Why are blockchains burning all that coal?

One of the most com­mon cri­ti­ci­sms of block­cha­in tech­no­lo­gies con­cerns the waste­ful use of reso­ur­ces, spe­ci­fi­cal­ly, elec­tric ener­gy. Block­cha­in mining farms, the argu­ment goes, use in total as much ener­gy as a small coun­try, and they spend it all on use­less com­pu­ta­tion, puz­zle solving. In prin­ci­ple it is true, but only when you look at the sur­fa­ce of things. It can be said that this com­pu­ter power, this ener­gy, is being spent on doing what coun­tries or com­pa­nies are doing.

Łukasz Jonak, Ana­li­tyk DELab UW

The ener­gy, elec­tri­ci­ty a cer­ta­in kind of block­cha­ins (public, per­mis­sion­les, based on pro­of-of-work) are expen­ding is a cost of the­ir key featu­re – the cer­ta­in­ty that you can par­ti­ci­pa­te in the block­cha­in sys­tem kno­wing nothing abo­ut other par­ti­ci­pants and still be sure that it tru­th­ful­ly sto­res and pro­ces­ses infor­ma­tion and that it is prac­ti­cal­ly immu­ne to attacks. Ener­gy is spent main­ly by „miners”, par­ti­ci­pants of the sys­tem who are respon­si­ble and rewar­ded for keeping it safe. Howe­ver, first they need to make an inve­st­ment – buy har­dwa­re and keep the­ir mining ope­ra­tions run­ning by con­stan­tly pur­cha­sing ener­gy (sold to them by power-plants, con­si­de­ra­ble num­ber of which use burn coal, poiso­ning the envi­ron­ment). Miners can only earn rewards which off­set the­ir inve­st­ment if they faith­ful­ly take care of the secu­ri­ty and vera­ci­ty of the sys­tem – vali­da­te inco­ming trans­ac­tions, pack them into con­se­cu­ti­ve blocks and make them part of the cha­in – they are incen­ti­vi­sed to act in the inte­rest of the sys­tem. This sche­me makes possi­ble to have a decen­tra­li­zed cur­ren­cy and bank (as in Bit­co­in), or distri­bu­ted, glo­bal com­pu­ter (Ethe­reum), which can do what Bit­co­in network does and more (eg. run decen­tra­li­zed organisation).

Tra­di­tio­nal insti­tu­tions achie­ve simi­lar results by other means. Lets look at a com­pa­ny. Its employ­ees are also incen­ti­vi­sed to work towards com­pa­nie­’s goals by wages they are being pay­ed. But then we’ve got com­pa­nies main­ta­ining cor­po­ra­te cul­tu­re, sche­du­ling team away­days, run­ning HR depart­ments that fol­low employ­ees» pro­gress and make sure the­ir con­duct is ali­gned with whe­re com­pa­ny is headed. All of it uses quite a lot of ener­gy (and burns coal too) and pro­du­ces what block­cha­ins afford: trust in the sys­tem; howe­ver, unli­ke block­cha­ins, in a cen­tra­li­sed mat­ter, based on impli­cit trust betwe­en par­ti­ci­pants of the sys­tem, rooted in iden­ti­ty and reputation.

We tend to cri­ti­ci­se block­cha­ins» use of reso­ur­ces becau­se usu­al­ly we don’t real­ly have the insi­ght into what the­se reso­ur­ces are  used for – cre­ating con­di­tions suita­ble for coor­di­na­tion witho­ut the need of a cen­tral autho­ri­ty. This is not to justi­fy the envi­ron­men­tal unsu­sta­ina­bi­li­ty of the way block­cha­ins are being fuel­led (and some block­cha­ins are alre­ady moving away from waste­ful pro­of-of-work model), only to show that the­ir fuel is not that dif­fe­rent from the one bur­ned by tra­di­tio­nal insti­tu­tions, to the simi­lar effect.

The real question is: to what degree the­se results (trust in the sys­tem pro­du­ced by both kinds of sys­tems) are actu­al­ly comparable.

Autor pro­jek­tu: Łukasz Jonak

Pro­jekt finan­so­wa­ny ze środ­ków pro­gra­mu „Dia­log” MNiSW