The focus of the blockchain climate discussion is missing the point

October 2, 2021 Coin Telegraph

Bitcoin’s energy consumption and its dependency on climate-damaging fossil fuels has raised debates from both inside and outside the blockchain community.

As the nonfungible tokens craze took off at the start of the year, many climate-conscious artists vocalized their disapproval of Ethereum’s energy consumption. In May, Elon Musk then derailed Bitcoin (BTC), citing the energy consumed by Bitcoin as cause for Tesla to withdraw its plans to accept BTC as payment for its electric cars.

Both of these events have provoked a surge of debate from inside and outside the blockchain community. In particular, the arguments tend to focus on two areas: Bitcoin’s energy consumption and its dependency on climate-damaging fossil fuels versus renewables and, secondly, the benefits of one blockchain platform over another — generally focusing on consensus models and promoting proof-of-stake as the greener option.

Each debate is overflowing with arguments for both sides. If the IPCC is right, then the need for drastic action to help reverse some of the damage cannot be overstated. To do that, the focus ought to be on the positive applications of blockchain.

Leveraging blockchain’s strengths

One significant way that blockchain’s impact is already substantial is in its ability to crowdsource large amounts of otherwise wasted energy — which is aggregated and reignited for further utility. Crowdsourcing wasted energy is in keeping with the principles of a circular economy, which eliminates the throwaway culture, for recirculating available resources as much as possible. And computing power is one example.

Whether it be on a personal laptop or a commercial server out of office hours, there’s a vast amount of wasted idle computing power lying around on hardware, particularly when not in use. At the same time, there’s a vast demand for computing power that’s being met by companies like Amazon Web Services, which is continually building new data centers to accommodate this need.

Blockchain networks, like Cudos’ decentralized cloud computing platform, redirect spare computing power from idle computers and put it to better use, reducing waste in the process. Other networks like Filecoin or Bluzelle focus on storage services, but the principle remains the same.

Decentralizing the energy grid

Other projects are using this concept to decentralize energy networks. Brooklyn Microgrid is a hyper-local initiative allowing “prosumers” (producers and consumers) of solar energy to sell their surplus by funneling it into a microgrid where other participants can buy it. It’s the kind of “act local, think global” project that proves anything is possible if you’re willing to start from scratch.

In Vienna, the government had previously funded an initiative allowing citizens to earn token-based rewards for identifying sources of heat waste that can be recycled back into the energy grid. A slightly different variation on the same decentralised theme, but uses the same principles of leveraging blockchain technology for the greater good.

Trustless green credentials

Blockchain technology also has a fundamental role in bringing transparency and accountability to governments and corporations for their role in fighting climate change. Transparency in ESG (environmental, social and governance) matters is currently high on the agenda for chief financial officers following the introduction of the EU Sustainable Finance Disclosure Regulation earlier this year. In its broadest terms, the regulation obliges banks and financial institutions to categorize their investment products according to their green credentials.

Using blockchain to store and verify this information would increase visibility and vastly increase the level of trust that investors can place in products brandishing ESG credentials. It’s quickly becoming easy to envisage a future where consumers and enterprises can make choices based on the algorithmic ESG ranking of any type of organization on the blockchain.

Being the “least bad” blockchain platform will no longer suffice, and the community is far from helpless when it comes to the climate emergency. It has a powerful technology at its disposal, along with some of the best, brightest and most innovative thought leaders in the world.

Clearly, blockchain technology can be applied to a myriad of positive use cases that give more to the green cause than they take away. And in doing so, blockchain technology makes a stronger argument for its applications in environmentalism than against them.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Matt Hawkins is founder and CEO of Cudo Ventures, a provider of global cloud computing and monetization software, and Cudos, a decentralized cloud computing network bridging the gap between the cloud and blockchain by recycling the world’s idle computing power. He previously founded C4L in 2000, which was acquired in 2016 and was one of the U.K.’s fastest data center ISPs, supporting around 1% of the U.K.’s internet infrastructure, and was winner of many fast-growth awards, including: The Sunday Times Tech Track 100, Deloitte’s U.K. Technology Fast 50 and Technology Fast 500 EMEA, and many more.

How will blockchain technology help fight climate change? Experts answer

September 5, 2021 Coin Telegraph

Bitcoin mining

Here’s what experts on emerging tech think about the role of blockchain in achieving more sustainability and lessening the climate crisis.

Tom Baumann of the Climate Chain Coalition:

Tom is the founder and co-chair of the Climate Chain Coalition, an open global initiative to advance collaboration on blockchain/DLT and digital solutions to enhance climate actions.

“In general, digital solutions can be helpful tools to support a low-carbon economy. The World Economic Forum estimates that digital solutions can help achieve 15% of the Paris Agreement goals. These solutions can be used throughout the entire economy, creating smart grids and buildings, smart transportation, integrating with digital services and more.

Digital tools could link sustainable production to sustainable consumption in a more efficient, equitable manner, for a fair transition. Beyond the described carbon trading market, distributed ledger technologies, including blockchain, can enhance international and intersectoral collaboration.

DLTs can be combined with other technologies, like the Internet of Things, to support digital MRV-based climate action tracking and accounting. They can also facilitate innovative natural resource management. This can lessen market failures by recognizing and preserving the real value of natural resources, all while considering the rights and interests of present and future generations.

In terms of multi-stakeholder empowerment, blockchain has game-changing potential. It enables digital identities and asset management to be linked to people, organizations and businesses in a way that ensures rules are enforced, and it can make governance a community effort. By employing governance tokens and decentralized autonomous organizations, more stakeholders can be brought into decision-making roles.”

These quotes have been edited and condensed.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Marco Schletz of Data-Driven EnviroLab and Søren Salomo of TU Berlin:

Marco is a research associate at Data-Driven EnviroLab, an interdisciplinary and international group of researchers, scientists, programmers and visual designers with a goal of strengthening environmental policy at all levels. He is also an innovation fellow at the Open Earth Foundation, a nonprofit organization that fosters sustainable development and solidarity through art and education.

Søren is a professor of technology and innovation management at the Technical University of Berlin.

“Launched in 2009, Bitcoin was the first application of blockchain or distributed ledger technologies more broadly. Despite both Bitcoin and blockchain maturing tremendously, Bitcoin is still frequently perceived and used as a blanket term synonymous with blockchain. Accordingly, problems explicitly related to Bitcoin, such as its energy consumption, create a halo effect that overshadows the potential positive effects of blockchain technology as a powerful means to accelerate climate action.

Blockchain technology creates a distributed network design that enhances transparency and reduces information asymmetries among heterogeneous climate actors. This design is based on bottom-up data contributions from all actors to allow for the triangulation of independent data sources. These new designs are desperately needed to overcome current legacy system thinking and path dependence in order to incentivize collaboration for major change and enable digital democracy for the Paris Agreement.

