When you think about renewable energy production, the two most visible proponents are wind and photovoltaic (solar) energy. Especially these two technologies have one problem in common: No one can predict how much electricity will be produced, even just a few minutes away.

This makes alternative energy sources mandatory as a means of compensation. Very few customers would accept if their computer might run, or not run, during the day, depending on how much wind a nearby farm is experiencing.

At the same time the amount of electricity produced is rarely big enough to warrant the transformation to the high voltages (like 440 kV) necessary to ensure long distance transport. Which means most of the green electricity produced needs to be consumed in its’ vicinty.

So while it’s certainly great that we have a growing supply of renewable energy, from the viewpoint of an electricity provider all that counts is the base amount that will always be produced no matter what. The rest has to either be bought or produced via hydropower (somewhat more stable, but seasonal), biogas, nuclear power or gas or even coal fueled power plants.

Sometimes extreme measures have to be taken, to consume the inflated energy supply, when the renewable energy farms are churning out at maximum power (imagine a solar power plant at 2pm on a summer day). Negative electricity prices,pumping water up hydro power plants for later storage, and even running machines without producing anything, or boiling water just for later cooling are reported.

And here is why this means renewables are a great match for crypto currency mining: Crypto mining can be co-located with renewable electricity production sites, as long as a stable internet connection is possible. Thanks to the widespread proliferation of LTE/4G networks more and more areas of the world offer this possibility.  Locating mining farms close to electricity production means the power does not have to pass through the distribution network of the local utility company, which typically charges a small, but not insignifcant, amount per kWh for using its network.

This means rock bottom electricity prices for the miners. Prices as low as USD 3ct/kWh are possible here. Electricity cost is the biggest obstacle to profitable crypto currency mining. Fluctuating supply can partly be buffered with batteries or inexpensive UPSs to keep network infrastructure and control servers alive at all times. The miners are then switched on and off as energy supply fluctuates. This is not ideal for mining, where miners want to have their computers on all the time. But it would be a great way to utilise every drop of energy a wind or solar farm produces. With a little bit of buffering, miners can be switched to standby or activated rapidly meaning no opportunity to mine gets lost.

Crypto currencies like bitcoinClean already incentivise miners that use green electricity sources. If others follow the lead of this particular coin, co-locating mining farms with renewable electricity production sites will make a lot of business sense, in addition to being the sensible thing to do.

Cryptocurrencies and Pollution

Why are cryptocurrencies and pollution linked, as was reported here and here?

Let’s start by reflecting on how a blockchain works. A blockchain is a number of linked data segments, called blocks, that are signed by a cryptographic function. Each new block contains a link, in the form of that cryptographic signature, to the last block before it, so changeing any block means having to recompute and change every block after that.

As a result, a blockchain is as secure, as hard it is to recompute parts of it.

If it’s very easy to compute the cryptographic signature of one block, then recomputing 2, 10 or even 100 blocks is still easy.

So what happens if the blockchain is not secure? Blocks contain transactions. So when Bob sends Alice some coins,this gets written into a block.

If Bob found a way to recompute this block, he could send some coins to Alice,and then recompute the block to send the same coins to Christine. Or simply delete the spent coins, so that Alice doesn’t have access to them any more. Clearly, this is fraud, and a blockchain that makes fraud easy will not gather a lot of users. Except those that are financially suicidal.

So blockchain security is important. Bitcoin addressed this issue by requiring the cryptographic signature to be very hard to compute. And this difficulty would automatically increase the more people started computing it. This means if a lot of people with a lot of computing power calculate the cryptographic signature, it’s really extremely difficult to come up with a one that meets Bitcoins standards.

If an attacker wants to overwrite, say, the last 3 blocks, he needs to have so much computing resources to recalculate these 3 blocks, plus any that have been calculated in the time it takes him to recalculate, or blocks than all the others working on the regular blockchain combined produced in that time. Because one more clever feature of Bitcoin is that only the longest chain, the one with the most blocks, is the valid Blockchain. Any other chain gets discarded as an attempted fraud. This makes sense, since the chain with the most people committing resources to will be the longest. So right now, such an attack is practically impossible to do, even for the biggest suppliers of Bitcoin computing power. Note that I said practically impossible. Because theoretically, it can be done!

