Article

Renewable Energy Will Not Solve Bitcoin's Sustainability Problem

Authors:
To read the full-text of this research, you can request a copy directly from the author.

Abstract

In this paper we find that the Bitcoin network, with an electrical energy footprint of 491.4 to 765.4 kWh per transaction on average, is relatively much more energy-hungry than the traditional financial system. Even though it has been argued that renewable energy may help mitigating the environmental impact of this, we find that there exist fundamental challenges in uniting variable renewable energy production with the consistent demand of Bitcoin mining machines. Moreover, we find that the environmental impact of Bitcoin mining reaches beyond its energy use. Continuous increasing energy (cost) efficiency of newer iterations of mining devices ensures that older ones will inevitably be disposed on a regular basis. The resulting electronic waste generation could equal that of a small country like Luxembourg, with a staggering average footprint of four light bulbs worth of electronic waste per processed Bitcoin transaction. Bitcoin will therefore have to address its sustainability problem in another way. This may consist of replacing its mining mechanism with a greener alternative like Proof-of-Stake.

No full-text available

Request Full-text Paper PDF

To read the full-text of this research,
you can request a copy directly from the author.

... Bitmain, one of the largest manufacturers of specialized Bitcoin mining devices, sold 1.87 million sets of Bitcoin mining hardware during the first two quarters of 2018 alone, as compared to 0.26 million and 1.11 million sets during the full years of 2016 and 2017 respectively [2]. The growth in mining equipment was accompanied by increasing energy consumption [3] and electronic waste generation [4] by the Bitcoin mining network as a whole. While the network had of course been consuming resources since inception, it was this peak in growth that put the topic of the resource intensity of running Bitcoin in the spotlight. ...
... 3 PUE is a ratio that captures the total amount of energy used by a data centre to the energy delivered to the computing equipment. The difference may be the 4 This shows that in a declining market real-world mining facility efficiency rapidly approaches the theoretic optimum, as suboptimal choices by market participants are increasingly punished. It also shows that during this phase a simple back-of-the-envelope approach (though corrected for market share) can provide a good sense of direction when estimating the electricity consumption of miners. ...
... (footnote continued) result of cooling and other supporting IT equipment. 4 The formula for calculating this lower limit can be written as The shortage of chips left manufacturers ill-prepared for the Chinese rain season that starts in April-May and ends in September-October. China is estimated to house a significant majority (75.62 percent per September 2019 [22]) of the Bitcoin network's computational power, and during this rain season market participants in the region may be able to obtain relatively cheap electricity (at a rate of less than 1 cent USD per kWh [23]) compared to the rest of the year. ...
Article
As the resource intensity of running Bitcoin has increased over recent years, it has become a serious concern for its potential impact on health and climate. Within this context, there exists a growing need for accurate information. Various organizations need this for multiple purposes like properly assessing the urgency of the problem, implementing the right policy response in the right locations and for setting up mitigation programs. We propose a market dynamics approach to evaluate the current methods for obtaining information on Bitcoin's energy demand. This allows us to establish that, while historically the Bitcoin mining industry has been growing most of the time, this growth allows market participants to pursue strategies that don't necessarily involve the best devices, device settings, or locations. The bigger the profitability of mining, the more it allows market participants to make decisions that result in suboptimal power efficiency of the Bitcoin network. Specifically, while the profitability of mining peaked during 2019, we find that market participants primarily used older generations of devices with better availability and lower acquisition costs. Common estimation approaches don't only fail to capture this behavior, but also fail to properly capture the market circumstances, like seasonal and geographic variation in electricity prices, that help enable participants to do so in the first place. This combination leaves common approaches prone to providing optimistic estimates during growth cycles. We conservatively estimate the Bitcoin network to consume 87.1 TWh of electrical energy annually per September 30, 2019 (equaling a country like Belgium).
... Consequently, blockchain is identified as a strategic technological innovation that has remarkably revolutionized monetary transactions and digital commodity exchanges (Aggarwal et al., 2019;Silvestre et al., 2020). However, a severe problem in the form of accumulation of electronic waste owing to the Bitcoin mining process with advanced hardware and machinery is observed of late (De Vries, 2019). Electronic waste generation can be extremely hazardous with severe implications. ...
... So, the miners prefer to opt for high-end sophisticated hardware and machinery (Kristoufek, 2020). The introduction of new machines and growing hash rates force the less effective systems and hardware to phase out at an increasing pace (De Vries, 2019;Li et al., 2019) and result in a tremendous surge in the piling up of electronic waste. Overall, several countries' electronic waste generation in a year is comparable with the electronic waste of the Bitcoin network in the same period. ...
... and www.digiconomist.net have been chosen for extracting the variables. Both data sources have been acknowledged to serve reliable information in the scientific literature (De Vries, 2019) and collate real-time daily data. The said data repositories help to conduct mainstream research for drawing actionable insights (Das and Dutta, 2020). ...
Article
Electronic waste is generating in the Bitcoin network at an alarming rate. This study identifies the determinants of electronic waste generation in the Bitcoin network using machine learning algorithms. We model the evolutionary patterns of electronic waste and carry out a predictive analytics exercise to achieve this objective. The Maximal Information Coefficient (MIC) and Generalized Mean Information Coefficient (GMIC) help to study the association structure. A series of six state-of-the-art machine learning algorithms - Gradient Boosting (GB), Regularized Random Forest (RRF), Bagging-Multiple Adaptive Regression Splines (BM), Hybrid Neuro Fuzzy Inference Systems (HYFIS), Self-Organizing Map (SOM), and Quantile Regression Neural Network (QRNN) are used separately for predictive modeling. We compare the predictive performance of all the algorithms. Statistically, the GB is a superior model followed by RRF. The performance of SOM is the least accurate. Our findings reveal that the blockchain's size, energy consumption, and the historical number of Bitcoin are the most determinants of electronic waste generation in the Bitcoin network. The overall findings bring out exciting insights into practical relevance for effectively curbing electronic waste accumulation.
