Energy Smart Bitcoin Mining – Stephane Bilodeau
Why Bitcoin consumes so much?
It should be considered as primitive that crypto-mines currently generate large quantities of heat and then reject them when many industries, agriculture, buildings, etc. burn abundant fossil fuels to generate heat. Crypto transforms electricity very efficiently into a lot of heat. So, used wisely, data mining could be much more efficient because heating bills could be offset.
The Blockchain will also allow the distribution of many database operations from expensive locations to remote locations, providing not only energy benefits.
To create Bitcoin, tons of servers, the “mining machines”, are connected to the cryptocurrency network. They are responsible for checking the transactions made by people who exchange Bitcoin. It is, therefore, the total power (and consumption) of computers connected to the system that explains the delirious carbon footprint of this system.
The Bitcoin network has indeed a problem of energy consumption. It consumes a lot of energy despite processing less than 100 million financial transactions a year. A figure to compare to that of the conventional financial industry, which processes 500 billion transactions per year. And if we consider the amount of energy used by data centers, Bitcoin consumes much more energy per transaction than all the banks in the world combined.
High demand for computing power
It is no more a surprise that mining cryptocurrencies use more energy than mining for gold. Well-Known researches and notably one published in Nature at the end of last year has confirmed that.
For dollar value produced, the computer-intensive process of “mining” digital currency consumes more energy than physically mining gold, platinum or rare-earth metals. The study in Nature had made an interesting quantification of energy and carbon costs for mining cryptocurrencies. Only Aluminum mining was consuming more per US$ created that the mining of the main cryptocurrencies.
Mining for precious metals is hard work, involving massive machines, huge smelters and harsh chemicals to extract resources like gold and copper. On the crypto mining side, a lot of ‘virtual’ work goes into mining digital currencies. Many digital currencies — Bitcoin is the most famous example — are produced by having computers grind away at ever more difficult mathematical problems.
As digital currencies like Bitcoin get more popular, the energy requirements will only rise — and not only because of the increased interest in mining. The concern is not just for the amount of energy consumed, but also for the volume of climate-warming carbon emissions this energy represents.
Recall that large computing power is needed, both to manage the flow of Bitcoin, but also to mine. The good functioning of this cryptocurrency thus explodes the power consumption. Another study by the Scientific Journal Joule also estimates that the electricity used for Bitcoin would produce 22 megatonnes of CO2 per year, a figure very close to that of countries like Jordan or Sri Lanka.What is the environmental impact of cryptocurrencies? To this question, the University of Cambridge is trying to answer in part by proposing the Cambridge Bitcoin Electricity Consumption Index tool.
The University of Cambridge tool models the operation of bitcoin miners around the world. It uses an average electricity cost of approximately 0.05 per kilowatt-hour and the energy needs of the Bitcoin network. Finally, assumes that all Bitcoin mining machines in the world operate with different efficiencies.
The latter displays every thirty seconds worldwide consumption related to Bitcoin. At the time these lines are written, the star cryptocurrency would consume 7.23 gigawatts, for an annual total estimated at 61.88 Twh (terawatts/hour) … more than Switzerland, Kuwait, Greece or Algeria, but slightly less than the Czech Republic or Austria.
AI is also challenged, but can also be part of the solution
If not well organized, Artificial intelligence will create exactly the same problems as cryptocurrencies using energy, but even bigger.
AI uses identical or similar chip technologies and therefore produces similar amounts of heat per device. Simply eliminating the heat produced or worse by using air conditioning to cancel it is a horribly primitive solution. This current approach to removing free but unwanted energy should disappear after the deployment of the first generation of these technologies. If not, what we see with the crypto-actives will be small compared to the heat rejections numbers we’ll be facing with power consumption and all the connected objects required by AI, Machine Learning, Predictive Analytics that we see upcoming.
Since, the energy in all its from worth money, the heat rejections should be used as an energy resource and not as a pure waste of energy.
