The use of proof-of-work (PoW) consensus in blockchain technology has long been criticized for its environmental impact, with numerous reports revealing that the Bitcoin (BTC) network uses more energy than many small countries. To tackle the problem, many blockchain developers and mining companies have searched for solutions in the form of renewable energy, different consensus methods, and more efficient mining chips.
While miners continue to focus on areas that offer renewable resources such as hydro-electric power, critics have pointed out the caveats that such so-called renewable resources impose. While hydro-electric power may seem an obvious choice, it poses considerable ecological implications in the form of land destruction and greenhouse gas emissions.
New Bitmain Chips
Bitmain, the world’s largest supplier of crypto mining chips, recently reported $500 million in losses in Q3 of 2018 following an ongoing cryptocurrency bear market. In an attempt to combat rising energy costs, the supplier has now announced a new chip that it claims will be 28 percent more powerful than previous ones.
The new chips, dubbed BM1397, will use only 30 joules of energy per terrahash (TH), meaning they can compute 33 terrahash with just 1 kilowatt of power. In late October last year, the Bitcoin hashrate briefly surpassed 60,000,000 TH/s but has since reduced to around 40,000,000 TH/s as network activity declines.
Another key development in the blockchain space is the Lightning Network, a second-layer network protocol that greatly improves speed and reduces costs via off-chain transaction confirmations. By creating dedicated channels between users that can facilitate thousands of transactions for as long as they remain open, the network promises to remove huge amounts of unnecessary minor transactions that clog up the network.
However, the Lightning Network has received criticism of its own due to its centralized nature and potential to tie up resources in the network. Lightning Network proponent Andreas Antonopoulos claims this issue is, in fact, more beneficial than the current situation where most Bitcoin assets are held on highly-funded, centralized exchanges.
Bitcoin Mining Reward Halving
The Bitcoin network is actually originally designed in a way that supports sustainability, meaning the energy consumption problem may be able to resolve itself without the need for intervention. The Bitcoin protocol includes a fixed piece of code which automatically halves the amount of BTC paid out for mining a block after every 210,000 blocks that are confirmed.
This means that if the current hashrate continues to climb within its current trajectory, the Bitcoin mining reward will half in about 15 months time. When this happens it will become far easier to confirm transactions, meaning far less energy will be required to do so. It also means miners will be less incentivized to continue mining, but in the past, this issue has always balanced itself due to the increased ease of mining.