The reason we need alternative data governance structures to ensure the validity and accuracy of critical emissions data could be seen very recently when Greta Thunberg called out the U.K. for lying about cutting its emissions. Examples of how blockchain can support and accelerate climate action include Yale Openlab’s Open Climate, the World Bank Climate Warehouse, the Blockchain for Climate Foundation, the Climate Ledger Initiative and the Climate Chain Coalition, among others.”

Linda Kristoffersen of KPMG:

Linda is a manager, advisory, at KPMG — a Big Four auditing firm. She also supports blockchain.

“Companies are making bold commitments to deliver on promises for a net zero carbon future and will need to embrace the use of emerging technologies, including blockchain, to be successful in achieving their goals. Stakeholders, investors and the public are looking for accountability and will increase pressure on companies to disclose real measurements while ensuring trust and auditability in reported carbon emissions data — and to provide the associated proof.

In this transition from reporting emissions estimates to real measurements, blockchain is an excellent auditable system of record that can track emissions data provenance, provide data security, prevent the double-counting of emissions and introduce transparency in data processing steps to prove environmental performance and prevent fraudulent claims. Blockchain can provide the same benefits to carbon offsets and credits where a lack of transparency and the double-counting of credits is of great concern.

In addition, by leveraging smart contracts, you can automate and incentivize participation in sustainable practices that require tight coordination between individuals, governments and companies.”

Francisco Benedito of ClimateTrade:

Francisco is the CEO of ClimateTrade, a fintech company helping organizations achieve sustainability by offsetting CO2 emissions.

“Blockchain as a technology is helping to fight the climate crisis on two main levels.

On one hand, we can see how carbon markets have been opaque and prone to fraud. Even though carbon credits have been the first expression of a digital certificate, they have been implemented in different isolated registries and have involved multiple parties that do not trust each other. Sound familiar?

It seems logical in the current context to utilize a single distributed ledger to record the generation of carbon credits and their movement in the market as true digital assets.

This is the first level in which blockchain can help us improve existing processes — by making them more efficient, transparent, secure, faster, cheaper, etc. But the true disruption comes when blockchain enables new models that were not possible before blockchain technology, not just improving existing mechanisms but designing completely new ones.

Blockchain is a very powerful technology, but the biggest advantage that it poses in this context is the ability to shape human behavior. The rise and general adoption of blockchain applications enable us to design financial incentive schemes that will foster the achievement of the decarbonization goals, allowing Earth to continue being a comfortable place to live — and that is precisely what we are doing.”

Emin Gün Sirer of Ava Labs:

Emin is a computer science professor at Cornell University, the founder and CEO of the Avalanche blockchain protocol, and the co-director of the Initiative for Cryptocurrencies and Smart Contracts (IC3).

“We must ensure that new technologies minimize or eliminate actions that negatively impact our planet — this outlook does not limit itself just to blockchain. Without concerted, intentional efforts to mitigate climate change, our planet cannot sustainably exist.

With the initial introduction of proof-of-work-based blockchain systems, many creators like Satoshi didn’t focus on climate impact. Instead, they simply wanted their technologies to work.

We’re now in a place where we can reference past innovations to ensure we’re developing sustainable technologies and protocols. Proof-of-stake is a prime example of people collaborating to improve blockchain’s capabilities in a way that helps fight the climate crisis. This is just the tip of the iceberg for what's possible with blockchain-powered technology for climate change.

Many teams are looking to push the boundaries. Minimizing hardware requirements for blockchain nodes, integrating with eco-friendly hardware and collaborating with leading climate change researchers are a few ways blockchain companies can accelerate progress toward a sustainable economy.”

Catherine Sear of World Bank:

Catherine is the external affairs officer of the World Bank Group Trade Practice, with a specialization in climate change and sustainable development.

“There is significant scope to apply innovations, including technologies like blockchain, as international carbon markets under the Paris Agreement take shape. In particular, these technologies can increase transparency and improve the overall functioning of future carbon markets in two ways.

Technologies like artificial intelligence, drones and smart sensors could help digitize project-level monitoring, verification and reporting systems. Blockchain encryption can be used alongside these technologies to ensure the immutability and integrity of data collected under a digital MRV system. A major benefit would be a significant reduction in the time and effort needed to generate carbon credits, which would reduce barriers to participation in carbon markets. The World Bank is developing protocols for digital MRV systems in collaboration with partners.

At the global level, blockchain technology could track carbon credit transactions, tokenize carbon credits and link transactions to smart contracts. It could also securely store the information required to track a carbon credit. This is being tested under the World Bank’s Climate Warehouse, a meta-registry that demonstrates how national registries can be connected and uses blockchain technology to track transactions between parties. Eventually, we anticipate this will link with the digital MRV system and create a connected digital ecosystem for credible, transparent and liquid carbon markets.”

Candice Teo of the Blockchain & Climate Institute:

Candice is the director of communications at the Blockchain & Climate Institute, a not-for-profit think tank comprising an international network of experts working at the intersection of blockchain technology, climate change and sustainability.

“We are currently in a situation where the time for climate action is now. As Mark Carney highlighted to the United Kingdom Treasury Select Committee, ‘We have left it exceptionally late’ to act effectively on climate change. It is thus integral for us to make ‘good bets’ for the future that scale and not worsen things.

Currently, there is a great deal of mistrust among various stakeholders, including donors and recipients of climate finance. Measurement, reporting and verification (MRV) issues have been major impediments to countries fulfilling their climate finance pledges. With blockchain’s consensus mechanism and crucial immutability feature, especially when paired with other emerging technologies such as AI and IoT, it can significantly enhance MRV, driving trust in climate funding that goes to carbon assets management/trading, biodiversity conservation (REDD ), community renewable energy projects, etc.

According to the International Energy Agency, there is a strong need to reduce peak energy demand. Therein lies a challenge in achieving this while renewables catch up. Local energy trading schemes have proved the value of using blockchain. Paired with AI, peak energy demand could be predicted and managed.

The use of blockchain is also crucial to progress in facilitating circular economies, biodiversity, smart cities, blue economy and oceans, and emissions management and trading.”

Adelyn Zhou of Chainlink Labs:

Adelyn is the chief marketing officer of Chainlink Labs, a decentralized oracle network.

"While many people are voluntarily altering their consumption habits to combat climate change, a global shift in consumption will likely require significant incentive changes to drive sustainable behavior. Self-executing contracts enabled by a combination of blockchains and oracle networks that pull data from the real world can automate incentive systems to directly reward practices that help our environment.

For instance, the Green World Campaign and Cornell University are building smart contracts that use satellite data to automatically reward people who successfully regenerate tracts of land by increasing tree cover, improving soil and implementing other restorative agricultural practices. When Chainlink oracles pull proof of land improvement (via satellite imagery) onto the blockchain, it triggers the smart contract to release a payout. With this system, land stewards can quickly and efficiently receive their rewards. At the same time, only those making a real impact can earn rewards, as payment only happens when a real-world condition is met and verified on-chain. This entire process is automated, scalable and fraud-proof, and can be replicated across hundreds of use cases across sectors.”

