It seems that every time someone uses the words "Bitcoin" and "Energy Consumption" in the same sentence, some people say that the network has a huge impact on the environment, and some people say that these concerns are exaggerated.
There is no doubt that miners can produce more bitcoin in areas with lower energy costs. Researchers at Columbia University and University of Paris-Sacry point out in a white paper published two weeks ago that modifying PoW to encourage the use of photonic chips in mining hardware can reduce energy consumption to less than one-tenth of current levels . This will effectively eliminate most of the advantages that miners enjoy in areas with lower electricity costs.
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Michael Dubrovsky co-authored the "Certificate of Optical Workload" with Marshall Ball, a doctoral student in computer science at Columbia University, and Bogdan Penkovsky, a postdoctoral fellow at the University of Sacramento in Paris. Dubrovsky is the co-founder of PoWx, which is developing hardware and software to change the PoW power struggle.
"We think that in large cities around the world, there is a lot of suppressed mining demand, and many people want to run one or several machines at home. At present, this is not possible without cheap electricity."
Instead, most of the bitcoin mining in the world is conducted in Eurasian countries. China's mining pools control most of Bitcoin's computing power, and some worry that China may limit the technology and destroy the Bitcoin network. In Europe, Russia is sending cheap energy to cryptocurrency mining for independent countries in Moldova and Ukraine, while readjusting the geopolitical order.
Switching from PoW to PoS solves the energy problem because computers are no longer needed to crack mathematical problems. But PoS itself has challenges. This type of mechanism requires people to hold a certain amount of tokens, which may promote network centralization. This is why Dubrovsky and his colleagues have been working on photonic integrated circuits, which can be used to significantly reduce the energy consumption of PoW mining.
In order to ensure the security of the PoW network, miners need to face some economic costs, but not necessarily electricity costs. By deploying a new algorithm-optical proof of work (oPoW), blockchain systems can increase economic costs and reduce energy consumption in the form of hardware capital expenditure (CAPEX). Dubrovksy said, "If energy accounts for only 5% of your total budget, there is no reason to build a $ 0.04 / kWh mine in Mongolia."
oPoW will change the PoW algorithm to operate on silicon photonic chips, resulting in a new type of mining machine. The authors say that this is different from "previous attempts to modify the PoW algorithm to support a specific hardware paradigm" (such as ProgPoW) because this attempt has nothing to do with ASIC resistance. In contrast, photonic chips can transform ASICs into super ASICs that run at lower cost.
The MIT Technology Review recently published an article entitled "Can Photonic Chips Save Bitcoin?" Article. First, in theory, photonic chips are more efficient, but this has yet to be confirmed.
Dubrovksy says this is partly true. Researchers are hopeful, partly because "from startups to Intel, many organizations are working to commercialize these calculations."
"Under what circumstances they will be able to beat electronic devices, it remains to be seen. OPoW is a good sandbox application because we built the algorithm specifically for the advantages and disadvantages of the technology."
These authors did not predict actual energy savings in the white paper. To that end, Dubrovksy said, people need to wait for their forthcoming "conference paper," which will contain "more detailed models." However, the researchers did say that they expected "a mature oPoW network to spend 10-100 times less on energy."
In the end, they didn't show how the algorithm would change existing power cost differences, which is still important because everyone's hardware costs are about the same, but power costs won't.
Dubrovksy says that while differences in energy costs still exist, their impact can be minimized:
"If the main determinant of mining costs is capital expenditures, and energy is a secondary project (as opposed to today), things like capital costs and operational risks become very important. The rule of law, stability and low interest rates The state will attract large mining companies. "