... All miners, running equipment to the same specifications, have the same constant energy demand and usually run their machines 24/7. Therefore, miners cannot exclusively rely on intermittent renewable energy sources to meet their energy requirements [42]. ...
... The Accord also assumes that producers of renewable energy would always prioritise non-mining activities before selling to bitcoin miners. Research shows the opposite [42]. For example, in Virunga National Park in the Democratic Republic of Congo, an EU funded hydroelectric plant has been constructed to help ex-combatants build sustainable livelihoods beyond poaching. ...
Article
The rate of adoption of some cryptocurrencies is triggering alarm from energy researchers and social scientists concerned about the industry’s growing environmental and social impacts. In this paper we argue that the unsustainable trajectory of some cryptocurrencies disproportionately impacts poor and vulnerable communities where cryptocurrency producers and other actors take advantage of economic instabilities, weak regulations, and access to cheap energy and other resources. Globally, over 100 million people hold cryptocurrency, mostly as a speculative asset. The digital infrastructure behind the most popular cryptocurrency, bitcoin, currently requires as much energy as the whole of Thailand, with a carbon footprint exceeding the gold mining industry. Should bitcoin’s mass adoption continue, an escalating climate crisis is inevitable, disproportionately exacerbating social and environmental challenges for communities already experiencing multiple dimensions of deprivation. In mitigating these impacts, the paper considers 4 potential regulatory pathways, including: 1) promoting voluntary private-sector commitments to using only renewable energy, 2) encouraging a system of voluntary carbon offsetting, 3) using existing financial regulations and tax frameworks, and 4) imposing national and/or international bans on cryptocurrency ‘mining’. The paper argues that effective environmental regulation of cryptocurrencies is urgently required, both to reduce the threat of catastrophic climate change, and to help the world’s poorest towards sustainable development. However, regulating cryptocurrency mining in any context is likely to require a combination of efforts and is unlikely to result in win-win outcomes for all.
... All miners, running equipment to the same specifications, have the same constant energy demand and usually run their machines 24/7. Therefore, miners cannot exclusively rely on intermittent renewable energy sources to meet their energy requirements [42]. ...
... The Accord also assumes that producers of renewable energy would always prioritise non-mining activities before selling to bitcoin miners. Research shows the opposite [42]. For example, in Virunga National Park in the Democratic Republic of Congo, an EU funded hydroelectric plant has been constructed to help ex-combatants build sustainable livelihoods beyond poaching. ...
Preprint
The rate of adoption of some cryptocurrencies is triggering alarm from energy researchers and social scientists concerned about the industry's growing environmental and social impacts. In this paper we argue that the unsustainable trajectory of some cryptocurrencies disproportionately impacts poor and vulnerable communities where cryptocurrency producers and other actors take advantage of economic instabilities, weak regulations, and access to cheap energy and other resources. Globally, over 100 million people hold cryptocurrency, mostly as a speculative asset. The digital infrastructure behind the most popular cryptocurrency, bitcoin, currently requires as much energy as the whole of Thailand, with a carbon footprint exceeding the gold mining industry. Should bitcoin's mass adoption continue, an escalating climate crisis is inevitable, disproportionately exacerbating social and environmental challenges for communities already experiencing multiple dimensions of deprivation. In mitigating these impacts, the paper considers 4 potential regulatory pathways, including: 1) promoting voluntary private-sector commitments to using only renewable energy, 2) encouraging a system of voluntary carbon offsetting, 3) using existing financial regulations and tax frameworks, and 4) imposing national and/or international bans on cryptocurrency 'mining'. The paper argues that effective environmental regulation of cryptocurrencies is urgently required, both to reduce the threat of catastrophic climate change, and to help the world's poorest towards sustainable development. However, regulating cryptocurrency mining in any context is likely to require a combination of efforts and is unlikely to result in win-win outcomes for all.
... The evolution of Bitcoin mining hardware is outlined in Table 1. This evolution of mining hardware from CPUs to ASICs resulted in increased performance and energy efficiency [9,17]. While the energy efficiencies of these units have increased with time, their "energy consumption" and implications still remain the determinant factor in miners' decisions to operate in this market and their profit or loss margins [18]. ...
... In a report by Bank for International Settlements (BIS) in June 2018, Digiconomist's results were used and the report indicated that continuing to pursue decentralized trust could lead to environmental disasters [23]. De Vries [17] takes an international view of Bitcoin network's energy consumption and its entailing ecological implications and concludes that these problems will not be solved by application of renewable energy and that the only way forward is to change the POW algorithm with "Proof of Stake". Imran [22], however, believes that it is inappropriate to compare VISA's energy consumption per transaction with Bitcoin because, while VISA uses this energy specifically for said transactions, Bitcoin's energy consumption is used to protect all transactions dating back to 2010. ...
Article
One of Bitcoin's most significant problems is its seemingly insatiable use of electricity. In the present research, along with providing the required power for Bitcoin (BTC) mining, a solid oxide fuel cell (SOFC) system fed either by natural gas or biogas as a renewable source of energy is used to supply the electricity demand. Thermodynamic modeling for the fuel cell system is applied to determine the required biogas or natural gas. For the proposed cases (grid-based, natural gas-fed SOFC and biogas fed SOFC), various scenarios depending on the Bitcoin price and mining difficulty are proposed. Also, the economic viability for each scenario in several countries is investigated and compared. Results indicate more profitability for grid-based mining in Bitcoin prices up to $20,000, but as the Bitcoin price increases SOFC based mining operations achieve reasonable profitability. It is shown that Iran, Russia, and China with cumulative cash flows of $87,300, $77,200 and $70,500 respectively, are the best countries to mine BTC using grid electricity while Iran, Canada and Russia are the best countries using a natural gas-fed SOFC system. While the profitability of SOFC-based mining is lower than grid-based mining, the latter method compensates with better sustainability and lower environmental costs.
