Crypto-blockchain use cases to improve the energy transition
For several years now, Bitcoin and most other crypto-assets have been the subject of regular controversy over their energy costs.
The most recent example of this was Elon Musk’s announcement in May. He announced that he was withdrawing Bitcoin as a means of payment for Tesla cars because the network’s miners were using too much carbon-based energy. This decision greatly rekindled the debate on the energy consumption of Bitcoin and crypto-assets in general.
However, these criticisms sometimes lack precision. As mentioned in our previous article on the ecological impact and challenges of blockchain technologies, the ecological footprint of blockchain technologies is directly linked to the way they operate, and more specifically to the proof-of-work consensus protocol.
This state of affairs highlights the need to pursue initiatives to optimise the energy cost of crypto-assets. With this in mind, many projects have already taken up the challenge of reducing the environmental cost of crypto-assets.
This article provides a brief overview of the various uses of blockchain to help the ecological transition, and of projects that attempt to optimise proof-of-work without jeopardising the energy consumption of the crypto-blockchain industry.
Growing interest in blockchain projects in the energy transition
Reducing electronic waste
Reducing electronic waste is a major challenge for sustainable development. According to a report published by The Global e-waste statistics partnership, every year the total volume of electrical and electronic equipment used worldwide increases by 2.5 million tonnes. The production of electronic tools for the technology industries (AI, Machine Learning, Deep Learning, Big Data, etc.) has an imposing environmental cost. The same applies to the production of digital objects used in everyday life. The production of a 2kg computer consumes 600kg of raw materials and produces 103kg of CO2.
Blockchain technologies are emerging as an effective tool for reducing the volume of electrical and electronic waste produced. iExec is creating a decentralised network for sharing computing power, where anyone can become a supplier by connecting their machine (computer, smartphone, tablet) to it. Eventually, this will enable all existing hardware to be used, thereby reducing the environmental impact of digital objects.
Supply chain and procurement transparency
Public blockchain networks enable real transparency when used in supply chains. This has a number of advantages, including simple tracking for end consumers, giving them more decision-making power, and a significant reduction in fraud. In 2019, the AAC (Administrative Assistance Cooperation system) – a platform enabling EU countries to exchange information relating, in particular, to non-compliance or violation of European agreements on the food and agriculture supply chain – received 292 requests for assistance on food fraud within the EU. TEO, a French project, helps to reduce fraud by certifying the origin of green energy. Its decentralised network and sensors placed on production sources (wind turbines, photovoltaic panels) guarantee the authenticity of production data. In 2020, Tampax teamed up with the Treum project, which enabled end consumers to check the traceability of tampons. By scanning the barcode, the cotton origin of the tampons is displayed. This transparency puts pressure on consumers who want eco-responsible products. Ownest, a French company, provides complete transparency of logistics networks through the use of responsibility tokens. It enables its users to avoid losses and negligence on their networks, losses which have a high ecological cost.
Decentralisation of electricity supply
Electricity generation is undergoing a major paradigm shift. Previously highly centralised, more and more small producers are now able to generate electricity thanks to the democratisation of access to solar panels. The decentralisation brought about by blockchain technologies will ensure the creation of decentralised electricity distribution networks that allow users to be both producers and consumers, and reduce the path of this distribution. In this context, two neighbours could send and receive electricity respectively. In Canada, Alectra Utilities has set up a pilot project using IBM’s Hyperledger blockchain to try its hand at decentralised electrification. In France, Talium has also created a collective self-consumption service for photovoltaic energy.
In May, Australian company Power Ledger announced a partnership with Thai Digital Energy Development to create a blockchain-based peer-to-peer digital energy platform in the country. This blockchain-based platform will facilitate the use of renewable energy by marketing environmental products (carbon credits and renewable energy certificates) and selling energy on a peer-to-peer (P2P) basis.
Tokenisation of carbon allowances
In 2005, the European Union set up the EU Emissions Trading Scheme (EU ETS), enabling companies to buy or sell emission allowances based on their CO2 output. Large energy-consuming companies are the main clients of the EU ETS. The CO2IN project, still in its pilot phase, aims to enable citizens, small businesses and municipalities to buy EU ETSs, giving them a tool to offset their impact on global warming.
