Right now, there are sheds scattered around the world with hundreds of computers mining bitcoins, the cryptocurrency famous for creating thousands of millionaires overnight.
The existence of such sheds is a reminder that not everything is pleasure and profitability: many ecologists and renowned figures, such as Bill Gates, do not tire of pointing out the environmental impact inherent in the “manufacture” of bitcoins.
This week’s DEF video, available on YouTube, analyzes the phenomenon of bitcoin, which currently consumes more energy than Argentina, and its solutions.
CRYPTOCURRENCY IN A FEW WORDS
Bitcoin is a decentralized cryptocurrency. In other words, it is not backed by any central bank or government, or metals such as gold, but rather is supported by user databases, dispersed in blocks that are linked together.
This set of blocks is called blockchain. In fact, it is like a large ledger where all transactions between users from anywhere in the world are recorded. So, bitcoin cannot be forged.
There are many virtual currencies. There are an estimated 8,400, of which bitcoin is the most famous. The idea of cryptocurrency is controversial: there are those who argue that it is a bubble that sooner or later will explode, while others prefer not to listen and they just become millionaires, like the Norwegian Kristoffer Koch, who in 2009 spent $ 27 on Bitcoin, and now has $ 184 million.
The only undoubted thing is that cryptocurrencies, and bitcoin in particular, are real and have an effect in the real world.
THE ENVIRONMENTAL IMPACT OF BITCOIN
The bitcoin protocol states that all transactions must be recorded and validated in that great ledger, the blockchain. And those who validate and record these transactions are the miners, the powerful and laborious computers scattered in sheds around the world.
A miner, then, is the one who registers and validates the data, but for that he has to solve a mathematical problem. If he succeeds, he receives a reward.
The following is the classic equation: the higher the value of the bitcoin, the more money the miner will receive. And therefore more money is willing to invest in hardware to solve the mathematical problem and more computers he will have in the shed. Computers that also need a good cooling system to avoid overheating.
According to the University of Cambridge, which presented the Cambridge Bitcoin Electricity Consumption Index, CBECI for its acronym in English, bitcoin consumes 121.36 TWh, while Argentina’s consumption is 121 TWh, which places it in the 31st position in the world ranking of energy use.
The first place in the list is China with 5564 TWh. The United States follows with 3902 Twh.
Since electric power is expensive, companies that pursue profitability with bitcoin mining have a preference for countries where energy is cheaper.
This explains the profusion of bitcoin farms in Iceland and Kuwait. Iran is also a frequent place, because energy is subsidized by the state, but so much energy activity brings blackouts, excessive consumption of fossil fuels and CO2 emissions in large quantities.
WHAT IS THE SOLUTION TO STOP THE BITCOIN PROBLEM?
According to an article by Harvard Business Review, a solution could be an incentive for miners to use solar energy or other renewable energy sources. For example, Iceland-based Genesis Mining uses 100 percent renewable energy and is among the largest miners in the world.
But the best solution comes from the same crypto technology. Among others mentioned in the DEF video is SolarCoin (SLR). It is a cryptocurrency created in 2014 with the aim of migrating towards the definitive use of clean and renewable energies, which rewards solar energy producers.
In this case, the blockchain records the amount of energy produced by users. After obtaining authorization, a digital credit (one SolarCoin) is received for each megawatt-hour (MWh) produced.
The crypto world is just beginning: it is expected that, if it generates problems, due to its decentralized essence and the constant appearance of novel and diverse versions, it will find its solution.