We have been talking about it for several years now, but the phenomenon of cryptomoney is now being debated. These currencies, which are increasingly used by everyone around the world, are accused of being energy-intensive. Indeed, in order to "unblock" Bitcoins, the minors must solve complex problems requiring the use of specialized software and ultra-powerful computers that consume a lot of energy. It is estimated that the energy consumption for mining cryptosystems amounts to 0.12% of the world's electricity consumption. (1). Making a transaction in bitcoins would thus result in consumption equivalent to that of eight American households to live for a day. However, some companies that are experts in mining cryptomoney are trying to find fair and sustainable solutions and are trying to prove that mining does not rhyme with waste.
Un Nature magazine reportbased on a study conducted by researchers at the Oak Ridge Institute in Cincinnati, Ohio, demonstrates that the transaction of cryptomoney explodes energy expenditure. This report is not the first to talk about excessive consumption of electrical energy. The site Digiconomist has created in August 2018, a Bitcoin Energy Consumption Index to provide an overview of the amount of energy consumed by the Bitcoin network. Bitcoin's electricity consumption this year is estimated at 16.1 TWh. Digiconomsit also noted that the Bitcoin network as a whole consumes more energy than a number of countries, also based on a report published by the International Energy Agency. If Bitcoin were a country, it would rank about the same as Tunisia in terms of electricity consumption. (Source The Guardian).
Last weekend, another Nature Climate Change study argued that if the adoption of cryptography were to proceed at the same pace as other technologies, the mere mining of these virtual tokens could lead to a global warming of around 2°C within three decades.
Allegations correlated by a report relayed on November 5 by Nature.com, finding that mining cryptomoney was more energy intensive than mining copper, gold and platinum. Estimates are as numerous and varied as the price of the various cryptomoney businesses. To get a clearer picture, the floor is given to Owen Simonin, founder of Just Mining and an expert in cryptomoney.
UP': Can you briefly remind us what bitcoins and cryptography are in general?
Owen Simonin : Briefly, it's not easy. Let's just say that cryptography is one of the first ways to exchange value without using a trusted third party (bank or other organization) and in an equally secure, sometimes cheaper and faster way. All cryptomoney is based on Blockchain technology, it is this technology that allows this exchange. Bitcoin is the first blockchain and Bitcoin is the first cryptocurrency (the nuance is at the level of the capital letter). Bitcoin is today the best known and most widely used cryptomony.
The central idea of cryptography is to provide an alternative to the current economic system by giving "power" back to the users. Moreover, the creation of Bitcoin in 2009 is directly linked to the financial crisis that has affected the whole world. The founders of Bitcoin wanted to propose a new solution to mitigate a possible new crash.
UP':Do you think the blockchain heralds the dawn of a new era?
OS : Certainly, the blockchain is a technology offering multiple possibilities. It is useful in most sectors of activity. Its potential is really interesting and there are already concrete application cases that work perfectly. People who study or closely follow blockchain explain that it could have the same impact on society as the Internet had a few years ago. It is still too early to say whether the blockchain will actually change the way society works, but it has the potential to do so.
UP': How does cryptography facilitate a commercial, financial or other transaction?
OS : Cryptomoney has an international dimension. They are not limited to a geographical area and thus make it possible to carry out exchanges on a worldwide scale and without any currency problems. Cryptomoney also addresses the problem of transaction delays. One of the major challenges for companies is cash management. Most bank transfers for customer credit take on average 1 to 3 days (working days), whereas the sending and receiving of transfers in cryptomasks is almost instantaneous on some blockchains. The largest blockchains process transactions in an average of 10 minutes and up to 1 hour.
Finally, because there is no physical intermediary (in this case the bank), transaction costs are much lower. Bank charges are often pointed at, the blockchain makes it possible to do without them.
UP': Can you explain to us what 'mining' of cryptomoney is?
