Image: StunningArt/Shutterstock
The cryptocurrency boom has turned a libertarian pursuit into a hypercapitalist, environmental disaster. But is it possible to make a ‘greener’ solution?
While the media hype surrounding cryptocurrencies (mostly bitcoin) is not at the same level we saw at the end of 2017 and the beginning of 2018, the buying, selling and mining is still progressing at a ferocious pace.
10 years after bitcoin first got off the ground in the midst of an international financial crisis, the vision of an online currency free from governmental and institutional control appears to be taking off, with bitcoin, bitcoin cash and litecoin just some of the cryptocurrencies trading for thousands of dollars per coin.
But, away from the seemingly harmless process of buying and trading through exchanges from the comfort of your own home, the blockchain technologies on which these cryptocurrencies are based do not manufacture themselves out of thin air.
To generate that currency, and for dedicated users to earn their own rewards, it needs to be mined, which involves transferring a computer’s processing power over to the blockchain to solve trillions of complex mathematical equations.
Just like the Gold Rush seen in the US in the 19th century, hordes of eager miners have emerged across the globe, vacuuming up GPUs and processors from anywhere they can get them, to specifically mine cryptocurrency.
This has affected many PC gamers eager to get the latest powerful hardware to run their games, but also many in the scientific community looking to use the hardware to scan the universe.
Shocking statistics
Perhaps even more damaging is the fact that all of this hardware requires an incredible amount of energy, and its effects in the long term could prove disastrous.
Recent research has shown that by the end of this year, bitcoin mining could consume as much electricity in a year as all of Ireland would during the same period.
In numbers, this shows that bitcoin is currently consuming 2.55 gigawatts (GW) of electricity, which could grow to 7.67GW if the prediction is accurate.
The problem is only going to get worse as dedicated miners become less common, and in their place are vast mining networks comprising hundreds of machines churning through electricity, as the world’s sea levels are rising that bit higher.
But is it possible to create a sustainable cryptocurrency? One that can maintain the world’s interest in decentralised currency, but not require us melting our computers – and planet – in the process?
Explanation of the difference between PoW and PoS. Image: Blockgeeks
One possible solution does exist in the form of a mining solution called proof of stake (PoS), challenging the existing proof of work (PoW) model used by bitcoin and others.
PoS was first suggested back in 2011. Unlike PoW, this new system does away with the need for energy-intensive mining and reward system, instead replacing it with a system where no mining takes place and each ‘forger’ is chosen in a deterministic way depending on their stake.
From the beginning, a set number of currency is created, and for one of these forgers to join the cryptocurrency – with Ethereum among others already interested – they would need to effectively be picked from a lottery and subsequently pay the transaction fees.
One such cryptocurrency offering comes from the Divi Project based in Costa Rica, whereby each week a lottery block is mined that awards Divi forgers a sizeable chunk of its cryptocurrency.
As much energy as watching Netflix
Speaking with the start-up’s co-founder and CEO, Geoff McCabe, this means that the energy-intensive mining process is effectively eliminated. Even when there is a bit of energy usage, it equates to about the same amount of energy as watching Netflix.
“I would guess it’s about 1pc the power used. It makes a massive, massive difference,” he said.
Speaking of why he wanted to help create a PoS cryptocurrency, McCabe said he has a passion for finding ways for tech to do good things for the planet, almost like a counterculture to the existing ‘crypto bro’ culture of PoW.
“Those involved love their mining machines, they love the hardware,” he said. “To buy this stuff and set it up, it’s like a ritual; almost like a rite of passage for crypto people to do it. The idea of making it easier by doing it in a different way, maybe it hasn’t appealed to people until now.
“Every year requires more power with more cryptocurrencies coming and everyone is just ignoring this because they’ve focused on the money.”
He also stated that there are sociological problems from existing PoW cryptocurrencies, citing citizens of Quebec in Canada having major issues with the fact that the city’s cheap electricity costs have turned it into a global mining hub, driving up costs for the average person living there.
Regulation and future
The problem is that right now, there are no existing international regulations surrounding cryptocurrency, which is why the Divi Project was set up in Costa Rica, where its development is freely encouraged.
“The idea was to create a simple system that bypasses governments, bureaucracies, banks and corporations, that can be done by average people who get the benefits,” McCabe said. “But it’s turned into a giant, messy stew that’s getting messier.”
So, is PoS the future for crypto?
Perhaps one of its biggest supporters is Ethereum, the blockchain-based distributed computing platform that has said it plans to switch over to PoS, largely due to the stark environmental damage being done now and expected in the future.
Similarly, while obviously having skin the game, McCabe is hopeful that the major environmental issues will soon be unavoidable.
“I feel it’s very safe,” he said. “Climate change is happening and once people realise how bad it is to keep burning and burning electricity for no reason, particularly when there’s an eco-friendly option, there’ll be more pressure for companies that have blockchains which use a PoS system.”
