2017 may be the year remembered for Bitcoin entering into the global consciousness. With its value ballooning to over $250 billion and more transactions than ever being completed on its blockchain, Bitcoin saw a quick rise to prominence. However, this hasn’t come without its issues, one of the most notable being the energy consumption it takes to maintain a secure Bitcoin blockchain. This red flag has led to pushback from environmentalists who claim there is no reasonable way to expect Bitcoin to consume this much energy and be of use on a global scale. Because of this, it’s important green, sustainable energy sources be used to keep the Bitcoin network sustainable.
What’s so wrong with PoW?
On the surface there doesn’t seem to be such an issue with the proof-of-work (PoW) consensus model utilized by Bitcoin and other major blockchain networks. It allows for the consensus of decentralized ledger without the use of one localized entity controlling and potentially manipulating information. However, the cost of mining and electricity used in the process has become increasingly troubling, and continues to worsen over time.
The hash functions required to solve for a block of transactions on the Bitcoin blockchain continue to grow in difficulty. As the difficulty of solving PoW hashing algorithms grow, so does the energy it takes to solve the mathematical puzzle and create a new block, and in turn, create new coins given to blockchain miners. Higher mining difficulty leads to an increase in energy usage along with a wasteful spending of money and natural resources. At its current output, Bitcoin mining consumes more energy than 19 European countries, and just as much energy as the country of Ireland.
Additionally, as Bitcoin has risen in price, more miners have entered the market in hopes of solving a hashing function and being rewarded with new Bitcoin. The hashing power of the Bitcoin ecosystem has already outpaced the world’s top 500 supercomputers several years ago, and continues to grow in usage. However, more miners means more energy being consumed by their hardware, growing the usage of energy across the Bitcoin mining industry.
How to Combat the Energy Problem
There is seemingly no way to get around the energy intensive nature of mining Bitcoin and other cryptocurrencies built on PoW consensus mechanisms. Some detractors believe a PoW consensus model itself is the problem, and Bitcoin could eventually migrate away from this methodology in order to continue its growth rate without the environmental degradation. This, however, doesn’t seem a likely solution, as it would take agreement by the majority of the network, and a hard fork, to complete successfully. The forking of a blockchain network is dangerous, as it divides the community in ways which negatively affect the progress of the network.
Therefore, the only way to overcome the energy usage problem is to ensure that the energy being used in the mining process comes from green, renewable, and clean sources. This way, miners can utilize as much power as necessary to secure the network, without hurting the environment or wasting valuable resources.
Several new mining projects tout the usage of solar or wind energy to power their mining operations, making a direct effort at addressing this pressing issue. Yet, these energy sources are spotty, and not able to be sustained at the rate necessary for a mass number of miners to utilize. Not all green energy sources are created equal, and because the Bitcoin network runs nonstop, it is important that sources of energy utilized to support Bitcoin mining are able to operate continuously as well.
Luckily, hydroelectricity is a green, sustainable energy source which can be used continuously, making it a perfect fit for Bitcoin mining. This is because water is constantly going through a cycle of evaporation, formation, and precipitation, which can help facilitate energy production. By using water as the fuel to create electricity, this process is extremely sustainable.
According to the World Energy Council, hydropower accounted for 71% of all renewable energy consumed globally, totally 16.4% of the world’s total electricity. Many have already found success utilizing hydropower in Bitcoin mining, and this has led to an increase in the use of this sustainable energy source for mining purposes.
Bitcoin is showing no signs of slowing down, and as its network grows, so will the voices of environmentalists hellbent on putting a stop to the power being consumed by its network. Finding ways to generate power through affordable green energy initiatives are a key component of keeping the growth of Bitcoin, and the entire cryptocurrency industry, on track.