When you hear the word “cryptocurrency,” what’s the first thing that springs to mind? For many of us, it’s Bitcoin — the original, most highly valued, and most widely discussed cryptocurrency. And for many of us who care about conserving energy and innovating with sustainable solutions to climate change, Bitcoin isn’t exactly a household brand.
The Guardian’s Alex Hern recently pointed out that Bitcoin uses as much CO2 per year as 1 million transatlantic flights. That number is a baseline, it’s not static — the nature of the cryptocurrency means Bitcoin miners are continually adding new “blocks,” or transactions, to the network, which is called a “blockchain.” This process creates an ever-increasing demand for energy worldwide. Because it’s a distributed system, Bitcoin’s energy consumption isn’t confined to a single data center — it’s distributed. Every miner is responsible for skyrocketing energy usage.
Bitcoin incentivizes energy consumption because miners make more Bitcoin as they process transactions. As Bitcoin and other cryptocurrencies increase in value and more miners join the party, energy consumption increases. If countries were to produce this energy through alternative methods such as wind and solar, this wouldn’t be a problem. Or, if a renewable energy company were to somehow contract with Bitcoin to provide all the energy its miners need, its proponents could have a clean conscience.
As is, Digiconomist reports that Bitcoin consumes more energy than Bangladesh and is just below Israel on the energy consumption ladder:
Emerging Regenerative Finance Models
Join us as leaders from Ganaz, the International Living Future Institute and more share insights on alternative capital structures and financial instruments that seek to both maximize purpose and service the interests of all stakeholders, at SB'21 San Diego — October 18-21.
The nature of Bitcoin combined with the nature of coal-fired power plants makes for a wasteful, pie-in-the-sky cryptocurrency, especially given the fact that there are very few real-world uses for Bitcoin. Investors can cash out, but that lessens its value. Businesses can accept it as payment, but that makes them a part of an unsustainable, unproven and volatile system.
Yet, despite this seemingly damning state of affairs, the technology underpinning Bitcoin — blockchain — has its merits.
Solar Bankers is a solar energy company using a new blockchain solution called Skycoin to promote clean energy. The idea is novel to say the least: Skycoin is an open-source blockchain platform businesses can use to create their own cryptocurrency. Solar Bankers tapped it to create SunCoin, “the first peer-to-peer energy trading platform.” Solar Bankers’ customers can generate solar energy in their homes and then use SunCoin to effectively trade solar energy credits. In other words, you could generate solar power, and then instead of the excess that you don’t use going to the power company, you can sell it to someone else using SunCoin.
The idea is disruptive because it cuts out power companies. According to Solar Bankers: “The solar energy market is dominated by large utility companies that buy solar energy at a low price and sell it through the electricity grid at a much higher price, securing huge profits at the expense of the end consumers and small-scale solar producers.”
If utility companies weren’t driving up the prices through net metering agreements, solar credits would cost much less. What’s more, some customers unknowingly fund anti-clean energy groups, because utility companies help pay for these groups’ lobbying efforts.
SunCoin works through an app that lets you monitor your electricity consumption. Once you generate enough electricity to power your home, Solar Bankers says the excess goes to “community microgrids.” Smart meters monitor the microgrids and communicate with users’ apps. Solar Bankers says users could potentially make money and profit outside of SunCoin’s trading platform. Recently, Solar Bankers kicked off a pilot program in Turkey, where it’s installing a microgrid, which is a series of nodes that store and transfer solar energy.
All SunCoin transactions will take place on Skycoin’s Skyledger, a blockchain platform that eliminates the power-burning practice of cryptocurrency mining. Instead of incentivizing miners with coins, Skyledger works by giving cryptocurrency to people who operate nodes in a mesh network. Basically, in exchange for cryptocurrency a user houses an antenna or other device that communicates with other members of the network. The user’s computer acts as a modem and doesn’t consume any more power than it normally would to connect to the internet. With SunCoin, users would generate power through solar devices, making it a circular, sustainable network. With Skycoin, users are participating in a free, environmentally friendly Internet called Skywire that could potentially replace the current Internet.
That’s not the only sustainable use for blockchain. Moyee Coffee has a blockchain setup to monitor supply chain transactions for coffee beans. This could serve as a model for supply chain transparency for all sorts of businesses — using blockchain to document every step of a product’s supply life from farm to market. Moyee uses a blockchain solution from FairChain to make this happen.
Skycoin’s model shows you don’t need energy-intensive mining to operate a blockchain. And using Moyee’s model, a company could show you everywhere a product has been, and you could pay for that product using cryptocurrency the company has created. You can compare the company’s cryptocurrency price for a product to its market value. Furthermore, you could be certain the company’s cryptocurrency is powered by clean energy.
It doesn’t take a stretch of the imagination to see how blockchain can promote sustainability. In fact, the platforms for sustainable blockchain are already here. It’ll be exciting to see where we go with them.