And here comes the downside, the price, of this security: All that computing power requires electricity to run on. How much is a hotly disputed topic. Some say, that right now it’s more than all of Ireland, while others contend that it’s probably 1/10th of that amount. Which is still a lot of electricity, if you think about it.

The people who provide all this computing power are called miners, and get a reward if they are the first to discover a cryptographic signature that meets the requirements and submit the signed block. This reward is currently worth a little less or slightly more than $100,000 (it’s 12,5 Bitcoin) depending on Bitcoins’ price at that moment.

Electricity is mostly produced with fossil fuels. The worldwide energy mix consists of 87{bebb06f271259ca942a7887f5eb25673b4b02ba69cbc6ed6f7a39064dc6657a8} fossils, mostly coal, and some natural gas. According to the Shell 2014 energy report.

So producing a lot of electricity means producing a lot of pollution. CO2, short chain carbon hydroxides, heavy metals, fine particle pollution, you name it.

While Bitcoin has a lot of transaction volume today, about 4,5 billion USD worth in any single day, it’s still a far cry from fulfilling the potential of everyday use peer to peer cash.

If it should fulfill that role, this would mean even more pollution, as a bigger network would mean more people providing computing power and more difficulty in computing the cryptographic signatures.

How can we avoid that pollution? How can we align the desire to build a decentralized future of our money supply, with the demand to leave this planet healthier and better than we found it?

The next section will highlight some proposed solutions:

  • Proof of Stake

Ethereum is the most popular cryptocurrency that plans to implement Proof of Stake, or PoS as crypto-insiders typically write. PoS means blocks can be calculated with minimal computing power, but only by those who hold coins (called having a stake). Basically, who gets to create the next block is decided by a kind of lottery, where every coin held represents a ticket.

Proof of Stake drastically reduces the amount of energy required by the network.

However, as Ethereum shows, it’s notoriously fickle to implement, and has somephilosophical and mathematical challenges that have not been fully adressed.

  • Directed Acyclic Graph coins

A Directed Acyclic Graph is a fancy name for a network that has a direction (is Directed) and at no point creates loops (is Acyclic). It can be depicted somewhat like this:


A directed acyclic graph

As you can see the graph starts on the right, and is directed (to the left), plus there are no loops or meshes in there.

Directed Acyclic Graphs or short DAGs were first proposed as an alternative to a traditional blockchain by IOTA. Lately other coins like Nano or ByteBall have taken up the idea and tailored it to their specific needs.

DAGs promies some significant advantages: Transactions cannot be reversed or overwritten after a very short amount of time. No mining or expensive cryptographic signatures, like in Bitcoin, are necessary, making transactions effectively free.

Since the network can work massively parallel, it can handle more and more transactions per second as the network scales and grows.

Through the lens of pollution: The lack of mining, in the sense of Bitcoin, where computers try to find cryptographic signatures that meet very demanding and stringent criteria, is completely, or to a very large degree, eliminated, making these coins extremely energy efficient.

Instead, the trust is generated by having a few trusted “witnesses” or “captains of industry” that are trusted to confirm the odd block here and there. These are either selected by the developers, or voted on by users. And this is the crux of DAG coins. If just some of these witnesses are malign, the currencies are extremely vulnerable.

Since none of the DAG coins scaled to the size of Bitcoins network, they didn’t receive as much scrutiny. Whether or not these coins will past the test of time and scale remains yet to be proven.

  • Lightning Network

Bitcoin faced crippling transaction bottlenecks repeatedly. Basically, only about 250-500 transactions can fit into one Bitcoin block. And one block is generated on average every 10 minutes. This results in anything between 4-8 transactions per second. Visa supports and needs to handle up to 1,700 transactions per second.

Since Bitcoin miners get paid for including transactions into a block, they choose the highest paying transactions in times of high demand. Bitcoin transaction fees are currently arround $10 for a single transaction on average.