Introduction

For some time, the global climate crisis was a hot topic to debate. But the discourse has changed and a consensus has been reached, moving the conversation toward how to stop — or at least to lessen — the ongoing issue of climate change. Two pivotal moments in reaching this point were the adoption of the United Nations’ Sustainable Development Goals (SDGs), whose mission is to be a “blueprint to achieve a better and more sustainable future for all,” and the Paris Agreement, an international accord adopted by nearly every nation six years ago in 2015.

The discussion around how to fight against the global climate crisis has turned to emerging technologies and their role in the process. Back in 2017, the United Nations Framework Convention on Climate Change (UNFCCC) highlighted the importance of blockchain technology in helping to combat climate change globally. The secretariat of the UNFCCC detailed some specific use cases:

“In particular, transparency, cost-effectiveness and efficiency advantages, which in turn may lead to greater stakeholder integration and enhanced creation of global public goods are currently viewed as the main potential benefits.”

Decentralized technologies indeed have the potential to help achieve the SDGs by recasting conventional approaches to sustainable development via the benefits of blockchain technology, such as transparency and immutability. As 2020 showed us, many countries around the globe are already turning to emerging technologies in their fight against the climate crisis and in their efforts to lessen carbon-intensive practices. Some examples include Russia, India, Qatar, the United Arab Emirates, countries in Africa and the Asia-Pacific region, and certainly the G7 nations — which include Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.

Meanwhile, earlier in 2021, concerns about Bitcoin’s (BTC) carbon footprint became a highly discussed topic both within and outside of the crypto community, forcing some major global media outlets to speak up about Bitcoin’s energy consumption and carbon emissions. However, the topic wasn’t a new one, as experts had already been discussing the pros and cons of Bitcoin mining for a while. Bitcoin’s supporters argued that its energy consumption is irrelevant “when compared with global energy production and waste” and that compared with BTC mining, “Processing gold and steel is wasting money, energy and resources.”

It’s best to set aside the problem of who is right and who is wrong in this debate and instead focus on the impact of it. There is a saying that every cloud has a silver lining, and the most important one that came out of this debate is that the crypto industry has accepted that it must prioritize focusing on green technology, offsetting Bitcoin carbon emissions and leveraging renewable energy.

To find out the impact these technologies can have in the fight against the climate crisis, Cointelegraph reached out to a number of experts in emerging technologies whose goals are directly related to sustainable development and technological innovation. The experts gave their opinions on the following question: How can emerging technologies help achieve the U.N.’s Sustainable Development Goals and lessen the impacts of climate change?

Crypto mining needs to be redefined before simply casting it away

August 21, 2021 Coin Telegraph

Adoption

To ensure a sustainable future for blockchain and crypto, we need to reimagine the mining process and restructure PoW systems.

Blockchain mining networks are often victims of their success. The two contemporary realities that demarcate the mining landscape and cause blockchains to fall short of what they promise are 1) the ongoing technological arms race driven by inherent competitive greed; and 2) the rising energy costs associated with proof-of-work (PoW) mining. Blockchains built on the PoW consensus have become highly unequal and increasingly centralized in terms of their hash rate. This concentration of mining power in fewer and fewer hands is an attack on the fundamental requirement for distribution and decentralization that blockchains possess.

In addition, the motivation to ramp up mining power has a knock-on effect in terms of runaway energy costs, which have the potential to cause irrevocable environmental harm, as has been the crux of the Chinese Bitcoin (BTC) mining saga. To ensure a sustainable future for blockchain and cryptocurrencies, the hash rate must be distributed more equitably, ensuring that the chief components of distribution and decentralization are kept intact. This requires a reimagining of the mining process as we know it and necessitates a restructuring of PoW systems.

The detrimental impact of mining re-centralization

Before unpacking what such a solution may look like, it is worth emphasizing the extent of the issues. The PoW consensus was, and continues to be, essential to Bitcoin’s enduring popularity, success and reliability. Most notably, PoW offers a solution to the well-known Byzantine Generals’ Problem in the fields of mathematics and computer science, through an incentivization setup and ongoing resource commitment that makes it infeasible for a malicious party to interfere with honest consensus.

Distribution and decentralization remain the crucial aspects of solving the dilemma where parties must agree on a single strategy to avoid complete failure, by enabling widespread consensus on “the message” and eliminating the risk posed if some of the involved parties are corrupt or unreliable. Yet, the more centralized and dominated by a small number of entities a blockchain network becomes, the less the consensus protocol can function as a solution to this problem. The rise of massive ASIC farms enables a handful of powerful players to exert control over the blockchain infrastructure, thereby threatening its ability to remain distributed and decentralized — and, ultimately, trustless.

This “late-stage” issue of the PoW consensus arises through how miners are incentivized through competition for the block reward. Although an essential part of the game-theoretic structure for keeping the network secure, this all-or-nothing race to the top also creates serious issues. In particular, it gives rise to the allegorical “cheating athlete problem,” which describes how when the reward for a race is worth a great deal, participants will do just about anything to win, including cheating. Imagine a group of athletes at the starting line of the first of a series of races, wherein each one will try to cross the finish line first and win a prize.

There is a certain amount of luck involved in winning each race (it is not simply the fastest who triumphs), but the chance of winning increases with the speed of the athlete. Cheating, in this case, is defined as gaining a substantial advantage over the other runners through the use of technology and/or collusion, such that the winner of each race is not sufficiently random as to provide a solution to the Byzantine Generals’ Problem (namely, distributed consensus through a sufficiently randomly distributed resource commitment).

It is in a similar vein that the PoW race leads to the development of ever more energy-hungry machines and larger mining farms, reducing the decentralization and distribution of the network, and preventing the resource commitment from acting as a means of trustless verification. Additionally, it drives the overall energy usage of the network, potentially to a point where it could impact the environment negatively if left unchecked.

Balancing the protocol for blockchain mining networks

To develop a solution to the cheating athlete problem, it is necessary to begin with the realization that it is not the total hash rate of a blockchain network that gives it security; rather, it is how that hash rate is distributed. To this end, one seeks a solution where re-distribution of hash rate is a fundamental feature of the protocol (rather than being left to politics, or centralized committees — no matter how well intentioned).

It is possible to balance the chances of winning “the race” by applying a handicap to those runners who are significantly faster and giving an edge to those runners who are significantly slower. In a blockchain network, this can be implemented through a peer-to-peer, thermodynamic-like balancing process that adjusts the individual hashing difficulty for miners smoothly and verifiably. This allows the network to move toward equilibrium in the effective hash rate and circumvents the worst excesses of centralization of mining power on the network, all while continuing to operate autonomously with no trusted third-party involvement.

