Digital experts aim for 'Alberta solution' to environmentally friendly cryptocurrency mining
CALGARY -- Lead innovators and experts in the world of digital cryptocurrencies are putting Alberta on the map as a prime destination to reduce the carbon intensity required to create them.
Although currencies like Bitcoin (BTC), ether (ETH) or Dogecoin (DOGE) don’t physically exist, they do in fact require a great deal of energy to produce in what’s known as a process called mining.
Mining is when new cryptocurrencies enter into circulation, which is performed using very sophisticated computers that solve extremely complex computational math problems.
According to the Cambridge Centre for Alternative Finance, energy used to create Bitcoin alone is now equivalent to the annual carbon footprint of the entire province of Ontario, which hovers around 115 annual terawatt hours (TWh).
In fact, a single transaction of Bitcoin has the same carbon footprint as 680,000 Visa transactions, or 51,210 hours of watching YouTube.
Southern Alberta Institute of Technology (SAIT) finance professor Harry Vadalkar hopes to solve this issue right here at home.
He says Alberta is the sunniest province in Canada with plenty of solar energy potential and its cooler temperatures can also help reduce the cost of cooling the mining servers.
“We have a lot of solar potential, a lot of renewable potential, plus it is cold six months of the year so you don’t spend too much energy cooling down those mining servers,” Vadalkar said.
“The other big part in this is that Canada has a carbon tax regime, so if Bitcoin miners don’t use clean energy they have a carbon footprint and have to pay for that so that again incentivizes them to search for low carbon intensive resources.”
Vadalkar, who previously helped found companies that deal with cryptocurrencies like Bitcoin, adds that Alberta also has flare gas and stranded gas assets that can also be used for mining.
Meanwhile, Keith Stewart, senior energy strategist with Greenpeace Canada, notes that the increased carbon footprint of cryptocurrency mining, gives tech experts a chance to adapt responsibly.
He says crypto like Bitcoin uses coal powered electricity and there are other more sustainable ways to generate such high volumes of computing power.
“It points to the broader issue that as the internet becomes more apart of our lives, as the cloud gets bigger, we need to make sure we’re running it on clean energy so it’s not just bitcoin it’s our entire electricity system that we need to decarbonize,” Stewart said.
"Of the attraction, I think that is if you clean up that grid, clean tech jobs are going to come with it, but when we’re looking at things like digital currency, we really have to start from basic design principles to minimize energy use.”
ENIVORNMENTAL IMPACT OF CRYPTOCURRENCY MARKETS
Tech mogul and Tesla CEO Elon Musk recently made headlines when he announced the company would be suspending all vehicle purchases using Bitcoin because of the increased use of fossil fuels for mining and transactions.
Musk says Tesla won’t be selling any Bitcoin and won’t use it for transactions until mining transitions to more sustainable energy.
Tesla appeared to be Bitcoin’s biggest supporter earlier this year after a $1.5 billion investment and announcement that it would accept the crypto as payment for its products.
As the relationship soured however, the price crashed last week from a previous record high of US$65,000 to as low as US$38,000 earlier on Wednesday.
Matthew Haddon, who is the CEO of BitNational Exchange in Calgary says he’s seen increased engagement on social media related to more energy efficient cryptocurrencies, but says 70 per cent of Bitcoin is renewable energy anyway.
“I see his (Elon Musk’s) comment about coal and coal being a big part of bitcoin mining, it’s about eight to 12 per cent of coal and that’s mostly out of China right now,” Haddon said.
“But Alberta has done a really good job especially down in Lethbridge where instead of flaring off gas into the atmosphere, they’re hooking up natural gas generators and running massive mining farms down by Lethbridge.”
Haddon adds that Alberta has some of the lowest energy costs in the world so a lot of miners are coming to Alberta to do deals with natural gas companies.
One of those software companies is Calgary-based GuildOne, which conducted the world’s first blockchain oil and gas royalty transaction on the Energy Block Exchange (EBX).
CEO James Graham says the Bitcoin algorithm itself is very energy intensive, but his company doesn’t need an entire network of computers to agree or validate a transaction.
Instead, GuildOne uses private blockchain, which is a new breed of applications that don’t require mining at all, just a small group of counterparties to agree to a trade.
“There are algorithms being developed using proof of stake and they are very environmentally sensitive,” said Graham who is currently working on a project called ‘Eco Tokens.’
The entire concept is to be net-zero on a block chain and as we see Calgary, Alberta and Canada’s industries trying to whether that net-zero effect, it will be very interesting to see those same types of requirements from investment perspectives being applied in the cryptospace.