... Moreover, Loviscach proposed two fundamental aspects that must be taken into account in assessing the impact of Bitcoin on the environment: (a) computer power consumption (expressed in kWh) for computing, networking and cooling; (b) disposal of electronic waste produced [68]. Starting from the fact that the mining equipment used to obtain Bitcoin becomes obsolete in about 1.5 years, leaving only those that prove to be economically viable remaining viable, we should also consider how they turn into electronic waste [69], the amount of which is comparable to the total electronic waste generated by a country such as Luxembourg (12 kt) [70]. ...
... De Vries has an international vision of the energy consumption of the Bitcoin network and its ecological implications and concludes that these problems will not be solved only by applying renewable energy and that the only way forward is to change the PoW algorithm with "Proof of Stake" [70]. ...
Article
Full-text available
The controversies surrounding Bitcoin, one of the most frequently used and advertised cryptocurrency, are focused on identifying its qualities, the advantages and disadvantages of using it and, last but not least, its ability to survive over time and become a viable alternative to the traditional currency, taking into account the effects on the environment of the technology used to extract and trade it. Based on such considerations, this article aims to provide an overview of this cryptocurrency, from the perspective of conducting a systematic review of the literature dedicated to the economic and environmental impact of Bitcoin. Using peer-reviewed articles collected from academic databases, we aimed at synthesizing and critically evaluating the points of view in the scientific literature regarding the doctrinal source of the emergence of Bitcoin, the identity of this cryptocurrency from an economic point of view, following its implications on the economic and social environment. Subsequently, this research offers the opportunity of evaluating the level of knowledge considering the impact of Bitcoin mining process on the environment from the perspective of the energy consumption and CO2 emissions, in order to finally analyze Bitcoin regulation and identify possible solutions to reduce the negative impact on the environment and beyond. The findings suggest that, despite high energy consumption and adverse environmental impact, Bitcoin continues to be an instrument used in the economic environment for a variety of purposes. Moreover, the trend of regulating it in various countries shows that the use of Bitcoin is beginning to gain some legitimacy, despite criticism against this cryptocurrency.
... Further, in this issue of Joule, de Vries argues that renewables are unlikely to decarbonize a large-scale proof of work blockchain application. 9 Taking these conclusions together, proof of work consensus algorithms for widespread implementations of blockchain are simply not sustainable. While it is the protocol seeing the most active use (due to the popularity of Bitcoin and Ethereum), it is not the most common. ...
Article
The rapid growth of cryptocurrency with computationally intensive mining processes has significantly impacted global energy use. Recently in Frontiers in Energy Research, Zade and colleagues developed a generalized scenario model to evaluate the power demand of proof of work blockchain mining. It was determined that mining algorithmic complexity—not advances in hardware efficiency—is the prime factor determining the energy consumption of Bitcoin and Ethereum. Blockchain applications must transition from proof of work toward energy-efficient consensus algorithms to be sustainable.
... However, this new technology comes at a cost. In a recent study, De Vries (2019) found that Bitcoin consumed as much electrical energy as all of Hungary in 2018, corresponding to 15 billion U.S. dollar per year. Nowadays there are more than 2,100 cryptocurrencies traded on more than 18,000 exchanges. ...
... The same optimal hyperparameters are selected when considering instead CO re 2 , dened by equation (6). Finally, when the bottom-up target is adopted, CO BU 2 in (7), the optimal hyperparameters are: RMSProp optimizer with ρ = 0.9; learning rate, = 0.003, dropout rate, q = 0.1 for all hidden layers, and number of epochs, 5000. ...
Article
Full-text available
Building on an economic model of rational Bitcoin mining, we measure the carbon footprint of Bitcoin mining power consumption using feedforward neural networks. After reviewing the literature on deep learning methods, we find associated carbon footprints of 3.8038, 23.8313 and 19.83472 MtCOe for 2017, 2018 and 2019, which conform with recent estimates, lie within the economic model bounds while delivering much narrower confidence intervals, and yet raise alarming concerns, given recent evidence from climate-weather integrated models. We demonstrate how machine learning methods can contribute to non-for-profit pressing societal issues, like global warming, where data complexity and availability can be overcome.
... Predicting the future electricity efficiency of mining facilities, as well as predicting the future hash rate of the network, add significant uncertainty to estimates, given the high dynamics in the technological advancement of mining hardware and the price volatility of Bitcoin. [8][9] Here we propose an alternative approach to project Bitcoin's electricity consumption and carbon footprint in the long term while avoiding the uncertainties discussed above. We use insight from the gold market as a proxy to estimate Bitcoin's future market capitalization. ...
Preprint
The carbon footprint of Bitcoin has drawn wide attention, but Bitcoin's long-term impact on the climate remains uncertain. Here we present a framework to overcome uncertainties in previous estimates and project Bitcoin's electricity consumption and carbon footprint in the long term. If we assume Bitcoin's market capitalization grows in line with the one of gold, we find that the annual electricity consumption of Bitcoin may increase from 50 to 400 TWh between 2020 and 2100. The future carbon footprint of Bitcoin strongly depends on the decarbonization pathway of the electricity sector. If the electricity sector achieves carbon neutrality by 2050, Bitcoin's carbon footprint has peaked already. However, in the business-as-usual scenario, emissions sum up to 2 gigatons until 2100, an amount comparable to 6% of global emissions in 2018. Therefore, we also discuss policy instruments to reduce Bitcoin's future carbon footprint.
... The purported advantages of Bitcoin are dwarfed by the intentionally resourceintensive design in its transaction verification process which threatens the environment integral to our survival. 7 Environmental science and engineering studies have estimated the detrimental environmental impacts of cryptomining (e.g., Li et al., 2019;de Vries, 2019;Truby, 2018). Again, this is a manifestation of the impossibility triangle: for a large-scale decentralized system, generating consensus could be very costly. ...
