The Energy to Sustain Blockchain – The debate rages on as the energy consumption increases
Guest essay by Shea Karssing
Earlier this year, we published an article (https://smarterbusiness.co.uk/bitcoin-electricity-energy-sustain-blockchain/) on Bitcoin energy consumption, reporting how Iceland has become one of the top locations for cryptocurrency servers, which now exceed the consumption of private energy users.
Now, the criticism amongst ecological circles and the debates around Bitcoin energy consumption have been fueled by a paper by Alex de Vries of PwC’s Experience Center in Amsterdam.
His paper, Bitcoin’s Growing Energy Problem, concludes that Bitcoin’s energy consumption could soon be heading above a consumption rate of 8 gigawatts (GW) per year.
The paper’s findings:
- At the moment, the Bitcoin network consumes at least 2.55 GW of electricity – as high
as the annual energy consumption of Ireland. - This could reach a consumption of 7.67 GW in the future – close to the energy
consumption of the entire nation of Austria (8.2 GW). - By the end of 2018, the mining of bitcoin could be using as much as 0.005% of the
entire world’s energy use.
The reality is that Bitcoin uses a massive amount of energy. Author Alex de Vries says: “The bitcoin development community is experimenting with solutions such as the Lightning Network to improve the throughput of the network, which may alleviate the situation. For now, however, Bitcoin has a big problem and it is growing fast.”
Why does bitcoin mining require so much energy?
The bitcoin mining process uses computers with software that can solve complex mathematical problems. A new block is added to the blockchain every time a new problem is solved, rewarding the miner with bitcoins. This process requires a lot of energy because the computers need to ledger all the transactions so that the same coins aren’t spent twice – this takes time and consumes a lot of electricity.
How can bitcoin mining become sustainable?
De Vries’ research reveals that if the price of bitcoin continues to go down, and the amount of energy needed to mine it continues to rise, bitcoin investment could become inefficient. One of the ways this can be avoided is if the world shifts to 100% renewable energy in the years ahead. With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.
New research from Renewable and Sustainable Energy Reviews journal found that a shift to total renewable energy using contemporary technology is both possible and affordable.Co-author of the research, Brian Vad Mathiesen of Aalborg University says: “There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research. Now let’s get back to the business of modelling low-cost scenarios to eliminate fossil fuels from our energy system, so we can tackle the climate and health challenges they pose.”
If we were to eliminate fossil fuel usage, this would eliminate the environmental and efficiency challenges caused by energy-intensive bitcoin mining.
It’s not impossible to imagine a world in which bitcoin is used exclusively, backed by green energy. If there’s one thing we’ve learnt over time, it’s to ‘never say never’…
About the author:
Shea Karssing is a writer for Smarter Business, one of the UK’s leading independent consultancies, helping businesses secure the most comprehensive savings solutions from utilities contract management and procurement to business loans and facilities maintenance. Smarter Business are experts on all things energy, and it’s the company’s mission to provide
whole-of-market business comparisons, maximise savings and improve profitability for its clients. https://smarterbusiness.co.uk/
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“There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research.”
No amount of research can avoid the inherent weakness of renewable energy – unreliability, massive environmental footprint, need for special climate locales (desert for solar, eternally windy areas for windmills) – we’re talking stuff no better than 16th century energy technology. The usual claim – that adding batteries for storage does not solve the unreliabilty of these enery sources and only adds greatly to the cost. A more rational argument would be for these people to avoid “100% claims”. A more intelligent
low carbon system would be to wait for small modular molten salt nuclear power plants to come online.
Anyone who calls themself an energy expert and doesn’t point to SMRs as the future is no expert.
When I read the article, I realized right off the starter’s block that the author doesn’t have a clue about Iceland’s power generation capabilities.
Per a Fortune 2/2018 article, Bitcoin’s energy usage in Iceland is about 840 GWh for this year, whereas the rest of the population will use about 700 GWh.
http://fortune.com/2018/02/13/iceland-bitcoin-mining-electricity/
The concern in February was that if all the proposed data centers were to be built, there was insufficient power generation to meet the power-hungry, gigawatt-guzzling data processing equipment.
