Astrology for Sensitive New Age Tech Bros
October 27, 2021 6:45 AM   Subscribe

Seeking reputable links/resources. A couple people in my social circles have been touting some new cryptocurrencies as being environmentally and socially responsible. My gut tells me that while they may not have the energy usage of bitcoin mining, this claim is likely more along the lines of “clean coal” or other forms of green capitalism.

But a quick internet search just comes up with a bunch of articles listing the top three to ten “most [relatively] environmentally responsible cryptocurrencies” that don’t get into the details of actual energy usage, or how this compares with regular banking or finance systems. (Eg. if you combine the statements from one article that “Bitcoin uses more energy than the country of Finland!” with “[other new crytocurrency] uses one tenth the energy of bitcoin!”, then supposedly environmentally responsible new cryptocurrency still uses over a tenth the total energy usage of the entire country of Finland, but I have no idea how many people or financial transactions that represents, so what the footprint is per person.) Send me accurate, reputable resource links please?
posted by eviemath to Computers & Internet (11 answers total) 9 users marked this as a favorite
Best answer: Without any suggestion this is actually worth investing in, you or your friends may be referring to proof of stake coins, which are often viewed as a way of significantly reducing the power consumption of crypto algorithms.
posted by saeculorum at 7:07 AM on October 27, 2021 [1 favorite]

David Gerard is a blockchain critic who's written some stuff about this. You may want to look at his stuff.
posted by suetanvil at 8:12 AM on October 27, 2021 [1 favorite]

(The reason cryptocurrencies are so wasteful is because nobody trusts anyone else, but you can prove that you've just burned X amount of computing resources. So for one particularly hard-to-prove aspect of it (deciding the order of the transactions), this gets added as a requirement for candidate orderings so that nobody can just flood the system with advantageous orderings.

(E.g. two separate transfers of the same bitcoin; one is going to be bogus but if you can keep it out of the record long enough, you can pick up your heroin and run before your dealer finds out.)

The idea behind proof-of-stake (AIUI; I know very little about it) is that instead of proving you've burned X CPU cycles, you prove that you hold X amount of the currency. This turns into government by the rich, but then proof-of-work turns out to be that as well. So in theory, it's an improvement over proof-of-work in that it at least does less harm to people not involved in cryptocurrency. However, I have yet to hear any CC that has done it successfully. Ethereum is planning to but keeps pushing back the switchover date.

Note: if it isn't obvious, none of this should be considered an endorsement for or advocacy of cryptocurrency as a concept or of any existing cryptocurrency.)
posted by suetanvil at 8:37 AM on October 27, 2021

Response by poster: Specific links that I could pass along would be most helpful!
posted by eviemath at 8:44 AM on October 27, 2021

You won't be able to counter their claims of "this specific new cryptocurrency is better for the environment!" with specific articles about other cryptocurrencies, but you didn't specify the ones they say are great. If they are aware of the general problem and claim it's fixed now, you would need very specific evidence to counter it. As you can see from this summary article there are a lot of different approaches and some are probably not much worse than using Venmo, while others are likely scams that are lying about how they work
posted by JZig at 8:54 AM on October 27, 2021 [1 favorite]

Specific links are going to be basically impossible to provide without knowing about which specific cryptocurrencies they're talking about.

In general, though, there is a dearth of good writing about this stuff :(
posted by wesleyac at 9:50 AM on October 27, 2021

Best answer: Here's a carbon calculator from the XRP (Ripple) folks.

White paper from Poseidon with a table on page 18.

Note that these are from specific organizations with a stake in their own solution so take with a grain of salt. However, they both draw the same conclusion -- there exist newer crypto networks closer to VISA/Mastercard in terms of energy efficiency per transaction processed -- vs. older crypto systems that are extremely inefficient.

(I can't speak to the methodology, I think it's hard to compare b/c credit cards, paper notes, and crypto networks don't have the same feature set)

"Socially responsible" is a more subjective metric. I'll have to defer to Jesus on the subject of ethical money.
posted by RobotVoodooPower at 10:15 AM on October 27, 2021 [1 favorite]

Response by poster: Yeah, stuff like JZig‘s link was all I was finding on my search - nothing that describes specific energy usage or compares to traditional banking energy usage (except in the one example from that link, which at least acknowledges that one might want to know such details and makes an incomplete comparison).

There are hundreds of different specific cryptocurrencies, sure, but only so many basic mechanisms (eg. proof of work, proof of ownership, etc.). There’s nothing that talks about, say, theoretical limits on computing power required for a given mechanism, and compares that with traditional banking? Or that at least gives an overview of the different mechanisms? (Eg. my current understanding is that they all somehow rely on blockchain, albeit they might make different use of it?)

