The techno king of Tesla has spoken, and his decree may be a death knell for arguments about any environmental benefits of bitcoin.
Whatever the benefits of bitcoin may be, sustainability ain’t one of them — at least for now(as Tim McDonnell noted in this excellent piece in QZ).
There are new projects underway that are committing to using only renewable resources to power bitcoin mining operations, like the folks at Gryphon Digital Mining, whose company uses hydropower assets out of New York state for its bitcoin mining operations.
Gryphon said that their operations are using renewable resources that have nowhere else to be deployed (in state). “We are in an electricity rich environment where they sell electricity outside of the region,” said Dan Tolhurst, the former director of corporate strategy and business development at The Walt Disney Company.
The company actually has a few high-powered executives among its ranks, including Rob Chang, a former CFO of Riot Blockchain and head of metals and mining research for Cantor Fitzgerald. The company’s board is chaired by Birttany Kaiser, a congressional subcommittee member for blockchain, fintech, and digital innovation in Wyoming — a state that’s been more friendly than most to cryptocurrency.
“At Gryphon, our long-term strategy is to be the first vertically integrated crypto miner with a wholly-owned, 100 percent renewable energy supply,” said Chang in a statement.
Gryphon raised $14 million for its clean cryptocurrency mining project — and they’re far from the only company that has raised money on the prospect of greener cryptomining.
Crusoe Energy Systems is another early stage company which has raised nearly $250 million for its cryptocurrency mining and data center development operations, which are powered by waste natural gas.
Refinery flaring emissions at night. Image Credit:Flickr/Kurayba
Still, these projects are unlikely to make a dent in greening the entire bitcoin mining industry given the size and scope of the cryptocurrency’s user base — and the presence of a good chunk of miners in China, where coal power remains the norm. Bitcoin may go green, but it will be when the grid itself is powered by primarily renewable energy resources.
What’s potentially more interesting than bitcoin’s green dreams are the projects being built on other cryptocurrency platforms that are focused on sustainable applications themselves.
These are projects whose applications are built on cryptocurrency systems based on proof of stake rather than proof of work. Bitcoin relies on proof of work, having machines compute increasingly complex cryptographic problems to validate transactions and create new currency, as this Investopedia piece explains.
“The energy impact is real and it’s damaging. There are a handful of people who have brought proof of stake to life rather than proof of work,” said Ethan Buchman, the founder of an alternative cryptocurrency platform called Cosmos. “The whole point of proof of stake is to make it possible to have a world of many blockchains and many cryptocurrencies without having to have the energy consumption of bitcoin.”
The Cosmos blockchain plays host to one project in particular, called the Regen Network, which has received attention from no less significant a player in the climate space than Microsoft.
The Redmond, Wash.-based tech giant bought a clutch of carbon emissions offsets from Regen as a test case for its agricultural offset credits. The cryptocurrency startup uses blockchain to manage the certifications it creates based on the company’s own credits which measure not just sequestration, but also ecosystem health, animal welfare and soil health, the company said in a January statement.
If Regen represents one end of the sustainability spectrum, with a focus on a blockchain-based immutable ledger for managing carbon credits, then a clutch of companies using blockchain technology to manage microgrids are on the other end.
These are businesses like LO3 Energy, a company developing a blockchain-based software that helps utilities manage and pay customers for distributed energy resources.
It’s backed by big businesses like Shell Ventures (the investment arm of the oil and gas giant), Japanese power company Shikoku Electric Power, and Sumitomo Corp. along with venture capital firms like Braemar Energy Ventures.
WePower is another of the blockchain-based smart contract companies for utilities. The European business made a name for itself joining forces with an independent energy provider in Estonia to give consumers a chance to buy into the program using its own cryptocurrency. Blockchain offers WePower‘s customers a chance to monitor energy prices and adapt and diversify their energy portfolio off of their predictions in a transparent way.
“Distributing grid operational decision-making is revolutionary,” said Dane Christensen, a mechanical engineer in NREL’s Residential Buildings Research Group and a principal investigator on a blockchain pilot project, in a 2020 article. “It’s really like somebody in the 1980s expounding on the economic opportunity of the Internet. Everyone would have laughed at you. That’s kind of what’s happening right now with blockchain applications — the foundational tools for another technology revolution are emerging, and this could be one of them.”
The through-line for all of these offerings is the potential to provide an immutable ledger that can in some cases create autonomous transactions based on certain observed conditions.
“We are trying to play… I think… one of the more important roles in all of this, which is how do you confirm ecological impact and transform that into digital assets in a verifiable and trusted way,” said Regen founder Gregory Landua.
“We’re building a public open source network to make all this work. We’re also building public open source verification systems that can compliment these private VC-backed verification sources,” Landua said.
It all comes down to replicability and transparency, according to the Regen founder.
“In blockchain you can program in incentives. The other nice thing about blockchain is that it is a distributed ledger so it allows you to have consensus about the structure of a claim,” Landua said. “The blockchain is what makes the progarm incentives and align a potentially adversarial group of entities. We can align their incentives on a public good.”