Here’s a quote: ““If all these projects are realized, we won’t have enough energy for it,” Johann Snorri Sigurbergsson, a spokesman for Icelandic energy firm HS Orka, told the BBC.”
Since Iceland’s power generation is 70% hydro and 30% geothermal, it is a finite resource, something that the author of this silly article did not take into account when blathering on about renewables.
There is a limit to how much electric power can be generated by any resource of any kind. Period.
If Bitcoin’s power demand exceeds the capacity of the island’s ability to supply electricity, then Bitcoin will have to place its additional equipment elsewhere. It’s that simple. It doesn’t matter who pays for “mining” or electricity usage. It only matters whether or not the demand can be met. If it cannot be met because the demand exceeds the generating capacity available, then additional “projects” will not happen in Iceland.
There is also the fact that Iceland, as a hydro and geothermal dependent entity, can easily lose its available power generation in the blink of an eye, if one of the more explosive volcanoes (like Hekla) decides to erupt and shut off the hydro flow and geothermal resources available now. It happened when Ejefjallajokul decided to explode a few years ago, with the destruction of a long-existing waterfall near that volcano. The water source went elsewhere and the waterfall is gone permanently.
The author has a very narrow and uninformed view of the real world and what can and cannot be done. The entire body of “sustainable” and “renewable” arguments do not bear close examination, as many of you have indicated in your GW vs GWhs responses.
The people who propose these things do not have the slightest understanding of load or capacity or anything else. All they see is ‘look! sustainable!!’ They consistently fail to take into account that it costs money – REAL money – to build, maintain, and expand power-generating plants to meet demand, and that there is a physical, real-world limit to what can and cannot be done.
Geothermal power generation depends entirely on the will of the volcano gods. Hydropower generation depends entirely on water being available to spin the turbines in a generating station. There is NO guarantee that these natrual resources will stay as is any longer than it takes Hekla to develop a belly ache and start burping.
That articles is possibly the silliest thing I’ve read in a while, and I’ve read some real silly stuff here and elsewhere. The only way to put a stop to this ridiculously starry-eyed “warm/fuzzies’ idiocy is to continue to put data and facts into rebuttals.
Okay, Anthony is in a mean mood. Pushing this poor lady into his tank of sharks.
Or did he just forget the “Friday Funny” tag line?
Pushing poor people like this into a tank of sharks is just following the ideas of Darwin—if she survives…..Just saying.
I thought we were a wolf pack.
There was a figure went in front of my face some while ago about energy required to fabricate Large Scale Integrated silicon chips.
What I got as ‘The Take Away Number’ was that it took as much energy to manufacture one reasonably large silicon chip (e.g. a 4 gigabit RAM chip) as the entire PC it would be installed into would use in its typical 3 year life. And then be binned.
My lappy here now has 16 chips like that JUST as its memory – before we get into the CPU itself or the graphics card/memory, disc drive (a 240GB SSD in my case).
Apparently most of the energy used goes into (simply) keeping the clean-room clean – air filtration.
Not far from where I am is a place called Scunthorpe.
Everybody knows about Scunthorpe as it is where an inventive fellow name of ‘John Harrison’ invented longitude.
His prize was £20,000 Sterling – which the Government of the time had promised, were reluctant to pay but did eventually cough up. So and in due course, some horses & carts arrived at his house bearing 9071.8474 kilograms of Sterling Silver. (Work it out)
Someone here mentioned ‘dollar bills’
I’m not au-fait with them but the UK version (paper, now plastic currency) is not actual currency at all. UK currency is in fact just a series of IOUs – paper money are simply notes promising to pay. It says as much on each one.
Smallest UK note is now the fiver and it carries the wording of a promise from the Bank of England which and it goes:
“I promise to pay the bearer on demand the sum of five pounds”
The current UK ‘cost’ of Sterling Silver is £8.51 per ounce.
So, the fiver in yer pocket is worth 80 ounces of Sterling Silver at £8.51 per ounce.