There are vast many implementations of blockchain technology currently in existence, the majority of them possessing some form of economic or monetary value and employing an underlying technology that aims to best ensure the security and efficiency of the network. However, an algorithmic balancing protocol, which pushes the network closer toward a homogeneous distribution (although not all the way — a completely “flat” network would bring its own economic and security problems) can achieve the optimal balance between the distribution and economic incentivization. This can substantially reduce monopolistic mining practices while keeping the carbon footprint of the network to a minimum by disincentivizing the continuous ramping up of processing power through costly technologies and the building of large ASIC farms.

A greener, fairer, more secure future

The issues posed by the widespread mining re-centralization we see commonly today pose a significant challenge for the PoW consensus, but they shouldn’t spell its end. Emerging as revolutionary technology innovation, PoW solved a longstanding mathematical and computer science problem that paved the way for the success of Bitcoin and many other cryptocurrencies, while promising an entirely new means of economic exchange. There is a danger that we won’t fully explore the transformative power of PoW if we cast it aside too hastily.

There are similarities here with humanity’s exploration of economic systems. Capitalism is one of the greatest, most progressive systems ever developed in human history — improving innovation, lifespan, opportunities and quality of life for billions of people. However, left unchecked, it can drive unprecedented wealth, inequality and potentially even take us to the brink of climate catastrophe. Rather than abandon it entirely, what societies typically try to do is to balance the pros and cons of this system — to create a form of tempered capitalism in which greed and monopolistic endeavors are not allowed to dominate entirely, so that a more responsible, functioning, fairer society can emerge and flourish. This is largely what societies have tried to implement (to varying levels of success) in the form of wealth redistribution through, for example, taxation, anti-monopoly laws, etc.

Similarly, the PoW consensus is a revolutionary invention but needs tempering to curb the worst excesses of greed within the system. Collectively, we have a chance — and the responsibility — to align the PoW consensus protocol more with the needs of society and with its original purpose by reducing monopolistic tendencies and preventing crypto mining re-centralization. Simply put, instead of reinventing the wheel (abandoning PoW in favor of risky alternatives), what is needed is a way to harness the wheel more effectively to build a machine that connects and changes the world.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Alexander Hobbs is the director of science at Zenotta. Alexander is a Ph.D. graduate in theoretical astrophysics and has authored numerous scientific publications in the areas of supermassive black holes, galaxy formation and dark matter and has spoken at a number of international conferences and workshops. Prior to joining Zenotta, he held postdoctoral positions at the Institute for Astronomy at ETH Zurich in Switzerland and the Institute for Computational Science at the University of Zurich.

Staking will eat blockchain for breakfast — Here’s why

August 18, 2021 Coin Telegraph

Coin Telegraph

The market for staking has accelerated rapidly recently, and a shift to PoS will ensure that the blockchain ecosystem is more resilient.

In early July, JPMorgan released a report in which two of the bank’s analysts projected that the staking industry would be worth $40 billion in rewards by 2025. The report anticipates that once the Ethereum 2.0 network completes its transition from proof-of-work (PoW) to proof-of-stake (PoS,) payouts will more than double, up to $20 million from the current $9 million. Within the next four years, it will double again.

With the rapid rise of staking over the last few years, it’s hardly surprising that traditional finance analysts are starting to take note. While the JPMorgan analysts are correct that the market will continue to grow, however, even $40 billion could be a conservative estimate.

If that seems ambitious, then consider how quickly the current market for staking has accelerated over the last few years. Of the top six staking platforms, only Cosmos and Algorand launched staking before 2020. The other four — Cardano, Ethereum 2.0, Solana and Polkadot — only went live with their variation of PoS over the last fifteen months or so. Furthermore, those platforms now account for around half of the total staked value.

In the wake of this dramatic growth, venture capital (VC) investment is pouring into the crypto space. As one of crypto’s proven growth segments, decentralized finance (DeFi) is currently attracting the kind of investment that is making mainstream headlines. The Financial Times reports that private investors have already backed 72 DeFi companies this year, outpacing 2020 even before the year is halfway through.

The vast majority of these DeFi apps are based on PoS platforms, indicating that we can see traffic levels on those networks increase exponentially over the coming months and years. More traffic means more fees which means more generous rewards for validators and stakers, making staking a no-brainer for generating passive income.

PoW proves vulnerable to mining clampdowns

The reasons why projects are turning to PoS hardly need revisiting. Ethereum’s scalability problems under PoW are well-documented and much-discussed. PoS offers the opportunity for faster throughput and lower fees. However, recent events underscore more than ever why PoW is no longer fit for purpose.

As the Chinese authorities have taken Draconian steps to outlaw cryptocurrencies, miners have staged a mass exodus to avoid falling foul to the law. Some have migrated across international boundaries and some have dumped their mining equipment on the market, resulting in Bitmain halting shipping of its newest models.

It’s to Bitcoin’s (BTC) credit that the price has held as well as it has, indicating the resilience and maturity of the crypto markets.

However, the events in China have underscored that PoW is vulnerable to the kind of censorship that blockchain aims to resist. Bitcoin’s power consumption proved to be its biggest weakness over recent weeks, and it’s a scenario that could repeat in any other country where PoW miners choose to exploit low-cost electricity.

The climate controversy

Bitcoin’s energy consumption also has another Achilles Heel, and one that’s been hotly debated this year — its effects on climate change. While renewables offer one workaround, PoS offers a far more attractive workaround — eliminating energy consumption dependency altogether.

Many environmental advocates invoke the analogy of coal-guzzling power plants to illustrate the dangers of PoW. Taking this analogy a step further, PoW can be considered as the engine that drove crypto through its “Industrial Revolution” phase. For the digital era, however, we need a more sustainable and resilient engine that can reach cruise speeds for long into the future without losing power or causing unknown collateral damage along the way.

PoS — a model for the future

None of this is a criticism of Bitcoin or PoW, both of which have proven their ability to last the distance. Bitcoin’s resilience means it will be around long into the future. However, new platforms and projects are self-evidently shunning PoW in favor of PoS. Therefore, it seems inevitable that many PoW platforms will simply fade out through lack of use over time.

Ultimately, for the blockchain sector, this is a good thing. Aside from the endless accusations of environmental destruction, a shift to PoS will ensure that the ecosystem is more resilient against external forces. Furthermore, by eliminating the need for expensive mining equipment, PoS makes joining a blockchain network as a validator more democratic and removes barriers to entry. Making staking more attractive improves the likelihood of validators joining the network, increasing security.

As the returns available in the traditional financial markets diminish over the coming years, and while governments seek to recoup the debts they incurred over the last year or two, staking will become an increasingly attractive prospect for investors. For those of us who’ve watched the inexorable rise of staking over the last year or two, the only question is: Does the JPMorgan prediction go far enough?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Tushar Aggarwal, an early member of the LuneX Ventures, is the founder and CEO of Persistence, an ecosystem of bleeding-edge financial applications focusing on both institutional and crypto-native users. Tushar is listed in Forbes 30 under 30 Asia.