A part of Bitcoins’ core development team became so dissatisfied with the slow and contentious improvement process of Bitcoin, that they create Bitcoin Cash as a result.

Bitcoin Cash enlarged a block to 8x the size of Bitcoin to have 8x the transaction throughput and included a host of other improvements.

Another developer proposed Lightning Network for Bitcoin as way to scale. Lightning would basically have next to unlimited transactions per second for extremely low fees. In Lightning transactions are no longer written into blocks, but cleared inside payment channels between peers. Just the opening and the closing of payment channels are written to the blockchain and incur a transaction fee. If Bob wants to pay Alice and doesn’t already have a payment channel with her, he can route his coins along payment channels until they get to Alice. Very much like domain names get resolved on the internet. The transaction fees would be so low, that even long routes would still be orders of magnitude cheaper and faster than traditional Bitcoin transactions.

Lightning Network has quickly established itself as Bitcoins promise of a bright future, but so far is not ready for public deployment yet.

Also some serious criticism about payment channels has been raised.

  • bitcoinClean

bitcoinClean is a Bitcoin child, a so called hard fork, like Bitcoin Cash. This means that every holder of Bitcoin is also a holder of bitcoinClean. It was released on April 18th, 2018 and allows blocks to be 8x the size of Bitcoin, to allow more transactions.

It also introduces a new concept to cryptocurrencies: The requirement that only renewable energy is used to fuel the computers that generate the cryptographic signatures.

It’s approach to ensure that is ingenious: Since no technical solution to verify the energy supply of miners exist, it relies on a social solution.

Miners need to publish proof that their computers are powered by renewables, and renewables only. Other miners can then inspect and vote on this proof.

If the proof garners enough votes the miner can start to compete for blocks and get his share of the rewards.

Bitcoins’ blockchain allows any kind of data to be stored inside blocks, and some promising ideas have already used this to store anything from contracts to records of service.

bitcoinClean stores the votes miners cast on each other’s proof on the blockchain, which means votes are transparent to read and secured by the same technology that secures Bitcoins’ transactions.

bitcoinClean’s developers find, that while the energy demand for computing power is still the same as with Bitcoin and Bitcoin Cash, redirecting that demand to renewables is actually better than reducing the energy consumption.

Increased demand leads to a better and increased supply, and more innovation.

Many of the renewable energy production techniques are still in their infancy and are plagued by scaling issues and technological problems.

Increased demand might just be what’s needed to help ensure a decentralised and ecological future for our energy supply, as well as our monetary supply.

Bitcoin Block Date Calculator

Didn’t you always want to know at what date a specific Bitcoin block would come?

Or what block number a specific date corresponds to?

Now, I know, block time isn’t always the same. This can never be exact science.

However, block time has been pretty consistent on average over the last few years.

So I created a Bitcoin Block Date calculator, which you can download here.

It’s quite rough yet, as I didn’t know how to grab the current block from the net, yet.

If anyone has an idea for improvement, don’t be shy and leave a comment or send an E-Mail.

Regulating Cryptocurrencies – Why? and How?

“Cryptos are awesome, but they need to be regulated!!” I heard this sentence so often, and from so many different, smart people.

It was nauseating. Cryptocurrencies were created so that central authority regulation was NOT, and I repeat, NOT needed.

That was the idea behind Satoshi Nakamotos original Bitcoin. It was created in the tradition of crypto-anarchists.

I personally believe that the reason so many people use something so cumbersome, volatile and cutting edge as Bitcoin for a store of value, or to transact, is because they don’t trust the central authorities anymore and are looking for a way out.

If cryptocurrencies should be successfully regulated, their whole reason for existence would be instantly erased.

I fear however, that governments will outlaw any cryptocurrency that doesn’t supply KYC/AML to the full extent required by individual country laws, if governments ever find a way to do so reliably.

This would be a very sad day for all of us.

Until then, let’s use the freedom we have, and let’s fight to keep it. By innovating, by spreading the knowledge and by educating others.