OS Mining: Mining is a method of securing the block. When a transaction/exchange is carried out on the blockchain, it must be validated by so-called miners. They act as a trusted third party. In the traditional economy, for a bank exchange for example, it is the bank that will play this role of trusted third party. The miners are spread all over the world, they are computer machines that work for the blockchain network. In return for the work done, the miners receive a commission in the form of cryptomoney. This is how the new cryptomonnages are issued. In the blockchain economy, there are no machines that print new banknotes, the new cryptomonnages are "printed" according to the volume of exchange on the blockchain.
Mining is therefore a method of securing the blockchain and also the activity of generating cryptomoney. It is for this reason that many people invest in mining because everyone can become a miner, it is enough to have your machine and you can participate in the security of the network while being paid in cryptomonnages.
UP': Do cryptomoney really represent a danger for the ecology as it is said? Why is that?
OS Yes and no, it's actually a bit more complicated than that, we hear far too much misinterpreted information about it. Crypt mining is the most widespread security method (I'll come back to this in more detail in the next question), it's a very energy-intensive activity. Mining requires a lot of electricity, in this sense it is not very good for the environment. Afterwards, to say that cryptomoney is a danger for the ecology, ok, but in relation to what?
On the same scale, the traditional economy consumes more energy than the economy of cryptomoney. Between vending machines which are less and less used, but still consume as much energy, even at the level of small rural bank branches which are less and less frequented and consume a lot, we add to this the machines used by traders, the big bank offices... Finally, isn't it the economy as a whole that represents a danger for the environment? I don't have the answer at my level, but when I hear that cryptomoney is a danger for the ecology I answer that they are not more dangerous than € and $.
UP': What does this "pollution" by cryptomonnages consist of? Digital pollution / functioning of the internet network?
OS : This pollution is essentially linked to energy consumption, at the level of the internet network, there is no particular danger.
UP': Are there solutions to minimize these effects? What is Just Mining's solution to answer this? Are some currencies less energy consuming than others?
OS : I will make a global answer to these three questions.
Yes, there are solutions. The first and simplest to implement is simply to manage the source of the energy used. Renewable energies are used enough for the mining of crypto-currencies. We have many clients who own hydroelectric dams and use the excess energy produced to mine. This system makes it possible to invest in the cryptomonnages while respecting an environmental ethic and also to optimize the profitability of the dam.
At Just Mining we are working on several points in this more "eco-responsible" direction. We also operate dams on our own behalf and on behalf of our customers, but these are not the only solutions. Today we are working on two subjects which are heat recovery and hardware improvement. We are entering the R&D phase on these two areas, but unfortunately I can't say any more for the moment. The difficulty is to find solutions that are interesting from an environmental point of view, but without compromising the economic part. We are optimistic that we will be able to propose new solutions as early as 2019.
There are indeed less energy-intensive currencies. To make it simple without going into too technical details, we have previously talked about mining, it is a method of securing the blockchain (we talk about proof of work). There are other methods such as the proof of stake, the proof of capacity...which are less energy-consuming. Today, the proof of work is the most secure and therefore the most used method, but all the players in the blockchain are working to make these other methods as effective. Then, in mining there are several processing algorithms, some are heavier, longer or more complex, these characteristics make the energy requirements vary for the same volume of data exchanged.
So, while cryptocurrency transactions require an astronomical amount of energy to date, they now represent only a tiny fraction of the mass of dematerialized transactions that take place every second. According to the same Nature study, nearly 315 billion banking transactions are carried out every year worldwide, including the Visa system. Those in Bitcoin represented only 0.033% in 2017.
Bitcoin's energy consumption between March 2017 and February 2018 (source: digiconomist.com)
An article from last NovemberAfter numerous detailed calculations, Hackernoon estimated that the infrastructure and everything around the VISA payment system consumed around 100TWh per year, twice as much as the Bitcoin blockchain at present. At first glance, the VISA system would therefore be much more greedy than the Bitcoin blockchain, but it is important to qualify this data. The VISA system supports 141 billion transactions per year, whereas the Bitcoin blockchain supported "only" 300 million transactions between February 2017 and March 2018.
Interview by Fabienne Marion
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