What is blockchain energy
When talking about blockchain technology in academia, business, and society, frequently generalizations are still heared about its — supposedly inherent — enormous energy consumption. This perception inevitably raises concerns about the further adoption of blockchain technology, a fact that inhibits rapid uptake of what is widely considered to be a groundbreaking and disruptive innovation. However, blockchain technology is far from homogeneous, meaning that blanket statements about its energy consumption should be reviewed with care. The article is meant to bring clarity to the topic in a holistic fashion, looking beyond claims regarding the energy consumption of Bitcoin, which have, so far, dominated the discussion. Blockchain technology entered public awareness with its first application, the cryptocurrency Bitcoin Nakamoto , which was established in and currently exhibits a market capitalization of more than billion USD.
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Blockchain - The Energy Origin (TEO)
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Be skeptical. The cryptocurrency bitcoin has become notorious for its ravenous appetite for electricity — and its presumed massive carbon footprint. A June paper in the journal Joule estimated that annual carbon dioxide emissions from the bitcoin network are as high as It also accounts for 0. But another recent study by CoinShares , a cryptocurrency asset management and analysis firm, found that the majority of the electricity used by bitcoin actually comes from clean sources, like wind, solar, and hydropower.
CoinShares says bitcoin network gets Analysts also warn that the same factors that pushed miners to use clean energy could one day lead them to back to dirty fuels. The CoinShares study also points to a broader problem for how renewable energy is currently deployed around the world: Many renewable power generators are so poorly located and underused that mining bitcoin has become the only viable use for that electricity.
Even though bitcoin solely exists in digital zeroes and ones, the computers that run the network are huge energy hogs. According to the bitcoin energy consumption tracker at Digiconomist , bitcoin currently consumes Since there is no central bank or authority governing the currency, the bitcoin network regulates itself through a distributed accounting system known as blockchain.
In blockchain, every bitcoin transaction is tracked in a public ledger spread across thousands of computers. These transactions are grouped into blocks. The bitcoin network creates an incentive for people to contribute computing power to verify transactions by awarding bitcoins to a miner who verifies a block currently Blocks are added to the blockchain roughly every 10 minutes.
But mining is competitive, with only one miner winning the award per block. Over time, the calculations needed to verify a block get more difficult and the bitcoin award shrinks.
The price is also unstable. These factors have created an arms race to develop better computer hardware to more rapidly verify transactions and a push to devote ever-increasing amounts of electricity to the task. Between 60 and 80 percent of bitcoin mining revenue goes straight back into paying for electricity. So miners really, really want to save as much on their electricity bills as possible. The quest for the cheapest kilowatt has led miners to set up shop in remote regions of China and Mongolia.
Bitcoin mines have gone up in rural Washington state. The hunt for cheap power has even led to cases of electricity theft.
Since the network is spread all over the world, bitcoin miners often want to remain anonymous and keep their operations opaque. Another factor is that the computing hardware miners use, known as an application-specific integrated circuit ASIC , has been getting more energy efficient over time.
But mining operations are continually deploying more of them. The power grids miners draw on are also changing over time and can change in their fuel sources between seasons. That means a local utility could be getting cleaner or dirtier over time, and if more fossil fuels are coming online to meet the demand, that would lead to more greenhouse gas emissions.
In so doing, the CoinShares team found that bitcoin miners were using a disproportionate share of renewables. This is why you see miners flock to regions where high-powered renewables are abundant.
Regions with high levels of renewable energy and low demand are often areas that saw local industries leave in recent years and subsequently experienced a population exodus. So bitcoin miners, who care more about electricity costs than location, happily moved into renewable-powered rust belts around the world. Governments have had mixed reactions to the rise of cryptocurrencies like bitcoin and their rapacious demand for electricity.
In Quebec , the government is offering discounted electricity to lure in miners to boost the economy. Meanwhile, China is weighing an outright ban on cryptocurrency mining because it sees miners as scofflaws that are wasting resources and damaging the environment.
Bendiksen said bitcoin mining is making use of energy resources that would otherwise go to waste and that renewable power mitigates its environmental footprint. He noted that its estimate of renewable energy use in bitcoin mining is out of line with other calculations. A report from the University of Cambridge , for example, found that while the majority of bitcoin mining facilities drew on renewables to some extent, the average share was just 28 percent.
In a separate paper published in Joule in April, de Vries explained that even the renewables being used for bitcoin mining have their own consequences. Hydropower in particular has huge regional environmental effects and sometimes has to be backed up by fossil fuels. Production of hydropower is high in the wet season during the summer months and low in the dry season during the winter months.
And since miners are concerned about energy costs above all else, a glut in coal, oil, or natural gas could make burning them much more attractive. Another emerging concern around bitcoin is the electronic waste. But mining bitcoins remains profitable, so the amount of hardware it uses and the quantity of electricity it inhales will continue to surge dramatically for years. Another price spike could push energy use even higher.
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Where is all that electricity coming from? Reddit Pocket Flipboard Email. The bitcoin network consumes vast amounts of electricity. Some researchers say most of it comes from wind, solar, and hydroelectric power.
Why bitcoin needs so much power Even though bitcoin solely exists in digital zeroes and ones, the computers that run the network are huge energy hogs. A map showing the major bitcoin mining regions around the world.
Has bitcoin truly cleaned up its act? Bitcoin mining hardware is leading to a growing volume of electronic waste. Next Up In Technology. Delivered Fridays. Thanks for signing up! Check your inbox for a welcome email. Email required. By signing up, you agree to our Privacy Notice and European users agree to the data transfer policy. For more newsletters, check out our newsletters page. The Latest. Ukraine has more than Russia to worry about By Jen Kirby. By Dylan Matthews.