... 12 Moreover, specialized Bitcoin mining devices cannot be repurposed, potentially resulting in a substantial amount of electronic waste once they become obsolete in several years' time. 8 On top of the environmental impact of cryptocurrency mining, the effects of the sector's energy-hunger might also spill over to other parts of the economy. Prior to the latest surge in Bitcoin price, it was already reported that there was a global shortage of chips for an array of electronic devices. ...
Article
Alex de Vries earned his MSc in Economics and Business from the Erasmus University Rotterdam in 2011. In 2014 he founded the blog digiconomist.net. This blog is a platform for research, dedicated to exposing the unintended consequences of digital trends. The blog is best known for featuring the Bitcoin Energy Consumption Index since late 2016, which has played a major role in the global discussion regarding the sustainability of proof-of-work-based blockchains.
... The entire network generates as much electronic waste as a country like Luxembourg does annually, which results in an electronic waste footprint of almost 135 g of equipment (equivalent to the weight of an iPhone 12 mini) per transaction processed on the Bitcoin network. 6 This equipment is primarily made of aluminum, copper, iron, and rare earths. Low waste collection and recycling rates in countries with high mining activity create the risk of toxic chemicals and heavy metals leaching into soils and causing air and water pollution. ...
Article
The digital currency Bitcoin is known for its energy hunger and associated carbon footprint. Investors, how-ever, must not neglect further environmental, social, and governance issues related to digital currencies. Therefore, we urge the adoption of a more comprehensive view in assessing the externalities of investments in Bitcoin and other cryptocurrencies.
... To model this, every week the least efficient 1% of the hashrate is replaced with the most efficient hardware. This means that all ASICs are replaced every 2 years, which is close to an often cited hardware lifetime of 1.5 years [78]. ...
Thesis
Full-text available
Much confusion and uncertainty exists about Bitcoin's-and by extension all cryptocurrencies'-carbon footprint. Although it is impossible to calculate the exact carbon footprint of cryptocurrencies, due to their decentralized nature, it is possible to make some fair predictions. This work proposes a method to estimate both the electricity consumption of and the e-waste generated by the cryptomarket industry, and convert them to emissions. Furthermore, an approach to estimating future consumption in function of the price is developed. We estimate that the cryptocurrency market consumes on average 80 TWh/year, with an average lower and upper bound of respectively 35.7 and 150.6 TWh/year. Between June 2019 and June 2020, we estimate that 27.1 kilotons of e-waste were produced by mining ASICs, and during the same period, 2.92 million new ASICs were produced. By using geographic mining data and an extensive study of the used electricity mixes, we calculate that per kWh of electricity consumed for mining, 473.64 g CO 2-eq is emitted. This results in an average carbon intensity of 38 million tonnes CO 2-eq per year for the used electricity. Finally , an extra 1.27 million tonnes is added by the creation of ASICs.
... As for the future energy demand, a first possible source of future increases is the proliferation of blockchain technology applications and cryptocurrencies, notably the bitcoin, e.g., [36]. However, [37] argues that the problem just affects bitcoin, since blockchain technology can be implemented much more efficiently than has been up to now. A second possible source is an increase in telecommunications services and applications [38,39]. ...
Article
Full-text available
The primary purpose of this research is to assess the long-range energy demand assumption made in relevant Roadmaps for the transformation to a low-carbon energy system. A novel interdisciplinary approach is then implemented: a new model is estimated for the aggregated world primary energy demand with long historical time series for world energy, income, and population for the years 1900–2017. The model is used to forecast energy demand in 2050 and assess the uncertainty-derived risk based on the variances of the series and parameters analysed. The results show that large efficiency savings—up to 50% in some cases and never observed before—are assumed in the main Roadmaps. This discrepancy becomes significantly higher when even moderate uncertainty assumptions are taken into account. A discussion on possible future sources of breaks in current patterns of energy supply and demand is also presented, leading to a new conclusion requiring an active political stance to accelerate efficiency savings and lifestyle changes that reduce energy demand, even if energy consumption may be reduced significantly. This will likely include replacing the income-growth paradigm with other criteria based on prosperity or related measures.
... 11 The success of Bitcoin revealed the drawbacks of PoW. The arms race between the miners led to an enormous energy consumption, [13][14][15][16] and the throughput limited to seven transactions per second limits its scalability. 17 Ethereum is a blockchain popular for its generalized technology on which all transaction-based state machine concepts can be built. ...
Article
Full-text available
Today, the integrity and authenticity of digital documents and data are often hard to verify. Existing public key infrastructures (PKIs) are capable of certifying digital identities but do not provide solutions to store signatures immutably, and the process of certification is often not transparent. We propose Veritaa, a distributed public key infrastructure with an integrated signature store (DPKISS). The central part of Veritaa is the Graph of Trust that manages identity claims and singed declarations between identity claims and document identifiers. An application-specific distributed ledger is used to store the transactions that form the Graph of Trust immutably. For the distributed certification of identity claims, a reputation system based on signed trust declarations and domain vetting is used. In this work, we have designed and implemented the proposed architecture of Veritaa, created a testbed, and performed several experiments. The experiments show the benefits and the high performance of Veritaa.
... Over the course of 2019, the network processed 120 million transactions (Blockchain, 2020), while traditional payment service providers processed about 539 billion transactions (Capgemini, 2019). Dividing emissions estimates by the number of transactions yields a carbon footprint in the range between 233.4 and 363.5 kg of CO 2 per Bitcoin transaction (de Vries, 2019). It is noteworthy that such annual estimates as depicted in Fig. 1 are typically based on results at a certain day assuming those daily conditions persisted for a year to facilitate comparisons with other emitting activities or national emissions on country level. ...
