Instead, the hydroelectric power plant fuels massive machines that churn out solutions to complicated mathematical problems. In other words, this renewable energy is being used to mine the cryptocurrency bitcoin.
Deane’s model of work might sound like the perfect antidote to Bitcoin’s environmental woes, but renewable energy isn’t a cure-all.
Bitcoin was the first and is still the most prominent cryptocurrency, despite the rise of other coins like Ethereum, Cardano, and the joke currency Dogecoin.
Blockchains, named rather intuitively, operate by storing transactions in “blocks” that are validated by the “nodes,” or computers, that make up the network.
The nodes that validate those outstanding transactions and lock them into a block are referred to as “miners,” who solve complex mathematical problems as part of Bitcoin’s code.
To make sure they don’t exhaust the supply too quickly, the difficulty of the math problems miners have to complete continually increases in complexity.
This competition, along with the growing scale of the Bitcoin blockchain, means miners are upgrading and grouping computers to make them more powerful.
On the day tech billionaire Elon Musk announced that Tesla would no longer accept bitcoin as payment for its cars, the value of bitcoin dramatically plummeted, wiping away hundreds of billions of dollars in value.
These energy consumption estimates—from sources like the widely quoted Cambridge Bitcoin Electricity Consumption Index and Alex de Vries’ Digiconomist—vary and are hard to conceptualize, as there is no centralized source of data for bitcoin mining, with most analysis based on models.
Because Bitcoin consumes energy in a network of anonymity, analysts calculate the consumption through “hash rates,” or the amount of computing and processing power used in mining and transaction operations.
While tracking down exactly where Bitcoin’s energy is being supplied from is tricky, researchers can make approximations based on who is doing the mining and where their energy comes from.
When miners self-identify, it’s easier to locate “mining pools,” places where miners combine their resources together to scale up their operations.
But averages are just averages, and could be more or less accurate depending on the location of the miner, the time of year, and even the business model.
Several studies have looked into quantifying Bitcoin’s carbon costs or pinning down its carbon footprint.
In a study published in 2019, Jones and other researchers sought to quantify how much air pollution mining camps generated in the surrounding communities, and what the impact on climate would be.
The researchers first calculated emissions profiles for the US and China.
This excess power is what lures miners to places with cheap electricity and large profit margins.
But right now, as we’re making the transition away from fossil fuels, the renewables are all being utilized for some purpose, and so if bitcoin miners or cryptocurrency miners are going to take that renewable, that means it’s not there for somebody else to use,” says Jones.
Like many other industries, there are slow albeit palpable shifts toward using renewable resources.
“I do believe it is the absolute responsibility of all miners to run on renewable energy.
This consensus mechanism helps secure the network against economic attacks, since there is only one validated ledger of transactions that has been agreed upon by every single participant in the network.
Proof-of-stake is an alternative consensus mechanism where instead of every blockchain being sent to every computer in the system, it’s randomly sent to one miner who validates the transaction.
As Zaki Manian, a co-founder of various crypto projects like iqlusion and Sommelier, points out, nearly all of the new cryptocurrencies appearing on the market have already adopted the PoS model.
The central question at the heart of Manian’s work is whether or not these new systems can still preserve the quality of being open-entry, open-exit while not burning excessive amounts of energy.