What do we need bitcoins for?
What are we waiting for, see you down Threadneedle Street first thing Monday morn.
What could possibly go wrong?
Or more particularly, what DID go wrong?
Inflation. Kills you every time.
“Let’s get back to modeling…”
Right. Nothing about putting himself on this magical whirlwind that uses only renewable energy to power a modern life.
What a fool.
yodeling about the modeling?
moar bagpipes!
“If there’s one thing we’ve learnt over time, it’s to ‘never say never’…” Of course. We can violate the laws of physics and do anything. It’s called “magic”.
These people get dumber by the minute and more delusional.
There’s a lot of magic going on nowadays. I woke up this morning with the penis I have had for decades and magically I can become a woman tonight to get cheap drinks from the local night club by rubbing my little ‘genie’ and becoming a woman. Tomorrow I gonna be an intergalactic alien! Magic is like …. so mystical!
“The amount of bitcoins that can be mined is finite and is set at 21 million.”
Sez who? Bitcoin is an open invitation to crooks and swindlers.
software sets it at 21 million. the only way that can be changed is if nearly everyone (95%) who mines bitcoin and who runs a full node ( about 100K of those) decide to run new software that changes the number.
aint gunna happen.
“With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.”
Really? There is no environmental impact from covering millions of hectares of land with solar panels, or wind turbines? There is no environmental impact from producing all those cells or generators?
This is beyond parody.
“Mit der Dummheit kämpfen Götter selbst vergebens.”
“Die Jungfrau von Orleans” by Friedrich Schiller,
“Against stupidity, the gods themselves fight in vain.”
Well, well. A currency is a medium of exchange. In it’s use as currency, the intrinsic ‘value’ of a thing is not relevant. It’s cost to acquire is not, either, once it has been accepted for exchange. Once a gold coin is in circulation, it’s cost to mine is not relevant. It’s value is based on what you can acquire for it in exchange, or what you will give for it in exchange. It also has an intrinsic value in commerce; as a metal. Fiat money has no such intrinsic value. It derives its value in commerce, as does the gold coin, in what you can exchange it for. Government make it valuable by accepting it for government debts. It tries to add value by declaring is useful for private debts. It then supposedly tries to maintain its integrity by limiting the supply. This has actually worked very well to enhance commerce over quite a long time and in many places.
Excess debasement of the currency is a known issue and has similar results from Weimar to Venezuela.
There is a cost to maintain the blockchain the must be added to each transaction. This is larger than the cost to maintain other currencies. Cryptocurrencies are not as useful in times of social stress; even local stress. Getting on a train after a ballgame, using bitcoin for the fare would depend on the cell tower not saturating. Never mind the ferry over a remote river. Coinage has worked well for several millenia.
It is very difficult to evaluate a medium of exchange that is invariate. This is because the economy is always growing, except when it is shrinking. Commerce works best with approximate price stability.
A Britain where an endowment might have the same purchasing power for generations is lost in the mists of history, but relative stability form year to year is important for reasonable commerce. One of the salubrious effects of gold and silver was the fact the mining and supply more or less tracked the growth of the world economy; folks noticed the inflation or deflation during brief periods when the balance did not hold. Increasing value motivates increasing effort to mine and extract, decreasing value the opposite. Not so with Bitcoin. But, one argues, there are other currencies just as there are many forms of fiat money! And (they say hopefully) Bitcoin is the first and the best and the most reliable, so it will be the most valuable….would you rather have gold or silver or copper or paper? Yes, I’d rather have gold or silver or copper or paper. If one thinks gold will increase dramatically in value, because it will become scarce, one will hoard it. A fixed supply of bitcoin almost guarantees hoarding. A tulip at least blooms. What does a hoarded bitcoin do? It sits until you need real exchange value, so you find another hoarder who will pay you in a generally accepted media of exchange for the chimerical value. Such bubbles almost always burst.
This is true even when they represent something with intrinsic value, if the imputed value gets to far out ahead of the real value. Many dot-com companies survived and even prospered as shareholds lost most of their investment. millions of homes are happily occupied and have real value, even though real estate tranche investors lost millions on the same properties.