Article
Bitcoin’s increasing energy consumption has triggered a passionate debate about the sustainability of the digital currency. And yet, most studies have thus far ignored that Bitcoin miners cycle through a growing amount of short-lived hardware that could exacerbate the growth in global electronic waste. E-waste represents a growing threat to our environment, from toxic chemicals and heavy metals leaching into soils, to air and water pollutions caused by improper recycling. Here we present a methodology to estimate Bitcoin’s e-waste and find that it adds up to 30.7 metric kilotons per annum, per May 2021. This number is comparable to the amount of small IT and telecommunication equipment waste produced by a country like the Netherlands. At peak Bitcoin price levels seen early in 2021, the annual amount of e-waste may grow beyond 64.4 metric kilotons in the midterm, which highlights the dynamic trend if the Bitcoin price rises further. Moreover, the demand for mining hardware already today disrupts the global semiconductor supply chain. The strategies we present may help to mitigate Bitcoin’s growing e-waste problem.
... 3 The ultimate carbon footprint of one Bitcoin transaction compares to New Zealand's annual 37 million tons of CO 2 emission. In comparison, a VISA transaction consumes 0.4 grams of CO 2 , and a Google search equals 0.8 grams (Vries, 2019). Corbet et al. (2019) added to this unfavorable ✩ Acknowledgment: Muhammad Abubakr Naeem gratefully acknowledges the support of Science Foundation Ireland under grant number 16/SPP/3347. ...
Article
Full-text available
The high power consumption of Bitcoin transactions has raised environmental and sustainable concerns of green investors and regulatory bodies. We utilize the time-varying optimal copula (TVOC) approach to showcase the dependence structure between bitcoin and green financial assets. We find multiple tail-dependence regimes characterize the extreme dependence between bitcoin and green financial assets, and the dependence structure is mainly asymmetric and time-varying. Finally, the hedging effectiveness of green financial assets for bitcoin revealed that all green assets, especially clean energy, are effective hedges for bitcoin.
... According to digiconomist.net [6], as of October 2020, Bitcoin has consumed electrical energy 74.38 TWh per year, which is comparable to the power consumption of Venezuela. The carbon footprint of Bitcoin has reached 35.33 Mt CO 2 per year, comparable to the carbon footprint of New Zealand. ...
Article
Full-text available
Consensus mechanism plays an important role in blockchain. At present, mainstream consensus mechanisms include proof of work (PoW), proof of stake (PoS), and delegated proof of stake (DPoS). PoW, as is widely used in virtual currency, results in significant energy consumption; PoS and DPoS are proposed to reduce energy waste caused by PoW, but their disadvantage is that they tend to create Matthew Effect (ME): “the rich get richer.” In order to balance the discourse power of new nodes and elder ones, this paper proposes a flexible consensus mechanism called proof of engagement (PoE), based on the activity and contribution of network nodes. We analyze the incentive compatibility of PoE from the perspective of mechanism design. In our simulation experiments, we tested the profit changes under PoW, PoS, and PoE. The results illustrate it is easier for new nodes to accumulate their profits under PoE than under PoW or PoS, so as to reduce the negative impacts of ME.
... First, climate / carbon risk represents a sustainability issue of particular and increasing importance to investors (Andersson et al., 2016;De Jong & Nguyen, 2016). Second, the Bitcoin network's carbon footprint and contribution to global warming are widely seen as a major sustainability concern (De Vries, 2018;2019;Mora et al., 2018;Truby, 2018). ...
Article
Climate-related criticism toward Bitcoin is primarily based on the network’s absolute carbon emissions without consideration of Bitcoin’s market value. Taking a relative emission perspective and utilizing the mean–variance portfolio optimization framework, we study the financial and carbon implications of Bitcoin investments. Our results show that adding Bitcoin to a diversified equity portfolio can enhance the risk–return relationship of the portfolio. Furthermore, we identify realistic scenarios for which the addition of Bitcoin to a diversified equity portfolio reduces the portfolio’s aggregate carbon emissions. This finding persists under various, conservative assumptions about Bitcoin prices, carbon emission estimates, and carbon prices.
Article
Full-text available
With the increasing use of information technologies (IT) their opportunities to ensure environmental sustainability and the risks of their widespread adoption are growing. And if the possibilities have been studied well enough, then the risks have been paid attention to relatively recently. However, awareness of these risks is becoming increasingly important with the spread of technologies. Currently, there are already hundreds of cryptocurrencies, and the technological basis for many of these currencies is the blockchain—a digital ledger of transactions. This article has assessed the environmental burden of mining and supporting transactions in the cryptocurrency market in Russia using CO2-equivalent. For this, for the first time, the amount of electricity consumed to support cryptocurrency transactions in Russia was calculated, data on the largest cryptocurrency mining centres were collected and systematized, and the main factors for the placement of both large and small private farms were determined. Based on the collected data a map of the spread of mining centres in Russia was created. Our analysis showed that on average, 2.977 million tons of CO2 equivalent are emitted in Bitcoin production in Russia, and the total emissions from cryptocurrency mining in Russia are 4.466 million tons of CO2 equivalent. Based on our data on environmental damage, we believe that when deciding on the use of blockchain technology, not only its capabilities should be taken into account, but also an assessment of the ratio of potential benefits and impact on the environment. A systematic understanding of interrelated direct and indirect impacts is needed to make decisions on the use of blockchain, since the technology shows itself as potentially one of the most energy and resource intensive.
Article
Full-text available
The advent and development of digital technologies has had a significant impact on the establishment of contracts. Smart contracts are designed as computer code containing instructions for executing user agreements, offering a technologically secure solution with numerous advantages and applications. However, smart contracts are not without their problems when we try to fit them into the traditional system of contract law, and their presumed benefits can become shortcomings. Bibliometric studies can help to assess the current state of science in a specific subject and support decision making and research direction. Here, this bibliometric study is used to analyze global trend research in relation to this novel contractual methodology, the smart contract, which seems to have experienced exponential growth since 2014. Specially, this analysis was focused on the main countries involved and the institutions that lead this research worldwide. On the other hand, the indexations of these works are analyzed according to major scientific areas and the keywords of all the works, to detect the subjects to which they are grouped. Community detection has been used to establish the relationship between countries researching in this area, and six clusters have been identified, around which all the work related to this topic is grouped. This work shows the temporal evolution of research related to smart contracts, highlighting that there are two trends—e-commerce and smart power grids. From the perspective of driving sustainability, smart contracts could provide a contribution in the near future.
