The Cryptocurrency Mining Energy Problem
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Bitcoin Is an Energy Hog and We Expected That
According to an estimate made in November 2017, cryptocurrency mining consumes more energy than entire countries like Iceland. Bitcoin alone ate up 0.12% of the world’s energy usage and Ethereum used 0.05% in 2017. It would be reasonable to assume that these figures have gone up since then due to the recent surge in BTC and ETH prices. Bitcoin insiders are probably not surprised by this, especially those who remember Satoshi Nakamoto’s words on energy usage:
It’s the same situation as gold and gold mining. The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for Bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.
So unlike some people, Satoshi Nakamoto understood basic economics as it applies to anything that could be bought and sold on futures markets, like gold and Bitcoin. If the price goes up, miners will have incentive to produce more even though it costs them more in consumables. If the price goes down, miners will turn off their mining rigs and possibly also turn off their nodes if they own nodes. That means if these concerned environmentalists have any holdings in cryptocurrencies at all, they should sell those holdings now in an attempt to drive the price down and get miners to turn off their rigs.
Renewable Energy Trading on the Blockchain
It’s not as if miners don’t care about the amount of energy they consume. Most Bitcoin mining is done where electricity is cheap, regardless of the actual Bitcoin price. Miners have expressed interest in renewable energy, including hydropower, because it’s cheaper than energy produced with coal. Some cryptocurrency developers like the Grostlcoin team have worked on creating algorithms that are more energy-efficient than the one used by Bitcoin. Environmentalists demonizing Bitcoin are quick to look past the fact leaps and strides are being made to make cryptocurrency mining greener.
Beyond that, some blockchain developers are interested in the idea of buying and selling renewable energy on the open market using smart contracts capable of monitoring power meters. If you have solar panels on your rooftop and produce more power than you typically use, you should be able to sell your excess energy to other property owners that are connected to the same power grid. The actual earnings might amount to pocket change, but homeowners with solar panels get the same access as the local utility company even if they don’t have the same power production capacity.
Power Ledger is built around this idea and already has some deals to implement the concept in Australia and Thailand. It basically uses the same technology that gets blasted by environmentalists to provide incentives for investment in renewable energy and enable peer-to-peer buying and selling of energy on the free market.
A good rule of thumb to remember when dealing with issues like the controversy around cryptocurrency mining is that while raising awareness is important, proposing real solutions is most crucial. Much of the bad press around cryptocurrency, such as Bitcoin being used by extremists, often has an inkling of truth that gets stretched to meet an agenda. More often than not, somebody in the crypto space has already proposed a solution and the market simply needs time to mature for these issues to be solved.
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