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How Blockchain Technology Can be Utilized to Improve Renewable Energy Industry

The world is feeling the effects of climate, more so over the past months. Record-high temperatures, heat waves, extensive wildfires, longer drought periods and rising sea levels due to ice caps melting are just some of the consequences of the accumulated greenhouse gasses trapping heat energy in the atmosphere.

The World Weather Attribution recently published a report stating that “climate change more than doubled the likelihood of extreme fire weather conditions” that brought about record-breaking wildfires in Eastern Canada, which started in April and continues to burn today. So far, 17 deaths have been directly linked to the fires, while over 25,000 people have been displaced.

This is just one clearcut example of how climate change is negatively affecting the world. The emission of high concentrations of greenhouse gasses into the atmosphere that brought about climate change is due largely to human activity. This is because each activity that uses fossil fuels, like electricity and gasoline, and leaves behind a carbon footprint, which is how the emission of greenhouse gasses released into the atmosphere is calculated.

For this reason, it is extremely important to reduce the carbon footprint of all activities as much as possible. Initiatives and policies to combat climate change through carbon footprint reduction have been implemented all over the world. In fact, the United States, under the leadership of President Joe Biden, has announced its goal of being a carbon neutral nation by the year 2050.

Defining Renewable Energy

To this end, both the public and private sectors are eagerly researching and developing the use of renewable energy, which is energy acquired from natural sources like water, wind and sunlight that would leave little to no carbon footprint. For instance, battery-electric cars that are charged using electricity derived from solar technologies emit “zero emissions” on a daily basis.

Manufacturing the lithium-ion battery does use fossil fuels. And according to the Massachusetts Institute of Technology (MIT) Climate Portal, “building the 80 kWh lithium-ion battery found in a Tesla Model 3 creates between 2.5 and 16 metric tons of CO2.”

According to the U.S. Department of Energy, a car running on gasoline emits 11,435 lbs. of CO2 per year, while a fully electric vehicle emits only 3,932 lbs. The emission of a fully electric car actually comes from charging it without using renewable energy. It produces “zero emissions” when charged using solar energy, for instance.

“Electric cars are actually much, much better in terms of the impact on the climate in comparison to internal combustion vehicles. And in time, that comparative advantage of electric cars is going to grow,” MIT Joint Program on the Science and Policy of Global Change Deputy Director Sergey Paltsev said. “Once we decarbonize the electric grid—once we get more and more clean sources to the grid—the comparison is getting better and better.”

With electricity and gasoline-fueled modes of transportation the major sources of greenhouse gasses, this shows how the widespread use of renewable energy will aid in significantly reducing the emission of greenhouse gasses into the atmosphere.

Measuring Blockchain Technology’s Energy Consumption

Blockchain technology is a decentralized and distributed ledger that enables the immutable recording and storage of data. Its first functional implementation is Bitcoin, the pioneer digital currency. Because of this, many still equate it with Bitcoin. However, blockchain is a powerful technology that when developed and harnessed properly

A couple of years back, electric car manufacturer Tesla CEO Elon Musk drew attention to Bitcoin mining consuming an insane amount of energy that is bad for the environment. This quickly became a hot issue, and regulating bodies began scrutinizing Bitcoin’s energy consumption and sustainability.

Although there may not be a direct link, but Iran and China, two that placed in the top 10 bitcoin mining countries, decided to ban Bitcoin mining after Musk’s statement. For Iran, it is to mitigate the nation’s frequent blackouts. This shows the extensive effect of Bitcoin mining’s high energy use, and blockchain was inevitably viewed together with it as an unsustainable technology.

A blockchain that runs on the Proof-of-Work mechanism has an extremely high energy consumption due to its equipment and facility requirements. On top of having supercomputers running 24/7, the facility has to be in a temperature-controlled environment, needing air-conditioning units that consume a lot of electricity. This is where the misunderstanding about Bitcoin mining’s energy consumption comes from.

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However, neither Bitcoin nor blockchain actually has a high energy consumption given the correct parameters and calculations. First off, energy consumption when it comes to blockchain is measured in the amount of electricity it uses per transaction. The higher the number of transactions a blockchain completes, the lower its energy consumption.

Second, the Bitcoin that Musk was referring to was Bitcoin Core (BTC) and not the original Bitcoin. The BSV Blockchain is actually the one that restored the original Bitcoin design according to the Bitcoin white paper Satoshi Nakamoto wrote. BTC is just regarded by the majority as Bitcoin since it retained the original ticker symbol of BTC.

Musk is right in that BTC is unsustainable because it only has 1MB data blocks that contain about 2,000 transactions each and processes a maximum of seven transactions per second (TPS). On the other hand, BSV Blockchain completes 4GB blocks that contain at least 2 million transactions with a throughput of 50,000 TPS.

If an average block consumes about 2.9 million kilowatt hours (kWh), then BTC’s energy consumption would be 1,450 kWh/txn, while BSV’s would be 1.45 kWh/txn. And because BSV Blockchain is capable of unbounded scaling, meaning it can increase its block size and throughput according to market demand, its energy consumption will be further reduced in the future. This is ultimately why Bitcoin (as BSV) and blockchain are both sustainable and energy efficient.

Using Blockchain for Renewable Energy Technologies

Establishing blockchain’s sustainability and energy efficiency does not mean that it cannot benefit from the use of renewable energy. However, while it is still not yet possible due to renewable energy’s fluctuating supply, blockchain, in turn, can help the industry further develop.

Blockchain can actually help renewable energy grids’ inconsistent supply and demand become more stable. For instance, the blockchain-based platform Brooklyn Microgrid in Germany enabled the peer-to-peer trading of excess solar energy between homeowners. Because blockchain allows for each home’s energy production and consumption to be monitored, the platform is able to ensure a more balanced supply and demand.

Blockchain can also be extremely useful when it comes to carbon offsets, which reduce greenhouse gas emissions through trading certificates. Firms from different industries can offset their emissions by buying credits from other companies. Because blockchain is primarily a ledger or database, it can provide a way to easily and more accurately record, track and verify carbon trading transactions.

On top of making records immutable and virtually tamper-proof, a public blockchain can also provide transparency that allows for governments, agencies and even individuals to monitor each carbon credit traded from issuance to retirement. In this way, each transaction is ensured to be authentic and has not been double counted. It also makes way for improved accountability that will discourage firms from cheating.

By using blockchain, the renewable energy industry’s efficiency and productivity can also be boosted, at the same time reducing costs as compared to running traditional energy systems. For one, record-keeping need not be so labor-intensive as each transaction can be automatically recorded on the blockchain. Increasing productivity and reducing costs will ultimately lead to renewable energy being accessible to a wider market.

Climate change is a global issue that needs to be addressed as fast as possible. The current weather-related incidents the world is experiencing should be evidence enough of how urgent it is. Blockchain is a technology that when applied properly can greatly aid in the fight against climate change.