Conference Paper
In this paper, a technological assessment of a solar PV collector system for freshwater, cooling and electricity is evaluated. Technological assessment is made via use of energy and exergy analyses and system performance is carried out in terms of exergetic and energetic efficiencies. Desalination of water is carried out by employing freezing defreezing technique run by the evaporator of a vapor compression cycle. The heat from the PV is utilized for defreezing the water. A parametric study is carried out to see the effect of key parameters such as ambient temperature, evaporator temperature, and mass flow rate of freshwater. Analysis shows that system attains an energetic efficiency of 19.2% whilst exergetic efficiency as 7.5%. The system produces a net electric power of 4.7 kW and freshwater of 54 liter per hour.
Chapter
Cryptocurrencies have gained in popularity and generated a great deal of enthusiasm in recent years with regard to the sustained increase in the number of transactions achieved by miners. On what scale can we consider the process and uses of virtual money to be ethical? What are the misuses related to their use? In this chapter, we study the ethical and environmental issues of cryptocurrencies. First, regarding the environmental issue, the major cryptocurrencies use a large amount of electricity for mining, which has a significant impact on the energy production system and global warming. Second, we discuss the new type of Dark economy that has emerged with these currencies, thanks to the anonymity of transactions. We particularly emphasize the unethical use of cryptocurrencies, namely the virtual money laundering and tax evasion, the financing of illegal activities (i.e. illicit products, terrorist financing) and cyber-attacks. Third, we develop the ethical use of virtual money and show that this kind of currency, which guarantees the protection of privacy and anonymity of transactions, can be a good solution to mitigate transaction costs and reduce poverty. They can also be beneficial in the context of debt crises and hyperinflation. Thus, cryptocurrencies per se are not evil; it is their uses that can be.
Article
Purpose The purpose of this paper is to discuss the disrupting usage and impacts of blockchains and cryptocurrencies and advocate their role as enablers of sustainable tourism development goals. Design/methodology/approach Literature on blockchains and cryptocurrencies is critically synthesized, debated and expanded to identify and discuss their implications toward sustainable tourism futures. Findings As a distributive digital ledger, blockchains have the potential to create a more inclusive tourism future to address debates around tourism as a vehicle for sustainable development that alludes to value accruing to only certain providers and consumers. Blockchains and their cryptocurrencies (as a financial transaction capability) elevate trust and relational capabilities in an expedited and holistic manner, democratize participation in economic systems and re-distribute power and economic relations amongst actors by influencing the way data (the currency of the digital economy and the lifeblood of tourism) is collected, stored, exchange, owned and traded for co-creating value. Research limitations/implications The paper is conceptual and speculative by identifying ways in which blockchain and cryptocurrencies can support sustainable tourism development goals. Directions for future research are provided for further elaborating and collecting primary evidence on whether the premise and applications of these technologies can deliver the acclaimed sustainable impacts. Originality/value The paper contributes to the emerging but controversial literature about the trajectories between technology and sustainability by critically debating on how blockchains, through cryptocurrency economies, can be positioned to facilitate sustainable tourism futures.
Book
Full-text available
This book gives business decision makers and students a clear overview of the history, current applications, and future potential of distributed ledgers and cryptocurrency. The hype around blockchain technology is matched only by the innovation it inspires and the skepticism it provokes. This book gives business decision makers and students a clear overview of the history, current applications, and future potential of distributed ledgers and cryptocurrency. It explores strengths and weaknesses, emerging opportunities, and perceived threats. Technical frameworks are presented in a business context to help strategists understand the risks and rewards of different approaches to blockchain implementation, and the decision factors in determining whether this is a viable solution to the problem at hand. Extract attached - academic inspection copies are available direct from the publisher.
Article
Full-text available
In this paper, we critique ICT's current and projected climate impacts. Peer-reviewed studies estimate ICT's current share of global greenhouse gas (GHG) emissions at 1.8%–2.8% of global GHG emissions; adjusting for truncation of supply chain pathways, we find that this share could actually be between 2.1% and 3.9%. For ICT's future emissions, we explore assumptions underlying analysts' projections to understand the reasons for their variability. All analysts agree that ICT emissions will not reduce without major concerted efforts involving broad political and industrial action. We provide three reasons to believe ICT emissions are going to increase barring intervention and find that not all carbon pledges in the ICT sector are ambitious enough to meet climate targets. We explore the underdevelopment of policy mechanisms for enforcing sector-wide compliance, and contend that, without a global carbon constraint, a new regulatory framework is required to keep the ICT sector's footprint aligned with the Paris Agreement.
Preprint
Full-text available
Supplementary information for the manuscript 'Machine Learning the Carbon Footprint of Bitcoin Mining'.
Article
This paper presents an overview of the main developments of cryptocurrencies and discusses their future perspectives. First, it briefly reviews the history of cryptocurrencies since the creation of Bitcoin, presents the main market trends, and discusses the key features of cryptocurrencies in the context of blockchain. Second, it analyses current cryptocurrency projects, like the Libra project, and other applications of the blockchain technology. Third, it presents a systematic economics and financial literature review on cryptocurrencies. Fourth, it examines the challenges, benefits, and future perspectives of cryptocurrencies and blockchain technology, with a focus on the environmental issues and central bank digital currencies.
Conference Paper
Full-text available
Exergetic and environmental metrics of aircraft engines are topics of paramount importance for studies examining the effects of fuel consumption & combustion on environment. Therefore, it is important to quantify these parameters so as to predict the extent of environmental impact originated from aircraft engines such as turbofans. In this study, effects of turbine inlet temperature (TIT) varying between 1450-1550 K and high pressure compressor pressure ratio (HPC PR) varying between 7.5-8.5 on several thermodynamics metrics of the turbofan engine producing thrust of 110 kN are parametrically analyzed for thirty-six cases. According to the exergetic evaluations, exergy efficiency of the turbofan engine varies between 33.46% and 36.78%, whereas the specific irreversibility production (SIP) of the engine varies between 0.1676 MW/kN and 0.1752 MW/kN due to variation of TIT and HPC PR.