It will be interesting to see what happens to cryptocurrencies. If they are to be a medium of exchange, increasing acquisition and transaction costs do not bode well. Not does a party like the Venezuelan government coming in as an issuer help…I have not noticed that Gresham’s law has been repealed.
There has always been commerce outside the realm of governments, the image of gold for bottles on a ship offshore comes to mind. Governments tend to take effective action against and stop, or more often, co-opt it.
For what it’s worth, Nvidia no longer thinks they’ll be in the “mining equipment business”.
I also listen to the Dutch for sea level predictions.
http://flatheadbeacon.com/2018/08/16/building-virtual-gold-rush
I am not sure how correct my understanding in realation to this article here is.
but for what it could be worth of, will just let it fly.
Considering, the so many silly errors in there, seem more like dishonesty in steroids…. which mainly may consist as “fishing ” for info.
So this like more in the lines of a “reconnaissance thinktank ” product.
Not that there would be much problem or wrong about it in principle actually……
but considering the level of the mess and dishonesty, it makes the approach look
and be quite ugly….indeed.
Pulling the middle finger at it will not be such a bad idea…. at such an agly dishonesty.
Hopefully am wrong in this one.
But could not resist expressing this point. 🙂
cheers
Just curious…what do you buy “Bitcoins” with ??
Marcus
It is more like what can you sell or offer for bitcoins.
A little different from how you put it…. bitcoins consist mainly as value,
not as commodity or stock matterial…. 🙂
cheers
whiten
Rather, bitcoin is seen as “perceived value” … Worth something only to those who want it now, who want them because somebody else might want them in the next 15 minutes. Oil, copper, gold, silver, iron, wheat, cotton or the proverbial pork bellies are also only worth something to the “somebody else” who might want them in the future (an investor really doessn’t want 50,000 tons of pork bellies to show up on his front yard in 6 months, but at least those futures are ultimately based on a real product.
The potential 30 trillion in “Carbon future allowances ” are however ONLY “worth something” to their international carbon futures traders and holders if the CAGW community can create their value for the international bankers by their political power and propaganda.
I wish I could “up vote” you 10
All values are “perceived values”…..!
Cash, bank transfers….
That’s hilarious. Renewables will produce so much energy that they will have energy to spare? Wow ! Who knew. But who is stopping renewables from blasting their way into a brave new world where fossil fuels will no longer be required? GO FOR IT. You’re already part way there. Let’s see. The last time I checked, wind and solar, despite the hundreds of billions of dollars spent on them were contributing a massive 3% to the world’s energy needs. Looks like we’ll have to gear things up a notch if we are ever going to get to the promised land.
Clean, green, and sustainable as in out-of-sight and out-of-mind. Also, backed by the full faith and credit of a disparate exchange.
Will the crypto-currency go the way of Algore’s Chicago Climate Exchange (CCX) ?
If Mark Zuckerberg has any investment in crypto-currency, beware when he cashes out like he did on Facebook stock recently. The ones at the top of a pyramid scheme or director can make changes leading to a crash. All the 1’s and 0’s will become just that, 0’s. The organizers at the top will convert their share of holdings to tangible assets, the rest will be losers. You may just as well invest in conceptual penis’ as a social construct. At least then you will have a copy to pass on to your grandchildren!
Anytime I see a news article in which the writer botches the energy units, I tune out. If the writer can’t master the fundamentals, why should I trust the information?
Despite all the hype and explanation I still don’t “get” Bitcoin. Like religion, and Climate Change, it’s a trust based phenomena with no substance. The proof is the fact that the worth of Bitcoin is always compared to standard currencies. It would be nothing without them. The day of reckoning will be when the sell off starts and everyone stampedes for real money. May never happen, but I think it will. Being “safe” doesn’t add buying power value and that’s Bitcoin’s claim to fame.
I wouldn’t invest your money in bitcoin. Bitcoin is like Beanie Babies but at least when Beanie Babies went bust you had a cute little doll.