Enjin plans to use NFTs to promote sustainability and equality as member of UN pact

July 20, 2021 Coin Telegraph

Business

The company previously said it planned to enable carbon-neutral NFTs by 2030, and claimed its JumpNet blockchain is already carbon-negative.

The United Nations Global Compact, a non-binding pact aimed at encouraging businesses to adopt sustainable and socially responsible policies, has accepted nonfungible token and blockchain gaming and platform Enjin as a participant.

Enjin announced today it would be exploring ways to use nonfungible tokens, or NFTs, to promote sustainability and equality as part of the UN pact. The company suggested using the technology to fight climate change by employing it in carbon capture companies and reducing the global wealth gap by allowing creators around the world permissionless access to NFT markets.

"While we are struggling to recover from the global pandemic and its impacts, we are experiencing exponential growth of technologies like AI and blockchain,” said the head of the Centre for AI and Robotics at the United Nations Interregional Crime and Justice Research Institute, Irakli Beridze. “More than ever, we need to take advantage and harness the potential of these new technologies to ensure that we are better equipped and more united in the future, in order to make our planet a more livable, equitable place for all."

The United Nations has listed 17 goals on sustainable development it hopes to achieve by 2030, including reducing inequality, providing quality education, and encouraging responsible consumption and production. Esther Chang, executive director of the Global Compact Network Singapore, said Enjin’s involvement with the UN pact could help meet these goals as “technology plays an important role.”

The company has already joined initiatives aiming towards greener and sustainable practices, including the Crypto Climate Accord, in which participants commit to achieve net-zero emissions from electricity consumption. Enjin said it planned to enable carbon-neutral NFTs by 2030, and claimed its JumpNet blockchain is already carbon-negative

Environmental concerns have taken the spotlight in global industries including crypto and blockchain as the effects of climate change seem to be escalating. The UN has said that blockchain has the potential to address the climate crisis and help reach a more sustainable global economy.

Blockchain and sustainability — There’s more to it than electricity usage

June 26, 2021 Coin Telegraph

Coin Telegraph

Bringing the social and governance spheres to the discussion about the sustainability and potential of blockchain technology.

In a little more than 40,000 days — or over a hundred years — we have gone from the first terrestrial flight to the first flight on another planet. Within that short time, the amount of fuel burned and, unfortunately, even lives lost have been immense. In exchange, flight has completely transformed everything from commerce to warfare and has led to the birth of completely new industries. As aviation progressed, fuel efficiency improved and mortality rates also dropped immensely.

In the digital realm, blockchain technology could be equally as transformative, with applications in everything from trade, exchange, cooperation, identity, and resource usage management. At the moment, these advancements come at the cost of high levels of electricity usage. This is a concern that should and will be addressed.

The issue is that the current narrative uses this high electricity usage to call blockchain projects, and especially Bitcoin (BTC), unsustainable. This is not only detrimental to blockchain projects — especially from an investment and adoption perspective — but it is also untrue.

Sustainability is judged on the three broad metrics of ESG — environmental, social and governance. The current debate — characterized by lack of nuance on the one side and needless finger-pointing on the other — has only focused on the environmental aspect of sustainability. The social and governance aspects have been widely ignored, which leads to an inaccurate sustainability perception for both Bitcoin and blockchain projects in general.

Social

The social aspect should be seen in the broader context of the economy-wide shift to platforms. Everything from ride-hailing to buying books to ordering take-out is now taking place on platforms. In this winner-takes-all world, the market power of successful platforms allows them to eventually dictate unfair terms to their workers.

Tokenized blockchain projects have the potential to address this wrong by making possible the ownership of a platform based on a worker’s contribution. The result being workers benefiting from the growth of the platform instead of getting oppressed by it.

Governance

Blockchain technology enables the transparent and automated execution of rules/procedures on a global scale. This capability is based on a combination of immutability, transparency, censorship-resistance, decentralized software execution and economic incentive exclusive to the blockchain.

This makes the blockchain a rich proving ground for governance in the digital age — a proving ground which, as we have seen in the decentralized finance space, is making interesting progress on an almost daily basis. It is only a matter of time until the lessons learned spill over into helping us better manage the global commons.

Conclusion

A piece of fabric and wood from the original Wright Flyer was taken to the surface of the moon by the Apollo 11 astronauts. The fabric and wood had no functional purpose beyond the symbolic tying of these two historic events together.

It has been around 4,600 days since the Bitcoin whitepaper was published. With the breakneck speed of innovation in the blockchain space, the current blockchains — and their energy consumption — will also be icons of the past.

It would therefore be more productive to take a more holistic view and steer toward a sustainable end result, rather than being overly judgemental of a work in progress — and losing possible social and governance gains, opening blockchain up to grifting and profiteering in the process.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Gys Hough is managing partner at Coinstone Capital — a Dutch digital asset investment advisor that focuses on customized crypto assets portfolios for retailers, HNWIs and family offices. Gys writes and lectures on blockchain and society with a special focus on tokenization, inclusive platforms and CBDCs.

Spanish seafood firm partners with IBM for supply chain tracking

June 8, 2021 Coin Telegraph

Coin Telegraph

Spanish multinational seafood giant, Nueva Pescanova Group, has partnered with The IBM Food Trust to trace the shrimp and prawns it fishes on the blockchain.

Spanish-based seafood firm, Nueva Pescanova Group, has announced its working with IBM to utilize its Food Trust platform — a distributed ledger technology platform designed for supply chain traceability.

According to a June 8 announcement from IBM, the partnership is already underway, with Nueva Pescanova utilizing blockchain technology to track shrimp fishing in Argentina and prawn cultivation in Ecuador.

In the announcement, Ignacio González, the CEO of the Nueva Pescanova Group, stated the tracability platform will help the firm in meeting the United Nation’s Global Dialogue on Seafood Traceability (DGST) standards, stating:

“We want to offer our consumers all over the world rigorous and detailed information on the traceability of our seafood products, from their origin until they reach their tables. Now is the time for businesses across the seafood sector to begin addressing the GDST standards.”

Nueva Pescanova Group is a leading multinational seafood firm that was founded in 1960. The company covers the cultivation, production, processing, and distribution of seafood.

IBM’s Food Trust traceability platform was designed for the food industry, enabling members of the network to view comprehensive supply chain data from products in “near real-time” — offering significant efficiency savings to producers, minimizing fraud across the global market, and ensuring safety and sustainability obligations are met.

Sustainability is an issue of increasing importance to seafood consumers, with IBM referencing its 2020 Europe Food Sustainability study, which found that nearly 50% of respondents would buy more seafood if they had more information on its “origin, safety and production.”