Solution 1: Combination of technologies
So, let’s change the energy challenges into opportunities and come with solutions. Great options are given by a combination of clean technologies including Artificial Intelligence, Renewables and Hybrid Energy Storage. Exploiting the waste energy recovery and conversion of heat generated by the mining operation to provide a source of energy. Many options are discussed in previous articles:
Solution 2: Tangle, the blockchain without the blockchain
The Blockchain protocol could naturally be the one that would effectively organize the exchanges between all the connected objects in a distributed and secure system.
The German slock.it uses the Ethereum blockchain to set up smart contracts between objects. For example, between a smartphone and a lock connected in a hotel. However, Blockchain has too many weaknesses (see below) to be able to organize these exchanges concretely, a weakness to which Tangle technology is based on the model of the acyclic oriented graph drawn from Graph Theory.
The Tangle is based on the same principles as the blockchain:
a distributed database,
a peer to peer network
a consensus and validation mechanism.
However, with Tangle, there is no “block” in the classic sense of the blockchain. Instead, each transaction refers to two past transactions. The completion of a transaction is considered an approval of two other transactions: each transaction directly approves two transactions and indirectly a sub-section of the Tangle is valid and compliant with the rules of the protocol.
Instead of a small subset of the network being responsible for the general consensus (the miners as part of the blockchain), the entire network of active participants (that is, the connected objects making transactions) is directly involved in the approval of transactions. The consensus with tangle is no longer dissociated from the transaction process: it is an intrinsic part of it.
Solution 3: The IOTA cryptocurrency, a more efficient gear of the machine-to-machine economy
The relative ease of use of Tangle makes it possible to make this decentralized exchange protocol the perfect framework on which the connected objects will be able to exchange data, energy and other information. This protocol was imagined in 2015 by David Sonstebo, Sergey Ivancheglo, Dominik Schiener and Dr Serguei Popov who created IOTA a cryptocurrency that allows microtransactions without costs and instantaneous between machines in the environment of the Internet of Things. Unlike Bitcoin and most cryptocurrencies, IOTA units already exist (2.779.530.283 in total), so the motto is not based on the mining system.
But for now, IOTA is still in beta, as its creators repeat. However, at the end of November, the foundation that manages IOTA has announced the launch of a platform for exchange and monetization of data from connected objects: OITA Data MarketPlace on which IOTA will provide developers with an API. Each player in the industry can then contribute to testing this marketplace with the data from its sensors. More than thirty players have decided to join the experiment, including Orange, Engie Lab or Schneider Electric. In addition, Sopra Steria has signed a partnership agreement with the IOTA Foundation, enabling it to provide expertise in securing exchanges between connected objects (IOTA’s expertise) and to make available a portfolio of clients specializing in the industry (Sopra Steria). Ultimately, this merger aims to create synergies between IOTA and Sopra Steria. Taking advantage of their respective know-how, the two entities aim to develop Tangle solutions specific to IoT ever more efficient.
Greening the digital operations
At a time when the Intergovernmental Panel on Climate Change (IPCC) keeps repeating its calls for caution in the face of global warming, the use of this energy-consuming technology is clearly questioned.
Solutions already exist to imagine a “green” cryptocurrency, based on a “proof of space/proof of time” security. It is therefore relevant to question the involvement of public authorities in the development of these green technologies.
So, let’s start right now to improve while this sector is still in its infancy. This will, in turn, be absolutely useful to harness the energy challenges that we see upcoming for the growing use of AI, Machine Learning, Predictive Analytics, etc.
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The author, Stephane Bilodeau, ing., P.Eng, PhD, FEC, is an entrepreneur in cleantech, working and teaming on innovation, notably in energy storage, renewables, and artificial intelligence. He is the Founder and Chief Technology Officer, of Smart Phases (Novacab), Fellow of Engineers Canada and expert contributor to Energy Central and to Medium.
You can also look at this other article in The Startup discussing notably of Disruptive Financing including the new Facebook Libra cryptocurrency and other blockchain technology:
Published at Sun, 14 Jul 2019 20:08:31 +0000
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