Conference Paper
Full-text available
In 2019 the Earth Overshoot Day was reached in just seven months. Greenhouse gas emissions (GGE) continued to rise, as well as other forms of pollution. Surely, this year we could observe a partial regression of this trend due to coronavirus crisis, which will probably have killed around a million people by the end of the year, and will cause an estimated global economic fall of 3%. However, in 2021, according to the estimates of the International Monetary Fund (IMF), the economy may experience a significant rebound of 5.2% [1]. This, in a scenario of world oil oversupply, at very competitive prices, can lead to increased pollution and environmental degradation.
Article
The rise of centralized mining pools for risk sharing does not necessarily undermine the decentralization required for blockchains: because of miners’ cross-pool diversification and pool managers’ endogenous fee setting, larger pools better internalize their externality on global hash rates, charge higher fees, attract disproportionately fewer miners, and grow more slowly. Instead, mining pools as a financial innovation escalate miners’ arms race and significantly increase the energy consumption of proof-of-work-based blockchains. Empirical evidence from Bitcoin mining supports our model’s predictions. The economic insights inform other consensus protocols and the industrial organization of mainstream sectors with similar characteristics but ambiguous prior findings.
Article
Full-text available
This paper investigates the relationship between the bitcoin price and the hashrate by disentangling the effects of the energy efficiency of the bitcoin mining equipment, bitcoin halving, and of structural breaks on the price dynamics. For this purpose, we propose a methodology based on exponential smoothing to model the dynamics of the Bitcoin network energy efficiency. We consider either directly the hashrate or the bitcoin cost-of-production model (CPM) as a proxy for the hashrate, to take any nonlinearity into account. In the first examined subsample (01/08/2016–04/12/2017), the hashrate and the CPMs were never significant, while a significant cointegration relationship was found in the second subsample (11/12/2017–24/02/2020). The empirical evidence shows that it is better to consider the hashrate directly rather than its proxy represented by the CPM when modeling its relationship with the bitcoin price. Moreover, the causality is always unidirectional going from the bitcoin price to the hashrate (or its proxies), with lags ranging from one week up to six weeks later. These findings are consistent with a large literature in energy economics, which showed that oil and gas returns affect the purchase of the drilling rigs with a delay of up to three months, whereas the impact of changes in the rig count on oil and gas returns is limited or not significant.
Article
The paper deals with the cryptoeconomy impact on the environment. The term 'cryptoeconomy' is used for designating the emerging industry around cryptocurrencies and blockchain. Cryptocurrency mining consumes a lot of electricity. As of September 2019, the estimated annual miners' electricity consumption was 78.93 TWh. According to the upper boundary estimation, miners' carbon dioxide emissions were about 80.43 million tons of CO2, which corresponds to 0.24% of the world's total carbon dioxide emissions. The aim of this paper is to develop bitcoin mining carbon footprint estimation methodology. The suggested method is based on the miners' geographical distribution obtained by analyzing the traffic of mining pools login pages. The methodology includes 1) assessment of the miners' geographical distribution; 2) estimation of the miners' carbon dioxide emissions by regions. According to the proposed methodology, miners' carbon dioxide emissions are about 44.12 million tons per year (0.13% of the world's total emissions), which is two times lower than the upper boundary estimate.
Article
This article presents an overview of the main developments of cryptocurrencies and discusses their future perspectives. First, it briefly reviews the history of cryptocurrencies since the creation of Bitcoin, presents the main market trends, and discusses the key features of cryptocurrencies in the context of blockchain. Second, it analyses current cryptocurrency projects, like the Libra project, and other applications of the blockchain technology. Third, it presents a systematic economics and financial literature review on cryptocurrencies. Fourth, it examines the challenges, benefits, and future perspectives of cryptocurrencies and blockchain technology, with a focus on the environmental issues and central bank digital currencies.
Article
Cryptocurrencies employ different consensus protocols to verify transactions. While the “proof-of-work” consensus protocol is the most energy-consuming protocol, “proof-of-stake” and the hybrid of these two consensus protocols, which consume considerably less energy, have also been introduced. We employ portfolio analysis to explore whether energy is a fundamental economic factor affecting cryptocurrency prices. Surprisingly, our results suggest that, on average, cryptocurrencies employing proof-of-work consensus protocols do not generate returns that are significantly different from those that incorporate proof-of-stake consensus protocols. Even more surprising is that our results show that cryptocurrencies that incorporate the hybrid version of these consensus protocols generate significantly higher average returns than the other groups. A possible explanation for this phenomenon may be that the cryptocurrency market is still driven by the trust factor rather than the energy factor.
Article
The concept of zero waste is an ideal situation that will require different solutions for different categories of waste. Electronic waste (E-waste), the fastest growing category of solid hazardous waste presents various unique challenges. Electronic product repair, reuse and remanufacture (3re) are crucial for effective source reduction of E-waste and the integration of the electronics industry into a circular or zero-waste economy framework. Increasingly, 3re implementation is restricted by regulatory difficulties, particularly the invocation of copyright laws. Here, we use the examples of electronic printer cartridges and restored compact discs (CDs) to identify the challenges and to explore solutions for managing the risks associated with E-waste through circular economy and the opportunities presented by innovative Blockchain solutions. A set of international consensuses on judicial definitions, such as 3re, refurbish fake/counterfeit product and copyright exhaustion, are proposed to accelerate source reduction in E-waste management toward the goal of zero waste.
