Given the slew of stories that came out last week about how cryptomining is about to melt the energy supplies of Iceland, we looked into the impending energy crisis in the industry and how insiders are trying to rise to the challenge.
A Cambridge University study last year noted how the largest concern among cryptocurrency miners was competition for the same cryptocurrency whereas smaller miners were worried more about a possible plummet in the value of their coin. However, given the exorbitant amount of energy that cryptomining expends, perhaps it pays to ask the question of whether miners should really be worried about lack of a sustainable source of energy.
So why does mining need so much electricity to sustain itself? This has in large part to do with cryptocurrency servers and the requirement of enormous data servers to house them. Given that blockchain is the basis of every cryptocurrency transaction and that there is currently no centralised authority to validate payments, transactions require incredibly laborious and energy-sapping calculations to get the job done. In addition to this, the excess heat from the servers need to be cooled down by air-conditioners, which is less of a problem in Iceland but more of a problem in China and the Asia Pacific region where the majority of mining occurs.
In Iceland so many companies were drawn to the cheap hydro-electric energy, at 2-3 cents per kW hour, that the energy demands may eventually outstrip the energy use of its tiny island population of 340,000. Meanwhile in the US, scientists on the hunt for extra-terrestrials (SETI) have bemoaned that the craze for GPUs (graphic processing units that are essential in performing the calculations in mining currency) is getting in the way of of meaningful communication with intelligent life forms from neighbouring galaxies.
Which is why many companies are resorting to ingenious means to reduce energy use or finding more green sources of energy. The Economic Times recently reported on startup Golden Fleece’s attempt to harness the power of the rivers flowing from the Caucasus mountains by plonking containers with Chinese-built computers in an ancient tractor factory in Georgia.
There might also be savings in moving away from a Proof of Work (PoW) system, the basis on which Bitcoin was initially mined. As Matej Michalko Founder & CEO of Decent explains, “there are thousands of cryptocurrencies in existence and the PoW blockchain model is no longer the lone wolf. Instead, blockchain developers have found better, more energy efficient ways of sustaining their network. For example, in a Proof of Stake (PoS) model, the blockchain network is maintained by stakeholders who are the miners, which consumes much less energy than the PoW algorithm. To take it even one step further, in a Delegated Proof of Stake (DPoS) model, stakeholders are voters who can vote for miners. This is the lowest energy consumption algorithm and DECENT is proud to use this in our proprietary blockchain technology and platform known as DCore.”
Given the growing interest around the world in cryptomining, insiders will undoubtedly look towards greener environmentally sustainable solutions to mine some serious coin.
