Blockstream Mining is a blockchain-focused company that recently came into the spotlight of not just one important industry, but several of these. These industries are, beyond cryptocurrencies and blockchain, energy production and tech ventures that utilize renewable sources of power. All of that began when the company revealed that it has struck up a partnership with Macquarie Group, an Australian conglomerate working in the financial domain. The aim of that partnership is the development of mining facilities for blockchain cryptocurrencies that utilize the proof-of-work principle like bitcoin.
However, the scope of these cryptocurrency networks is much wider than just the BTC token. For all of them, Blockstream Mining is planning to define systems and protocols that would allow the same network to function in the same way – in other words, to keep the proof-of-work active as it now stands – but still, make them green. That would entail the use of renewable energy sources for the purpose of feeding the waste setups as they calculate inside of the demanding, core mathematical ecosystems that all of these networks have in common with each other.
The problem of Crypto Power Consumption
Bitcoin, like many other cryptocurrencies, is based on the principle of proof-of-work. This means that the computers that makeup mining rigs, but also the entire mining pools, have to show that they are supporting the same network actively and doing it all of the time. To do that, they spend electricity on complex mathematical calculations that are the process of crypto mining, besides their primary task of completing transactions and making sure that they are verified and written into the shared and evenly distributed ledger.
For both of these, the mining entities, no matter if they are companies behind mining pools or individuals who run personal mining nodes, are rewarded with “mined” blocks of bitcoin or any other digital currency they might be working in. The process of mining is, however, using vast amounts of energy from the electrical grid. This electricity, especially in places like China, is produced from the burning of fossil fuels. Because of that, the first part of 2021 saw a lot of negative publicity for the same domain, including a well-covered 180-turn that Elon Musk and his company Tesla Motors did to the crypto domain.
Musk, Crypto, and Energy Usage Flip-Flop Arguments
The notion that there is a lot of wasting of energy in cryptocurrencies is as old as the proof-of-work concept. In fact, the very start of the bitcoin network clearly stated that the energy expenditure is the actual physical representation of the underlying value in the same setup. In many ways, bitcoin is not made from thin air precisely because it has the energy usage that the miners need to pay for to prop it up. A BTC token in a digital wallet is not like a text document on a random computer’s hard drive because, among many other things, a lot of energy goes into the network that verifies it and makes the same coin possible.
Yet, all of this was information that Elon Musk knew too well long before he decided to push his company, Tesla Motors, into first buying cryptocurrencies for its corporate coffers and then announcing that he is planning to have BTC payments as official means of purchasing these vehicles. However, not long after that statement, Musk did a completely opposite thing and said that the payment function is now off the table because of the energy consumption of the bitcoin network. The same move was one of the key factors that brought about the May 2021 crypto market crash and whipped around 50 percent from both token prices and network market caps. The same flip-flop moment was a heavy price to pay but it did force the debate related to sustainability and renewable energy sources to the table.
The news related to Blockstream plans is a perfect example of the industry trying to find solutions to the energy consumption issues. In a blog post, the company said that its partnership with this big financial company will first include hosting for mining hardware. The same would come with a potential to scale up in a range of stages as green energy production infrastructure is gradually deployed. Also, the entire project will be based fully in North America.
This is not an anomaly in the developed countries and their cryptocurrency industries. A Canadian company called The Victoria recently teamed up with Square Inc, which is run by Jack Dorsey of Twitter and Asker ASA. This is a Norwegian holding company with experience in a range of infrastructure projects. Together, they too will, like Blockstream, work on building bitcoin projects that utilize renewable energy sources. So, this is showing that the current initiative from Blockstream is no anomaly, but a growing trend inside of the renewable energy industry ecosystem.
One of the key factors in any novel business sphere, including things like esports and social media, is the ability to catch the headlines but also the imagination of the global audience. Blockstream already did that previously with its Satellite network. The idea of this space-based infrastructure is to allow different devices inside of the crypto field, more precisely the bitcoin network, to communicate with each other through a satellite connection, which would be independent of the broader internet infrastructure. That would allow people and businesses located in remote areas to connect to the BTC network even if they do not have access to regular or cellular internet.
In the case of renewable energy expenditure to mine bitcoin, that means that production facilities – in this case, the crypto mining hubs – could be more easily moved into remote and inaccessible locations. These could cover places near waterfalls where the same water would be used for free cooling, or near volcano-prone areas, which could generate thermal sources for the production of electricity. While a satellite-based connection is not necessary for this to work, having one makes the entire venture much more feasible and places it inside of a closed setup run by the same business conglomerate. That means that the profits too would be increased for any potential investors.