fundamental problem in a currency, but Bonneau says that it is probably more than the hash rate is a final indicator. "Miners have a lot of fixed costs, they have to buy land and equipment, they have some marginal costs in electricity, so they usually operate at quite a high margin," says Bonneau. "Even if the price goes down a lot, it's still profitable to keep your hardware on." Large industrial miners could even purchase their electricity on a fixed contract, which gives them even less reason to be reactive to price.

The way Nakamoto designed the system, the computational problems become increasingly difficult, slowing down the speed at which new blocks are formed. And in the end there will be no more blocks; bitcoin has a limit of 21 million. "A lot of bitcoin maximalists dream that bitcoins will replace all other currencies, and that's how people justify the really high valuation," says Bonneau. "But even if it happened, if the bitcoin was the only currency in the world in 100 years, I think there would be huge changes." The 21 million cap, transaction costs, even the tests of the work itself are really just financial policy, coded in software. (Ethereum is working on another proof-of-stake approach that depends more on how much money a user has in the system, a technology called Lightning Network could increase the energy efficiency of hashing.)

"And if the government of China or the United States decides that bitcoin is a threat to civil society with its use of electricity, it will not survive," says Bonneau. "You can handle an underground cryptocurrency, but not the one that burns a gigawatt of electricity." Producing a gigawatt can not be done in secret. "

One last thing: you should probably ask if Krause started extracting bitcoins. "I did not," he says. "I was better off buying the coins and keeping them than trying to build a rig". In other words, it was the bad result: cryptocurrency not as a mechanism for safe trade, free from the government, but simply as a speculative tool. But Krause will not leave her job at the Environmental Protection Agency (which, to be clear, has not funded her research) anytime soon. "I did not get rich," says Krause. "Just like everyone, you would like to have put more on them earlier."

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