Article
This commentary considers the challenges and trade-offs in using blockchain as the facilitating digital infrastructure for degrowth projects. A blockchain is simply a distributed database. The technology is being used for a wide range of applications relevant to economic exchange and environmental sustainability. Many degrowth scholars wholly reject technical fixes for politically induced environmental crises, seeing blockchain projects as wasteful and counter to convivial social relations. Others highlight the technology's potential for facilitating redistributive and regenerative economies, but without much detail. This paper argues that if blockchain is ever to prove useful for the degrowth movement it would need to overcome challenges in three important areas: 1) building democratic and (re)distributive economies, 2) regenerating the environment without commodifying it, and 3) facilitating international alliances without imposing a particular set of values. What is certain is that technology on its own will not transcend the political struggles tackled by degrowth activists. However, under certain conditions, blockchain might make those struggles more effective.
Conference Paper
Today the integrity of digital documents and the authenticity of their origin is often hard to verify. Existing Public Key Infrastructures (PKIs) are capable of certifying digital identities but do not provide solutions to immutably store signatures, and the process of certification is often not transparent. In this work we propose Veritaa, a Distributed Public Key Infrastructure and Signature Store (DPKISS). The major innovation of Veritaa is the Graph of Trust, a directed graph that uses relations between identity claims to certify the identities and stores signed relations to digital document identifiers. The distributed architecture of Veritaa and the Graph of Trust enables a transparent certification process. To ensure non-repudiation and immutability of all actions that have been signed on the Graph of Trust, an application specific Distributed Ledger Technology (DLT) is used as secure storage. In this work a reference implementation of the proposed architecture was designed and implemented. Furthermore, a testbed was created and used for the evaluation of Veritaa. The evaluation of Veritaa shows the benefits and the high performance of the proposed architecture.
Article
Full-text available
The electrical efficiency of computation has doubled roughly every year and a half for more than six decades, a pace of change comparable to that for computer performance and electrical efficiency in the microprocessor era. These efficiency improvements enabled the creation of laptops, smart phones, wireless sensors, and other mobile computing devices, with many more such innovations yet to come. The Web Extra appendix outlines the data and methods used in this study.
Article
The electricity that is expended in the process of mining Bitcoin has become a topic of heavy debate over the past few years. It is a process that makes Bitcoin extremely energy-hungry by design, as the currency requires a huge amount of hash calculations for its ultimate goal of processing financial transactions without intermediaries (peer-to-peer). The primary fuel for each of these calculations is electricity. The Bitcoin network can be estimated to consume at least 2.55 gigawatts of electricity currently, and potentially 7.67 gigawatts in the future, making it comparable with countries such as Ireland (3.1 gigawatts) and Austria (8.2 gigawatts). Economic models tell us that Bitcoin’s electricity consumption will gravitate toward the latter number. A look at Bitcoin miner production estimates suggests that this number could already be reached in 2018.
Article
Existing studies on the evaluation of CO2 emissions due to electricity consumption in China are inaccurate and incomplete. This study uses a network approach to calculate CO2 emissions of purchased electricity in Chinese provinces. The CO2 emission factors of purchased electricity range from 265 g/kWh in Sichuan to 947 g/kWh in Inner Mongolia. We find that emission factors of purchased electricity in many provinces are quite different from the emission factors of electricity generation. This indicates the importance of the network approach in accurately reflecting embodied emissions. We also observe substantial variations of emissions factors of purchased electricity within sub-national grids: the provincial emission factors deviate from the corresponding sub-national-grid averages from -58% to 44%. This implies that using sub-national-grid averages as required by Chinese government agencies can be quite inaccurate for reporting indirect CO2 emissions of enterprises' purchased electricity. The network approach can improve the accuracy of the quantification of embodied emissions in purchased electricity and emission flows embodied in electricity transmission.
Article
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they'll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
An order-ofmagnitude estimate of the relative sustainability of the Bitcoin Network
  • H Mccook
McCook, H. (2014). An order-ofmagnitude estimate of the relative sustainability of the Bitcoin Network. https://bitcoin.fr/public/ divers/docs/Estimation_de_la_ durabilite_et_du_cout_du_reseau_ Bitcoin.pdf.
How Chainalysis helps solve crimes: Jonathan Levin tells all -Ep
Forbes. (2018). How Chainalysis helps solve crimes: Jonathan Levin tells all -Ep.62. http://unchained.forbes.libsynpro.com/ how-chainalysis-helps-solve-crimesjonathan-levin-tells-all-ep62.
The Global E-waste Monitor -2017
  • C P Baldé
  • V Forti
  • V Gray
  • R Kuehr
  • P Stegmann
Baldé, C.P., Forti, V., Gray, V., Kuehr, R., and Stegmann, P.. The Global E-waste Monitor -2017. http://collections.unu.edu/ eserv/UNU:6341/Global-E-waste_ Monitor_2017__electronic_single_ pages_.pdf.
Inside Visa's Data Center
  • T Kontzer
Kontzer, T. (2013). Inside Visa's Data Center. Netw Comput.. https:// www.networkcomputing.com/ networking/inside-visas-datacenter 15. VISA (2018). Annual Report 2018. https://s1. q4cdn.com/050606653/files/doc_financials/ annual/2018/Visa-2018-Annual-Report-FINAL. pdf.
The Netherlands *Correspondence: alex.de.vries@pwc
Experience Center of PwC, Amsterdam, The Netherlands *Correspondence: alex.de.vries@pwc.com https://doi.org/10.1016/j.joule.2019.02.007
  • Bnp Capgemini
  • Paribas
Capgemini, BNP Paribas (2018). World Payments Report 2018. https:// worldpaymentsreport.com/wp-content/ uploads/sites/5/2018/10/World-Payments-Report-2018.pdf.
  • C Bendiksen
  • S Gibbons
  • E Lim
Bendiksen, C., Gibbons, S., and Lim, E.; The Bitcoin Mining Network (2018). Coinshares. https://coinshares.co.uk/wp-content/ uploads/2018/11/Mining-Whitepaper-Final. pdf.