We’ve known for a long time that Bitcoin is unsustainable, but now we’re beginning to get a look at just how unsustainable it really is. One major drawback of the cryptographic system underlying bitcoin is that it takes an incredibly large amount of electricity to run the hashing algorithms that make the cryptocurrency work. This week, researcher Sebastiaan Deetman took the time to plot just how bad things could actually get over at Motherboard. The conclusion? If pessimistic but not unrealistic projections hold, by 2020 Bitcoin could require more than 14 Gigawatts of electricity just to run. That’s equivalent to a small modern country — like Denmark, for instance.
In simple terms, this means that Bitcoin is doomed — but cheer up, because maybe it’s actually not. See, Bitcoin may end up being remembered as an interesting footnote in the evolution of finance, but the technology allowing it could be have much wider impact. Called the blockchain, it could help to revolutionize (or at least greatly streamline) many huge industries, from securities trading to transportation to global food product tracking. There are even initiatives toward blockchain-based smart cities coordinating people’s daily routines with distributed ledgers.
As a result, some of the biggest and most established companies in the world signed on to help save the blockchain via the Open Ledger Project. The idea is to try to sanitize and strengthen future development of the blockchain, a software product that was developed and released anonymously and has been modified in an extremely haphazard way. Academia recently announced its own a major push to rescue the blockchain, called bsafe.network. This looks to be an “NSFNet for the blockchain,” or in other words the sort of strong, reliable development foundation that allowed the still-untested internet to bear the incredible stress we put on it in the 80s and 90s.
But, the Bitcoin energy study does make multiple predictions — is it possible that Bitcoin will go down a more optimistic path? Well, according to Deetman, the best plausible outcome by 2020 would see the Bitcoin network using about 417 megawatts, or about 1% the pessimistic projection. That’s still about double the estimated current draw, but it could be borne by the world’s ever-expanding energy infrastructure — even just to support Bitcoin. That’s not counting the sort of cryptographic load that would be needed to adequately run all the .
What could bring about this future? Well, Bitcoin is soon expected to halve the reward for mining a block — for completing a cryptographic has function and winning the reward raffle this triggers. Some think this will make some inefficient forms of mining unprofitable, requiring more energy than they can pay for in Bitcoins mined, which would not be good for Bitcoin per-se, but would certainly reduce its power draw. More importantly, the harsher the margins per block mined, the more power-efficient the average mining hardware should become.
In the long term, though, blockchain tech has no choice but to modernize. It has to either start running on much, much more power-efficient hardware, or find a way of securing the blockchain with less computationally intensive algorithms. The problem with that idea is that the hash problems serve two functions: they secure the system, and they put an effort barrier between users (miners) and earning new units of cryptocurrency. A cryptocurrency is always needed in some fashion, to incentivize providing the computer time needed to keep everything secure, and the difficulty of providing that computer time means the economy rewards investment with competitive advantage.
In other words, there’s no easy solution. But the potential in blockchain technology is great enough that a solution will almost certainly be found.