What about anything from the political science end of things that talks about the interaction between distributed financial transactions and trade offs between privacy/anonymity and accountability that would apply to general categories of cryptocurrency mechanisms? Or anything that addresses the economic justice issues of needing to have resources in order to gain cryptocurrency wealth, or that discusses whether categories of cryptocurrencies derive value from scarcity versus anyone being able to build wealth without needing to already have some wealth (that is, the issue that time banks and similar non-crypto local currencies aim to address)?

Part of the issue here, of course, is that I don’t actually care enough about cryptocurrencies to become an expert on all (or any) of these details myself:P
posted by eviemath at 10:16 AM on October 27, 2021

Response by poster: (And looking into some of these links, I have a sneaking suspicion that the cryptocurrencies the folks I know were excited about are ones that were advertising carbon offsets as a big part of their “environmentally responsible” justification, which while better than not offsetting, is definitely not the same as using less energy in the first place.)
posted by eviemath at 10:30 AM on October 27, 2021

Bitcoin and its descendent proof-of-work protocols are energy hogs for three interconnected reasons:

1. Adding a new block of transactions to the end of the blockchain also creates ("mines") a new currency token into existence.

2. The network periodically adjusts the difficulty of mining new tokens in such a way that the energy required to mine one costs almost as much as the new token could be sold for, in order to make the creation of new tokens in arbitrary quantities prohibitively expensive.

3. The market price of a single Bitcoin or Ethereum token is now literally millions of times what it was when these protocols were first released, and this has led to those protocols consuming millions of times as much energy per transaction as they originally did. But even from the get-go, a Bitcoin transaction involved deliberately wasting many times as much energy as it costs to perform the messaging involved in e.g. a Visa transaction.

Wasting energy is not a side effect of these protocols; it's built into them deliberately, and in fact the resistance of the associated blockchains to repeated spending of single tokens absolutely relies on the real-world cost of that waste. Similar considerations apply to protocols designed around proof of heavy consumption of resources other than energy, such as hard disk space. All of these things have resource wastage built deep into their structure and any of them is capable of bringing on shortages of the associated resource as its token price increases.

But there are newer, saner ways of dealing with prevention of double-spending on blockchains that don't rely on the brute force method of making that an absurdly expensive thing to do. Proof-of-stake is one of them, but to my way of thinking the most elegant is Federated Byzantine Agreement as used by the Stellar blockchain. This relies on multiple rounds of carefully designed voting, and its energy consumption is a side effect of the message traffic involved and in no way integral to the protocol.

In energy consumption per transaction terms, on the scale of all the other traffic that transits the Internet the Stellar protocol is down there in rounding-error land where Mastercard and Visa and PayPal also live. If you were to perform all your financial transactions on Stellar, you'd still be using literally millionths of the energy required to support e.g. a moderate Spotify or Netflix habit. In money terms, Stellar transactions are exceedingly cheap compared to traditional payment processing (less than a hundredth of a cent each).

In particular, the energy consumption of a Stellar transaction is in no way linked to the market value of any tokens exchanged in that transaction.

For what it's worth, Stellar also doesn't have any concept of "mining" new tokens. Instead, it's designed to operate using arbitrary kinds of token, anybody can issue their own tokens on the Stellar network, and what those tokens are worth is no more and no less than what somebody else can be persuaded to exchange for them. In particular, this allows for applications like NFT creation and trading to be done at extremely low cost in both money and energy.

Stellar does have its own native tokens - Stellar Lumens - all of which were pre-issued by the Stellar Development Foundation at the time the protocol was initially released. In the spirit of full disclosure, I hold a large (to me) quantity of these and will benefit financially as their price keeps going up. I will also benefit spiritually if that price increase comes at Bitcoin's expense because Bitcoin is the fossil fuel industry of cryptocurrencies and well overdue for superseding.
posted by flabdablet at 1:36 PM on October 27, 2021 [1 favorite]

Proof-of-work is disastrously inefficient, as others have said.

Anything that's /not/ disastrously inefficient is going to be roughly as efficient as any other database transaction, which is to say, so cheap that it's a bit hard to track. Complicated voting schemes imply maybe a hundred database transactions and some communication... But this is ultimately on the same order of complexity as what you expect from loading the average webpage.

There's a kinda lower-level question of why we care about energy use: Probably because it's often backed by fossil fuels and is slowly killing the world. BitCoin is about converting electricity directly into money, so miners have historically been incentivized to locate where they can get the most electricity at the cheapest rates, which has generally meant places with under-regulated fossil fuel grids. Not only does BitCoin use ridiculous piles of energy, but it tends to do so using the dirtiest energy available.

Once we get away from the electricity<>money regime, it's also easier to do things like ensure that your network is entirely powered by renewables, in which case many of the ethical issues on energy usage specifically have been resolved. I'm also reminded of the one-time kerfuffle over the energy cost of a Google search.

(Meanwhile, I hold crypto-currencies responsible for the ransomware crime wave, so will continue turning my nose up even once proof-of-work has disappeared.)
posted by kaibutsu at 1:05 AM on October 29, 2021 [2 favorites]

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