Crypto-blockchain use cases aimed at advancing the energy transition

For several years now, Bitcoin and most other cryptocurrencies have been the subject of regular controversy regarding their energy consumption. 

The most recent example of this is Elon Musk’sannouncementlast May. He announced that he was discontinuing Bitcoin as a payment method for Tesla vehicles due to the excessive use of carbon-intensive energy by the network’s miners. This decision has reignited the debate over theenergy consumption of Bitcoinand cryptocurrencies in general.

However, these criticisms are sometimes lacking in precision. As discussed in our previous article onthe environmental impacts and challenges of blockchain technologies, the environmental footprint of blockchain technologies is directly linked to how they operate, and more specifically to the proof-of-work consensus protocol.   

This situation underscores the need to continue initiatives aimed at optimizing the energy costs associated with crypto-assets. With this in mind, numerous projects have already taken on the challenge of reducing the environmental impact of crypto-assets. 

This article briefly outlines these various blockchain use cases that contribute to the ecological transition, as well as projects that aim to optimize proof-of-work without calling into question the energy consumption of the crypto-blockchain industry.

The growing interest in blockchain projects in the energy transition 

Reducing electronic waste

Reducing electronic waste is a major challenge for sustainable development. According to a report published by The Global e-waste Statistics Partnership,the total volume of electrical and electronic equipment used worldwide increases by 2.5 million tons each year. The production of electronic devices for the tech industry (AI, machine learning, deep learning, big data, etc.) carries a significant environmental cost. The same is true for the production of everyday digital devices.Manufacturing a 2-kg computer consumes 600 kg of raw materials and produces 103 kg of CO2.

Blockchain technologies are emerging as an effective tool for reducing the volume of electronic waste generated.iExecis creating a decentralized network for sharing computing power, whereanyone can become a provider by connecting their device(computer, smartphone, tablet). This would ultimately allow for the utilization of all existing hardware and thus reduce the environmental impact of digital devices.

Transparency in the supply chain and procurement

Public blockchain networks enable true transparency when used in supply chains. This offers several advantages, such as easy tracking for the end consumer, giving them greater decision-making power, and a significant reduction in fraud. In 2019, the AAC (Administrative Assistance Cooperation system)—a platform enabling EU countries to exchange information regarding, among other things, non-compliance with or violations of European agreements on the food and agricultural supply chain—received 292 requests for assistance regarding food fraud within the EU. TEO, a French project, helps reduce fraud by certifying the origin of green energy. Its decentralized network and sensors placed at production sources (wind turbines, solar panels)guarantee the authenticity of production data. In 2020, Tampax partnered with theTreumproject, which allowed end consumers to verify the traceability of tampons. By scanning the barcode, the origin of the cotton used in the tampons is displayed. This transparency serves as a tool for consumers seeking eco-friendly products to exert pressure. Ownest, a French company, enables complete transparency in logistics networks through the use of responsibility tokens. It thus allows its users to avoid losses and oversights in their networks—losses that carry a significant environmental cost.

The decentralization of electricity supply

Electricity generation is undergoing a major paradigm shift. Previously highly centralized, an increasing number of small-scale producers are now able to generate electricity thanks to the widespread availability of solar panels. The decentralization enabled by blockchain technologies will facilitate the creation of decentralized electricity distribution networks, allowing users to act as both producers and consumers and reducing the distance electricity must travel. In this context, two neighbors could send and receive electricity from one another. In Canada, Alectra Utilities has launched a pilot project using IBM’s Hyperledger blockchain to explore decentralized electrification. In France,Taliumhas also created a collective self-consumption service for photovoltaic energy. 

In May, the Australian company Power Ledger announced a partnership with Thai Digital Energy Development to create ablockchain-based peer-to-peer digital energy platformin the country.  This blockchain-based platform will facilitate the use of renewable energy by enabling the trading of environmental products (carbon credits and renewable energy certificates) and peer-to-peer (P2P) energy sales.

The tokenization of carbon credits

In 2005, the European Union established the European Union Emissions Trading System (EU ETS), which allows companies to buy or sell emissions allowances based on their CO2 emissions. Large energy-consuming companies are the main participants in the EU ETS. The CO2IN project, currently in its pilot phase, aims to enable citizens, small businesses, and municipalities to purchase EU ETS allowances, thereby providing them with a tool to offset their impact on global warming.