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How much energy does bitcoin use?
In a financial world of stocks, bonds, foreign exchange, and credit cards, trillions of dollars are traded daily, with money flows handled by a bevy of databanks. In the world of cryptocurrency, billions of dollars worth of Bitcoin are traded through as many as , transactions per day, consuming the energy supply of a modernized country. Tristan Rayner explores. The cryptocurrency Bitcoin is close to using around 0. Energy Information Administration, with Bitcoin is not alone in the world of cryptocurrency. Another, Ethereum, came later.
Blockchain and energy transition
The European Union should ban the energy-intensive system used to mine Bitcoin, one of the bloc's leading financial regulators has said. Bitcoin now consumes 0. Bitcoin and Ether, the two largest cryptocurrencies, are minted via the proof of work system, which financially incentivises miners to use ever more computing power - and therefore electricity - to validate blockchain transactions and earn the tokens. In the interview published on Wednesday, the Swedish regulator emphasised that he was not calling for a blanket ban on cryptocurrencies, but rather that he was trying to promote a "discussion about shifting the industry to a more efficient technology". While proof of work encourages competition between miners to keep the network secure, proof of stake mining is a less energy-intensive process where miners put their tokens up as collateral against errors in the validation process. Ether, the second largest cryptocurrency by market capitalisation, is due to move to proof of stake mining in the second half of this year. Rising concerns over the growing energy consumption of the crypto mining industry have already prompted governments to take action. Earlier this month, Kosovo banned crypto currency mining in an effort to tackle the country's worst energy shortage in a decade. In November, Norwegian authorities told Euronews Next that they would consider backing a ban on proof of work and said the Nordic country was "considering potential policy measures" to address the challenges crypto mining posed.
Bitcoin’s huge energy waste
Blockchain is most commonly known as the technology that underpins cryptocurrencies, the most well-known of which is Bitcoin. But the capability of the technology goes further than just the banking industry as it can also be harnessed to transform the renewable energy industry. Indeed, blockchain is set to transform the renewable energy industry in many ways from certifying the source of green energy by allocating generation assets to a specific point of consumption to making energy grids more accessible through data-sharing in real-time and through enabling a transaction between two parties; the latter of which will be the focus of this article. Through enabling tracked, verifiable and secure transactions between two parties, essentially cutting out the middle man that has long been relied on to transfer information and goods between buyers and sellers, blockchain empowers individuals — traditional consumers of energy — to actually produce and sell power, leading to a decentralized and distributed energy sharing system. Blockchain is, put very simply, a way of sharing a database securely across a network of computers.
Bitcoin’s Energy Usage, Explained
Today, Bitcoin consumes as much energy as a small country. This certainly sounds alarming — but the reality is a little more complicated. How much energy does an industry deserve to consume? Right now, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and the emission of carbon into the atmosphere. As cryptocurrencies, and Bitcoin in particular, have grown in prominence, energy use has become the latest flashpoint in the larger conversation about what, and who, digital currencies are really good for.
How Bitcoin's vast energy use could burst its bubble
We use cookies and other tracking technologies to improve your browsing experience on our site, show personalized content and targeted ads, analyze site traffic, and understand where our audiences come from. To learn more or opt-out, read our Cookie Policy. On Thursday, members of Congress debated how to make cryptocurrencies greener, as energy-intensive bitcoin mining booms in the US. The US became the de facto epicenter for bitcoin mining last year, after China clamped down on mining within its borders — in part because of how much energy bitcoin uses. The bitcoin network gobbles up more electricity than the countries of Ukraine or Norway use in a year. If bitcoin was a country, that would make it the 27th most electricity-hungry nation in the world.
My research interests are focused on energy democracy, which emphasizes community engagement with the objective to serve a diverse local public renewable energy through decentralized, democratic means. This revolution of the energy system has potential to create local employment and control while yielding lower energy rates. Starting in a couple of weeks, I will be working with a team at an organization in the Netherlands on a component of energy democracy: specifically the opportunities blockchain technology to transform how our energy is supplied and consumed. But how the heck does it do that?
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Remember the oil crises of and ? Though much of the industrialized West and Japan felt the shock, gasoline was in such short supply in the United States that the federal government cut the national speed limit to conserve it and drivers lined up for hours to fill their tanks at sky-high prices. The blow to industrial economies was profound, but it also encouraged positive changes in energy usage, from limits on lighted advertising signs to greater fuel cleanliness and efficiency requirements for cars. Something similar may be happening today as people realize that technology is a power hog. Technology companies have become more efficient at meeting the demand for computing power and connectivity while using relatively less electricity. But as demand continues to rise, especially from the use of mobile networks, electricity usage and carbon emissions will also increase unless they are able to make additional improvements. But now all kinds of industries are considering it as a solution to challenges of authentication, identity, and trust.
Few technological innovations have captured the public interest in recent years as much as blockchain. Most of the attention has focused on the meteoric rise of the cryptocurrency Bitcoin, part of a total cryptocurrency market that, at its peak in January, rose to over USD billion and then almost as rapidly fell to a quarter of its size. But cryptocurrencies are only one application of blockchain which is in itself an example of distributed ledger technology , and for many, the Bitcoin hype is merely a distraction from the transformative potential that blockchain technology could offer to a wide range of industries, including energy. Blockchain was one of the big topics of conversation in September at IRENA Innovation Week , where more than corporate leaders, government officials and experts at the forefront of energy gathered to discuss the innovations driving the energy transformation forward.
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