A number of problems with the original quoted article:
1) renewable energy. It wouldn’t surprise me if much, if not all, of the renewable energy generated in the past decade was consumed by bitcoin (and the other cryptocurrency) mining operations.
This talking about bitcoin using only renewable energy is nonsensical, much like companies and airports going “carbon neutral”.
2) bitcoin is not anonymous. If you were to actually use it to buy things, it deanonimizes surprisingly quickly. And since the blocks are public forever, once deanonymized, you can’t go back.
3) the energy consumption isn’t because of the blocks being updated. It is an architectural feature of bitcoin: each time a block comes up for “work”, every single bitcoin miner tries to get in on the action. So basically every single transaction has significant CPU cycles consumed by just about every bitcoin miner – it is this tremendous parallel waste which is how bitcoin is decentralized.
4) the present mining isn’t free – the transaction cost is the free bitcoin created and given to the miner. Which isn’t free either – but somehow this structural dilution of bitcoin is unacceptable to the faithful even as central bank printing and bank money supply expansion isn’t. Whatever.
5) The biggest problem with bitcoin and other cryptocurrencies isn’t transaction speed or energy use, although these are major.
The biggest problem is theft and fraud. Thefts from exchanges will very likely top $1b this year – that is a sizable percentage of the entire cryptocurremcy market cap. On top of this are the outright scams, thefts, and fraud. In particular, the rise of cryptocurrency price manipulation scams – taking the classic boiler room, pump & dump etc into this new realm.
Yet again, the faithful don’t want to acknowledge how large a problem this is.
I see a number of arguments that crypto is a protection from gubmint. Are you certain that CIA/FSB/… is not involved??
Not involved.
Not really, but their current level of incompetance seems to indicate they probably are not.
“It’s not impossible to imagine a world in which Bitcoin is used exclusively”. True. But how many of the perfect worlds that people have imagined have actually happened? How many times have people set out on the journey to perfection and found that it didn’t take long to become a nightmare? Maybe Bitcoin is yet another dictator’s path to the population’s poverty, as the electricity needed for everyday living is instead used to maintain the dictator.
My money’s all invested in tulip bulb futures. I just bought a huge position in March 2035 calls. Can’t wait to laugh at all you guys when I’m rich.
Mods.
I guess the picture of Charles Ponzi was too much.
Crypto, like Bitcoin, will have a real run for real money when whomever develops the better quantum computer platform. Being orders of magnitude faster and cheaper to operate, whoever has the best quantum platform will ‘mine’ the majority of the crypto currency and gain control of the particular crypto currency. Then the crypto will be deflated as well, since it became a lot easier to mine the ‘coins’ with a super quantum computer that works 1000X times faster than traditional silicone computing.
Currently, the Chinese are spending 10X the R&D that the USA is on a truly functional quantum computing platform, which has a lot of implications far more important than crypto. But that may be how we tell when someone actually has perfected quantum computing, since they will suddenly have a lot of this crypto currency. Then it is vapor currency, as it will soon be worthless after that due to rapid expansion of the crypto currency itself.
Sorry, but you are ignorant. The actual process of selection has nothing to do with prime number factoring. It’s much closer to a random guessing.
Secondly, the majority of cryptocurrency is already issued, so even winning all of the future mined cryptocurrency from now on does not dictate the market.
Most importantly, if quantum Co outing at real scale does occur, then the asymmetrical encryption used by the cryptocurrencies will be broken hence the whole system will break down.
Guys you are not thinking clearly.
First the value relies in the “size” of environment that work required to be
done.
Second in the work value itself, which can not be externally effected,
even in the case of quantum Co… and it’s speed.
Any body has any idea how much it costs to have and ran quantum Co??!!
Hypothetically the only thing different may just be the time to do the task.
Hypothetically, as quantum can not decide the outcome of the work point,
as that is up to the block chane.
So quantum Co will be most likely the most expensive whack a mole game, when it comes to bitcoin mining , provided that it exist and some how it could be employed for such task.
cheers