The partnership adds to the growing list of food and agricultural firms that have partnered with IBM for blockchain-based supply chain solutions.

In February, Multinational retail giant Carrefour partnered with IBM to track the supply chain of chicken and microgreens. In December 2020, Cointelegraph reported that Nestlé, Dole, and olive oil giant CHO were already leveraging the IBM Food Trust Network.

Ignore the headlines — Bitcoin mining is already greener than you think

May 29, 2021 Coin Telegraph

Bitcoin mining

ESG-led Bitcoin mining is not only possible, but it’s ultimately the most responsible and prosperous way to show leadership in this growing industry.

Is it possible to mine Bitcoin (BTC) using only 100% renewable energy sources and deliver the same economic returns as those using carbon-based sources? The answer is yes, according to Square’s recent analysis on the cost of renewables and their impact on Bitcoin mining.

Unfortunately for our industry, the number of headlines and headline-making tweets about Bitcoin’s energy use and potential environmental impact has followed its rise in value in recent months. The increased media scrutiny has led to increased calls for regulatory action and even a proposed bill in the New York State Senate that would place a three-year moratorium on non-renewable Bitcoin mining in the state.

This is one debate where both sides have a point. Critics are correct: Bitcoin mining does use a lot of electricity. The Cambridge Center for Alternative Finance estimates that the total electricity used worldwide by Bitcoin miners is an average of 113 terawatt-hours per year. This would place Bitcoin’s energy use somewhere between the United Arab Emirates and the Netherlands, two countries with a combined population of approximately 170 million people, which is admittedly a lot. However, the Cambridge Center for Alternative Finance’s recent “3rd Global Cryptoasset Benchmarking Study” shows that 76% of miners are using at least some renewable energy in their operations and that 39% of all energy consumption used in proof-of-work mining, such as mining Bitcoin, is from renewable sources.

Now that we have discussed Bitcoin mining’s energy consumption and carbon footprint, let’s try to put those figures in context. By looking at three directly relevant comparisons: the United States electricity grid, the traditional finance system and gold mining.

The electricity grid, traditional finance and gold mining

Let’s start with comparing Bitcoin mining to the electrical grid as a whole. Data from the U.S. Energy Information Administration shows that approximately 20% of U.S. electricity generation for 2020 was from renewable sources. This means that with 40% of its energy consumption coming from renewables, Bitcoin mining is twice as green as the national grid as a whole, reflecting the conscious decision-making of the industry to minimize its carbon footprint.

Moving on to traditional finance, there are two critical lenses to evaluate the industry through: 1) the financing of fossil fuel projects and 2) the industry’s carbon footprint. The former is a critical piece of the discussion, as shifting deposits away from traditional financial institutions reduces their capacity to fund environmentally destructive activities.

According to the Rainforest Action Network’s “Banking on Climate Chaos — Fossil Fuel Finance Report 2021” released in March, the world’s 60 largest commercial and investment banks have provided $3,800,000,000,000 — yes, 3.8 trillion U.S. dollars — worth of financing to fossil fuels since the signing of Paris climate accord in 2015. Think about that for a minute — the Paris Agreement is the world’s definitive step toward combating climate change, and yet, the world’s largest banks have provided financing equivalent to the GDP of Germany, the world’s fourth-largest economy, to fossil fuels since its signing.

For all of the outdated, exaggerated criticism of Bitcoin as a means of money laundering, terrorist financing and many others, the traditional finance industry has an incredible amount to answer for as far as its capital being used for destructive activities.

Looking at traditional finance’s carbon footprint, Galaxy Digital published in May “On Bitcoin’s Energy Consumption: A Quantitative Approach to a Subjective Question,” which is a breakdown of the energy consumption of Bitcoin mining and the two industries to which Bitcoin is often compared: traditional banking and gold mining. The traditional banking system analysis looks at the energy consumption of the world’s top 100 global banks, breaking down their energy consumption across four primary categories: data centers, branches, ATMs and card network data centers. Using publicly available data from industry leaders, Galaxy estimates the energy consumption to be around 260 TWh per year. This is more than double Bitcoin mining’s energy consumption and notably excludes key pillars of the system, including central banks and clearinghouses, due to lack of reliable data sources, suggesting the multiple may be materially higher.

As with its analysis of the traditional banking system, Galaxy’s analysis of gold mining captures what is likely to be only a subset of the industry’s total energy consumption. Using the World Gold Council’s own analysis contained in the 2019 report titled “Gold and Climate Change: Current and Future Impacts,” and limiting the scope of the analysis to direct greenhouse gas emissions, greenhouse gas emissions from electricity purchased by gold miners, and greenhouse gas emissions associated with the refinement and recycling of gold, Galaxy estimates the industry’s electricity consumption associated with greenhouse gases to be 240 TWh per year. At a base level, that means gold consumes around 85% more energy per year than Bitcoin mining. However, given that the Cambridge Center for Alternative Finance estimated that approximately 40% of Bitcoin mining’s energy consumption is from renewables, that means gold mining’s consumption of non-renewable energy is 3x that of Bitcoin mining.

Bitcoin’s green potential

Being better than your worst comparisons is not enough. For Bitcoin and Bitcoin mining to realize their full potential, we absolutely have to do better as an industry. We believe that the two key levers to do so are thoughtful regulation and industry action, but the inclusion of the former may surprise you. Isn’t Bitcoin supposed to be full of people who reject regulations?

The truth is, regulation on its own is neither good nor bad, but depends how it is crafted. Thoughtful, specific regulation can oxygenate an industry by supporting innovation, incentivizing good actors while disincentivizing poor actors and giving the public confidence. Look no further than the state of Wyoming, where legislators have been working with blockchain industry leaders since 2017 to pass 22 laws that provide a clear and encouraging regulatory environment that has since brought tens of billions of dollars of business to the state.

At the same time, overly broad, blunt regulation, like the anti-mining law proposed in the New York State Senate, can kill an industry. We look forward to working with regulators to help craft a regulatory regime that oxygenates the industry while addressing the very legitimate public interest concerns at the same time.

Finally, we come to the stakeholders who bear the greatest burden but also have the greatest ability to enact change in decarbonizing Bitcoin mining: the industry itself. With an estimated total of 40% of the industry’s energy coming from renewable sources — which is twice the share of the overall electrical grid in the U.S. — we should be proud of the progress we have made.

However, we are unequivocal in saying that more has to be done. We believe that the Crypto Climate Accord is a brilliant first step. We encourage all in our industry to not only sign the accord and satisfy its goals of reaching net-zero emissions from electricity consumption by 2030 but to surpass those goals as soon as possible. We believe this will happen, not only because it is the right thing to do but because those in the industry who adopt 100% renewable strategies will be rewarded.