Furthermore, the markets where these allowances are traded sometimes lack transparency and are subject to varying regulations from state to state.ClimateTradeaddresses these issues by tokenizing carbon credits, making them easier for emitting companies to trade. 

The gradual optimization of energy consumption related to mining

Reusing the heat generated by mining computers 

MintGreenaims to improve Bitcoin’s environmental footprint throughvarious partnerships. The company plans to build Bitcoin mining facilities near businesses that would utilize the heat generated by mining. The pilot project has already signed two partnerships with a sea salt producer and a distillery. To carry out their operations, these two companies require heat. Consequently, the heat generated by mining is recycled into hot water and supplied to MintGreen’s partners. 

In addition,WiseMiningis developing a boiler that recycles the heat emitted by mining rigs. These boilers, called “Sato,” will be compatible with existing and future graphics card models. The company aims to contribute to the emergence of a new generation of decentralized miners and to distinguish itself from centralized industrial mining operations, which do not always reuse the heat emitted by mining devices. 

The decentralization of mining

The decentralization of the power supply for mining will also be leveraged by Daymak, a Canadian manufacturer of light electric vehicles. In fact, Daymak recently announced Spiritus, its upcoming electric car, which will be equipped with its own mining infrastructure. 

Daymak Spiritus will incorporateDaymak Nebula technology, which consists of Nebula Wallet (an app with a built-in wallet) and Nebula Miner (a mining infrastructure built directly into the vehicle). Ultimately, Daymak’s cryptographic suite will transform its vehicles into“environmentally friendly cryptographic nodes—an unprecedented step in the rapid evolution of blockchain technologies.”

The use of green electricity to reduce the environmental footprint of mining

State initiatives 

On June 9, El Salvador’s President Nayib Bukele announced that he would introduce a bill to make Bitcoin legal tender.

El Salvador’s recognition of Bitcoin as legal tender is not its only initiative in the crypto-asset sector. In fact, in a recenttweet, Nayib Bukele announced that El Salvador plans to establish facilities for Bitcoin mining powered by very cheap, clean, and renewable energy generated by volcanoes. 

To quickly and efficiently mine its first bitcoins using the geothermal energy generated by its volcanoes,the government of El Salvador will enlist the services of the mining company BigBock Datacenter.

Private initiatives

According to the CBECI, 25,082 TWh of electricity are generated worldwide each year. However, 16.82% of this energy goes unused. In this context, using this energy for mining is an effective way to combat energy waste. Until recently, most miners were based in China’s Sichuan region. The energy used by these miners came largely from wind, solar, and, above all, hydroelectric power. 

In the wake ofthe Chinese government’s crackdown, the recent exodus of miners based in China appears to be reshaping the global mining industry. New mining pools could significantly boost the use of renewable energy, which would help improve Bitcoin’s carbon footprint. 

Since 2017, the Virunga region in the Democratic Republic of the Congo has been equipped with hydroelectric power plants that will eventually meet the region’s energy needs andhelp combat deforestation in Virunga(the world’s second-largest forest after the Amazon). These plants currently have excess production capacity due to the region’s limited economic development. BigBlock Data Center has installed a facility powered by these hydroelectric plants, enabling the plants to offset a portion of their costs.

Conclusion

In summary, it is important to qualify the notion that blockchain project developers do not take into account the challenges associated with the green transition. In fact, the products of certain blockchain projects are focused on future initiatives related to the green transition. Blockchain networks, which are open and decentralized, represent a real opportunity for the development of innovative ecological initiatives by facilitating peer-to-peer electricity distribution, for example. 

Furthermore, the energy consumption of certain blockchain networks based on proof-of-work has led to the emergence of initiatives aimed at reducing the carbon footprint associated with mining and offering greener alternatives. For example, Bigblock Datacenter has focused on surplus renewable energy in certain geographic regions to facilitate carbon-neutral mining.

Ultimately, the growing use of blockchain technology will help optimize energy supply across all geographic regions, thereby combating waste resulting from energy overproduction in certain areas. 

This article was written by Bettina Boon Falleur and Hugo Bordet