Here’s why bitcoin miners won’t go for a more climate-friendly alternative
Proof of Work mining is inherently wasteful, but don’t expect a switch any time soon
Proof of waste to proof of stake?
Bitcoiners don’t trust bankers, taxmen and other meddling middlemen. Because there are no banks with bitcoin, the job of keeping the books straight is given to a global network of specialist computers. The owners of these computers compete for bookkeeping tasks in return for the transaction fees paid by network users. They also get a few newly minted bitcoins as a thank you.
This competitionis known as Proof of Work (PoW) mining. It works like an ever-expanding game of hungry hippos. The more players that join the contest, the more work each hippo needs to do in order to win anything. If a new hippo with green intentions joins the game, everyone at the table has to work harder. Players powered by coal in Kazakhstan, or fossil gas in Texas, then belch out extra smog.
The higher the bitcoin price, the more the dirty hippos are prepared to waste on coal and gas until their costs for doing so are equal to their reward. And so, Proof of Work is proof of waste. And this is waste by design: Bitcoiners call this inefficiency “the feature, not the bug”.
Greenpeace hopes the bitcoin community could learn to love Proof of Stake (PoS) instead. With the network running on PoS, bitcoin’s bookkeepers would need to stake a prescribed minimum number of bitcoins as a security deposit. If they validate fraudulent transactions, they lose their stake. This disincentive keeps the network secure.
A number of blockchains, including Cardano, EOS, and TRON already use a PoS system, where token holders vote for the most qualified block producers. While bitcoin currently uses millions of mining computers, these PoS networks usually maintain an assembly of around 20 machines using a comparably minuscule amount of energy, taking turns to receive bookkeeping rights.
Code blockers
For bitcoin, coding these changes would be straightforward. Greenpeace claims that only 30 people – the largest mining outfits, exchanges like Coinbase and Binance, and code developers – would need to agree the switch to PoS.
But this ignores the fact that everyone would need to run the upgraded software. On average, to successfully mine bitcoin once per week requiresshelling out around US$1.8 million(£1.4 million) on hardware. Most miners are protective of these investments and conservative when it comes to amending the software code that underwrites their winnings.
For this reason,Chris Bendiksen, a commentator at thecryptocurrencywebsite CoinShares, puts the chance of Bitcoin ever moving to PoS at 0%. “There is no appetite among Bitcoiners to destroy the security of the protocol by making such a move”,he says.
Bitcoin is no stranger to coding stalemates. An amendment to fix intermittent congestion issues and stabilize transaction fees wasproposed in 2016. Despite being a relatively simple fix, the change split the bitcoin community, with the vast majority continuing to support the slower, more expensive status quo.
Even if some users were prepared to ditch PoW, the original bitcoin network would continue in some form. This PoW version would keep the name, branding, super-rich disciples, and polluting PoW miners. The PoS offshoot could end up as just anotherdisappointing experiment.
AnotherPoW heavyweight network, Ethereum, has been promising a shift to PoS since birth. But this migration has remainedjust around the cornerfor several years.
Starting a PoS network from scratch is another option. But there is already aBitcoinPoScryptocurrency. Aside from an early flurry of interest, it’sattracted few supporters.
Tackling crypto greenwashing
Many Bitcoinersscoffedat the Greenpeace campaign. After all, much of thefunding for this marketing missioncomes from billionaire venture capitalist Chris Larsen, co-founder of rival cryptocurrency Ripple.
Larsen’s Ripple was also an original member of the UN-backed Crypto Climate Accord, an organizationconvened in April 2021to promote more sustainable cryptocurrency trading. In response,prominent bitcoin advocatesestablished the Bitcoin Mining Council – a public relations groupaimingto “defend bitcoin against uninformed and hostile energy critics”, like Larsen.
Some argue that governmentsin EuropeandNorth Americashould followChina’s leadand ban PoW mining.
Retaliatory campaignsfrom bitcoin advocates are ramping up, and their greenwashing appears to be winning. The European Parliament recentlyrejected a billto ban PoW mining across the EU. The UK government alsofearsan exodus of crypto trading talent for other financial centers.
ResearchI have led suggests that effective regulation of bitcoin will not come from charity appeals. A globally coordinated ban, led by governments, is likely to prove the most effective solution.
This article byPeter Howson, Senior Lecturer in International Development,Northumbria University, Newcastleis republished fromThe Conversationunder a Creative Commons license. Read theoriginal article.
Story byThe Conversation
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