The market is the ultimate arbiter of success, and we believe that the era of responsible capitalism is upon us — investors and consumers vote with their wallets, supporting responsible actors while shunning those whose actions drive negative externalities.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Dan Tolhurst co-founded Gryphon Digital Mining in 2020 with the vision of creating the ESG-driven Bitcoin miner, and looks forward to the day that all Bitcoin mining is done using renewable energy sources. He has deep expertise as a strategy executive from his time at Netflix, The Walt Disney Company and Booz & Co., in a career spanning five continents. He holds both an HBA and an MBA from the Ivey Business School at Western University and a JD from Osgoode Hall Law School at York University. He spends his free time exploring London’s parks, travelling and cheering on his beloved Toronto Raptors.

Green blockchain should work smarter, not harder

May 23, 2021 Coin Telegraph

Coin Telegraph

A more lightweight, smarter blockchain would certainly have a smaller-size environmental footprint, and that is the goal.

As the spotlight returns to Bitcoin (BTC), helped by some tweets by a certain mercurial celebrity, the raging debate over its energy use has once again reignited. It centers around one, seemingly clear-cut question: Does Bitcoin use too much energy?

The basic contours of the issue are clear. Bitcoin secures its network from a hostile takeover using proof-of-work (PoW), a process that expends significant quantities of electricity due to the computing power required. Every time we have this discussion, the all-too-familiar battle lines are redrawn.

Critics argue that Bitcoin’s energy use simply cannot be justified. At various stages in recent years, reports have estimated that the network uses as much electricity as entire states such as Denmark or Ireland, for instance.

On the other side of the fence, Bitcoin’s proponents contend that the network might spur the greater use of renewables. Furthermore, they point out that we are not accounting for the energy use of the alternative. We cannot gauge the relative efficiency of Bitcoin as a means to secure and exchange value unless we compare it with the total energy use of the traditional banking system. Just as we should move beyond the narrow metric of tailpipe emissions to measure the environmental impact of vehicles, Bitcoin advocates assert that we need a comprehensive audit of the environmental impact of traditional finance, including all the infrastructure, brick-and-mortar buildings, travel and hardware that support it. In addition, lurking in the background, are the other alternatives — what about consensus mechanisms such as proof-of-stake (PoS), the approach that Ethereum is transitioning to?

The standard battle lines

It is a fact, and noncontroversial, that mining technology for blockchain consumes vast amounts of energy. This is particularly stark when comparing the cost of producing and circulating currency.

Bitcoin, for instance, is estimated to consume 123.77 billion kilowatt-hours of energy annually, compared with 2.64 million kWh for cash. According to Digiconomist founder Alex de Vries, if Bitcoin became the world’s reserve currency, global energy production would need to double.

Others claim that miners will eventually gravitate to wherever energy costs are lowest, or become the green energy buyers of last resort. Whether the argument stands up over the long haul remains to be seen, given the degree of regulation in energy markets, the physical costs of relocation and the potential security implications of concentrating miners.

Framing the opportunity costs

Of all these arguments, comparing the energy use of cryptocurrencies with the traditional banking sector — or fiat, in particular — is relatively new. Comparisons with legacy payment systems, however, overlook the difference in transaction volume: While the Visa network completed over 185 billion transactions in 2019 alone, Bitcoin has facilitated 643 million since its inception. Furthermore, commercial entities like Visa are well integrated with energy markets, which are highly regulated in many countries. In the mental models where miners move en masse into new energy markets, it is highly likely that transition costs (as well as the resistance of incumbents) are being discounted. Again, these tendencies are not surprising, as cryptocurrency advocates tend to look optimistically to the future, imagining that markets work more efficiently than they actually do.

Setting aside the non-trivial, highly complicated implications of energy use for the security of blockchains, the idea that miners will follow cheaper electricity prices does not necessarily mean cleaner energy, as cheaper is often dirtier. But even more importantly, the idea that miners will eventually just switch to renewables ignores the opportunity cost of energy. According to the United States Energy Information Administration, global energy usage will grow 50% by 2050. The emergence of unforeseen computational requirements posed by smart cities or integrated supply chains, for instance, will require blockchain to be more energy efficient — all while humanity needs to keep an eye on climate goals.

So, while Bitcoin maximalists are undeterred in their belief that Bitcoin is the first best use for energy, and while proponents of Ethereum — which is moving to a different model, in part apparently due to energy use concerns — may think they have a long-term solution, the general public may not be convinced that cryptocurrency (and nonfungible tokens built on technologies like that of Ethereum) have a sustainable answer to the question: What will be best for society?

Blockchain is now receiving mainstream attention, which gives those of us in the industry a chance to restate the problem in a way that speaks to all of us. Do we think the benefits of blockchain will be worth the opportunity cost? When it comes to memecoins built on mining chains — which are fads, peaking and waning in price with popular sentiment (and new memes) — and the many scams and imitations that have popped up (to the continual embarrassment of serious projects in this space), blockchain technologists are rightfully afraid the public will decide it is not.

However, if we are discussing the benefits of new blockchain technologies that take resource use seriously and open new markets as the internet did, that is an entirely different matter. In that case, the correct comparison is not merely with the opportunity cost of staying with the status quo in finance but with the intermediated economy as a whole.

More to the issue than just mining

While the debate about the efficiency of cryptocurrency tends to be dominated by the discussion of mining, less attention is given to the alternatives. PoS protocols sidestep the need for mining by changing what bad actors stand to lose if they try to falsify transactions. While with PoW such actors could potentially lose the energy they invested, on a PoS network they would forfeit cryptocurrency staked in advance. But this solution also comes with energy considerations.

Suppose that some of these stakers are centralized exchanges: Their first incentive will be profitable trading, not monitoring the energy efficiency of the underlying blockchain. In this respect, we need to consider how information is disseminated among nodes. Mainstream blockchains typically use peer-to-peer gossip networks to communicate. Put simply, such networks pass transaction data from node to node until it is known by all participants. As a result, however, the same message may be repeatedly sent to peers who have already received it from others, wasting resources. And the protocols that assume that security and transaction volume will be able to attract a sufficiently large number of nodes to maintain accuracy in some fashion — whether they are new delegated PoS protocols, directed acyclic graphs, layer-two solutions or cross-chain bridges — are similar to PoW in their assumption that the correct transactions will be confirmed and propagated wherever the network needs that information to be.

Beyond gossip

However, if we manage to overcome the limitations of gossip networks, a whole new world opens up. For instance, nodes on Geeq blockchains use a hub-and-spoke structure to communicate, in order to transmit a minimal set of messages without defaulting to a centralized power structure. Any honest (and potentially anonymous) node may serve as a hub for one block and communicate with the nodes on that blockchain’s active node list (the nodes that happen to be on active spokes).