In addition, the markets on which these allowances are traded sometimes lack visibility and are subject to legislative variations from one state to another. ClimateTrade alleviates these problems and tokenises carbon credits so that they can be traded more easily by emitting companies.
Gradual optimisation of mining-related energy consumption
Reusing the heat emitted by mining computers
MintGreen aims to improve Bitcoin’s environmental footprint through various partnerships. The company plans to build Bitcoin mines close to businesses that would use the heat produced by the mining process. The pilot project has already signed two partnerships with a sea salt producer and a distillery. Both of these companies need heat to run their businesses. So the heat produced by the mining is recycled as hot water to be passed on to MintGreen’s partners.
WiseMining is also developing a boiler that recycles the heat emitted by mining equipment. These boilers, called “Sato”, will be compatible with existing and future graphics card models. In this way, the company hopes to contribute to the advent of a new generation of decentralised miners, and to distinguish itself from centralised industrial mines that do not always reuse the heat emitted by mining equipment.
The decentralisation of electricity supply for mining will also be exploited by Daymak, a Canadian manufacturer of light electric vehicles. Daymak recently announced Spiritus, its next electric car, which will be equipped with its own mining infrastructure.
Daymak Spiritus will incorporate Daymak Nebula technology, comprising Nebula Wallet (an application with a directly integrated wallet) and Nebula Miner (a mining infrastructure directly integrated into the vehicle). Ultimately, Daymak’s cryptographic suite will transform its vehicles into “environmentally-friendly cryptographic nodes – an unprecedented step in the rapid evolution of blockchain technologies”.
The use of green electricity to reduce mining‘s environmental footprint
On 9 June, the President of El Salvador, Nayib Bukele, announced that he would propose a bill to make Bitcoin a legal tender.
The recognition of Bitcoin as a legal tender is not El Salvador’s only initiative in the crypto-asset sector. Indeed, in a recent tweet, Nayib Bukele informed that El Salvador wants to implement a plan to offer facilities for bitcoin mining with very cheap, clean and renewable energy emitted by volcanoes.
To mine its first bitcoins quickly and efficiently using the geothermal energy released by its volcanoes, El Salvador will be using the services of mining company BigBock Datacenter.
According to the CBECI, every year, 25,082 TWh of electrical energy is produced worldwide. Yet 16.82% of this energy is not used. In this context, using this energy for mining is an effective way of combating energy wastage. Until recently, most miners were based in the Sichuan region of China. The energy used by these miners came largely from wind, solar and, above all, hydroelectric power.
In the wake of repressive measures taken by the Chinese government, the recent exodus of miners based in China seems to be reshuffling the deck in the global mining industry. The new mining pools could massively promote the use of renewable energies, which would help to improve Bitcoin’s carbon footprint.
Since 2017, the Virunga region in the Democratic Republic of Congo has been equipped with hydroelectric power stations that will eventually meet the region’s needs and combat deforestation in Virunga (the world’s second-largest forest park after the Amazon). These power stations currently have excess production capacity due to the lack of economic development in the region. BigBlock Data Centre has set up a farm that obtains its supplies from the hydroelectric power stations, enabling them to recoup some of their costs.
In summary, the idea that developers of blockchain projects do not take into account the challenges of the ecological transition needs to be qualified. In fact, the products of certain blockchain projects are interested in future projects linked to the ecological transition. Blockchain networks, which are open and decentralised, represent a real opportunity for the development of innovative ecological initiatives by facilitating the peer-to-peer distribution of electricity, for example.
In addition, the energy consumption of certain proof-of-work blockchain networks has led to the emergence of initiatives aimed at improving the carbon footprint associated with mining and offering greener alternatives. Bigblock Datacenter, for example, has taken an interest in the surplus renewable energy available in certain geographical areas to facilitate carbon-free mining.
In the long term, the growing use of blockchain technologies will make it possible to optimise energy supply across all geographical areas in order to combat the waste associated with the overproduction of energy in certain land areas.
This article was written by Bettina Boon Falleur and Hugo Bordet