Unlike a gossip network, where each node sends messages (gossips) to every node around it, meaning that a particular node could receive the same message redundantly from all of its gossiping buddies, this structure results in messaging that is parsimonious, predictable and verifiable. As a result, the use of resources is lower by magnitudes compared with PoW or PoS based protocols, bringing computation, bandwidth and storage costs per transaction as low as a hundredth of a cent, making micropayments feasible.

Furthermore, future blockchain architecture will need to be multichain and flexible, providing a set of parameters that can be adjusted according to the specific requirements — such as speed, transaction throughput or security — of a given use case. A more lightweight, “smarter” blockchain would certainly have a smaller environmental footprint, but it would also be easier to adopt, and could even provide the underlying infrastructure for more sustainable societies.

Small is beautiful

One promising application in this regard is P2P energy trading. Currently, large utility companies supply entire cities with electricity through centralized networks. However, smart cities in the future could rely on a more flexible web of microgrids instead. To satisfy local consumption, these localized, autonomous electricity networks would use mainly local sources like power generators or photovoltaic panels.

Blockchain technology has always been a promising way to execute, validate and record P2P energy transactions, letting anyone on a local microgrid become either a producer or a buyer of electricity. However, up until now, the technology has not been up to the challenge. In order for the market to work well, units of energy as low as a few kilowatts would need to be traded, which would equate to a monetary value of just a few cents. Such transactions are infeasible given current blockchain transaction fees. When transaction costs are fractions of a cent, however, this hurdle would be eliminated. In turn, this would allow blockchain to serve as the technological bedrock of smart cities, allowing millions of Internet of Things devices like smart meters or solar panels to seamlessly interact and interface with digital wallets, often without human intervention.

For example, before going to work in the morning, you could charge your electric vehicle from the energy gathered from photovoltaic panels installed on your roof. Later you may decide to sell unused electricity to your neighbors before going on a vacation. It would also be possible to set up networkwide demand response rules, written in smart contracts. According to the Natural Resources Defense Council, for instance, the cost of “vampire electricity” consumed by plugged-in but unused devices is circa $165 per household, amounting to 4.6% of the total residential electricity production in the United States. Hence, an electric toothbrush left on the charger would be turned off during certain time periods automatically. To override network rules, you would need to pay a small compensatory fee, incentivizing producers to offset extra demand while discouraging users from wasting energy.

In addition, blockchain-based applications — decentralized applications, or DApps — may be built to ensure the traceability of clean energy. Thus, when purchasing electricity, you could check via an app whether it came from a sustainable source. Empowering the consumer to make these decisions is only possible with decentralized technology; otherwise, intermediaries will be able to distort markets to their own tastes. With the rise of global environmental consciousness, traceability may become a key tool to incentivize the production of renewable energy.

New horizons ahead

With such a drastic growth in global energy consumption predicted, it is easy to see why blockchain’s environmental footprint is coming under scrutiny. However, it is also important not to throw out the baby with the bathwater.

As well as taking a holistic view of the relative energy consumption of blockchain compared with traditional finance, we should begin a wider discussion about the net positives and negatives of the technology for society more broadly. In order for blockchain to fulfill its transformative potential, underpin smart cities and support low-carbon economies, we need to focus on developing smarter, more affordable blockchain architecture.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Stephanie So is an economist, policy analyst and co-founder of Geeq, a blockchain security company. Throughout her career, she has applied technology within her specialist disciplines. In 2001, she was the first to use machine learning on social science data at the National Center for Supercomputing Applications. More recently, she researched the use of distributed networking processes in healthcare and patient safety in her role as a senior lecturer at Vanderbilt University. Stephanie is a graduate of Princeton University and the University of Rochester.

Top mining, metals firms test blockchain to trace cobalt for electric cars

May 20, 2021 Coin Telegraph

Adoption

Miners Glencore, CMOC and Eurasian Resources Group, together with battery material supplier Umicore, are looking for ways to ensure the cobalt used for electric vehicles is traceable.

Establishing responsible cobalt sourcing practices has become a major focus of attention for human rights groups, environmental researchers and others in recent years.

In the Democratic Republic of Congo, or DRC, where over 70% of the world's cobalt is sourced, experts have cast a spotlight on severe human rights risks across many mining operations. Meanwhile, under-regulated deep-sea mining to extract cobalt and nickel has sparked profound concern amongst experts about its environmentally destructive impact.

A new announcement by world-leading miners Glencore, CMOC and Eurasian Resources Group, together with battery material supplier Umicore, suggests corporate actors are looking to blockchain technologies to provide an at least partial solution to these problems.

The four companies will pilot a blockchain solution called Resource in real-world operating conditions: tracing the mineral from cobalt production facilities in the DRC to downstream electric vehicle production sites. The pilot will run until the end of this year, with a roll-out of a finalized solution slated for 2022. Whilst blockchain has significant potential to improve transparency and monitoring, Glencore CEO Ivan Glasenberg said:

"Traceability is not enough on its own, it must be part of a wider industry effort to bring improvements to the entire cobalt supply chain. This starts with responsible sourcing compliance, for example through RMI [Responsible Minerals Initiative]; the collective use of wider ESG [Environmental, Social, and Governance] standards [...]; and supporting the artisanal and small-scale mining sector in the Democratic Republic of Congo sector through multi-stakeholder initiatives like the Fair Cobalt Alliance."

RelSource is a solution initially launched by the three miners back in 2019, with Umicore later joining together with an unnamed electric vehicles producer. The system uses zero-knowledge-proofs alongside blockchain and has been developed by blockchain studio Kryha, which has already worked on applications for carbon footprint and metals tracing in the past, as well as collaborating with the World Economic Forum.

RelSource is also directly connected to the Global Battery Alliance, or GBA, Battery Passport Project, as its three founders are all GBA members.

As previously reported, leading auto manufacturers such as Volvo and Mercedes Benz have also been working with a blockchain startup called Circular to pilot the use of blockchain to improve traceability for cobalt, with an emphasis on carbon emissions reduction.

Sustainability

Leveraging blockchain’s strengths

Decentralizing the energy grid

Trustless green credentials

Tom Baumann of the Climate Chain Coalition:

Marco Schletz of Data-Driven EnviroLab and Søren Salomo of TU Berlin:

Linda Kristoffersen of KPMG:

Francisco Benedito of ClimateTrade:

Emin Gün Sirer of Ava Labs:

Catherine Sear of World Bank:

Candice Teo of the Blockchain & Climate Institute:

Adelyn Zhou of Chainlink Labs:

Introduction

The detrimental impact of mining re-centralization

Balancing the protocol for blockchain mining networks

A greener, fairer, more secure future

PoW proves vulnerable to mining clampdowns

The climate controversy

PoS — a model for the future

Social

Governance

Conclusion

The electricity grid, traditional finance and gold mining

Bitcoin’s green potential

The standard battle lines

Framing the opportunity costs

More to the issue than just mining

Beyond gossip

Small is beautiful

New horizons ahead

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