Bitcoin hard fork security – what you need to know

Bitcoin Gold (BTG) hard forked the Bitcoin blockchain at block #491407 to create an alternate chain, where miners can use GPUs instead of single-purpose ASICs for mining. BTG also introduced some improvements like bigger blocksize and shorter time between blocks for higher transaction bandwidth.

While the whole motivation behind BTG seems to be profit, especially for the developers, who have been widely and loudly criticized for that, I personally don’t think this was necessarily a bad move. In the end every holder of Bitcoin got the same amount of BTG. So, theoretically, a lot of value can be created here.

However, through the lens of security, the picture is very different.

For those not familiar with the matter lats recap what hard fork means:

  1. every transaction up to block #491497 is copied, meaning:
  2. every Bitcoin address at that point is also BTG address
  3. every private key is the same
  4. every address has the same value (numerically)

This means, that if you want to spend your BTG you can use the same password, or private key, that you use to spend Bitcoins.

You probably know what’s coming:

It means that if someone would program a very comfortable wallet that phished your private key, he could instantly access your Bitcoins as well, since both private keys are necessarily the same. (Hard fork). That’s a huge security risk!

what can you do:

  1. Wait! Wait till a trusted BTG wallet emerges, then use it.
  2. If you cannot wait, but want to get into the possible fire sale of BTG now, transfer your Bitcoins to a new address with a new private key before accessing your BTG

I know that transfering your Bitcoin might be hard. They might be on a paper wallet, or on a wallet encrypted somewhere.

I’m also not saying that BTG’s wallet is a huge phishing scam. Actually I believe they did all they could to make that secure.

Still there is an inherent security risk here. And, at that, one that affects every single Bitcoin address out there.

Wie Bio ist Bitcoin?

Der bewusst provokante Titel dieses Blogposts soll auf eine Tatsache aufmerksam machen: Bitcoin und andere Kryptowährungen haben ein ökologisches Problem.

Der Kohlendioxid-Fußabdruck, den das Bitcoin-Netzwerk derzeit hat, entspricht dem von 3,53 Millionen Autos. Das liegt am enormen Elekrizitätsbedarf der Miner, so heißen die Computer, die Bitcoin kryptographisch absichern. Diese Elektrizität wird weltweit zu 87{bebb06f271259ca942a7887f5eb25673b4b02ba69cbc6ed6f7a39064dc6657a8} aus nicht erneuerbaren Quellen gewonnen. Mehr als die Hälfte der Miner steht in China, wo Braunkohle den Großteil der Kraftwerke betreibt.

So werden laut einem Artikel in Businessinsider 20 Barrel Öl verbraucht, um nur eine einzige Bitcoin zu erzeugen.

Alternativen und saubere Aussichten

Firmen wir Hydrominer und Envion verbessern die Situation, indem sie Wasserkraft bzw. Solarenergie verwenden.
In Kürze gibt es auch die erste Kryptowährung, die ihre Miner verpflichtet, ausschließlich erneuerbare Energiequellen zu verwenden – und sich gegenseitig zu überprüfen und zu überwachen.

BitcoinClean verspricht die erste saubere Kryptowährung der Welt zu werden.

BitcoinClean baut auf dem Protokoll von Bitcoin auf, weil es das Protokoll ist, das am ausführlichsten erprobt wurde, besagt das Whitepaper der neuen Coin. Ein enormer Vorteil dieser Strategie ist, dass jeder, der Bitcoin hat, automatisch denselben Betrag an BitcoinClean haben wird, wenn die Währung am 2.3.18 erhältlich wird.

BitcoinClean in sauberen Händen

Sehr interessant ist dabei der Ansatz, keine zentralen Zertifizierungen anzubieten, sondern darauf zu setzen, dass sich Miner gegenseitig überprüfen: BitcoinClean verlangt von einem Miner eine Dokumentation über seine Energiequellen. Wenn daraus hervorgeht, dass hier wirklich nur “sauberer” Strom verwendet wird, dann bestätigen andere Miner durch eine Art “Like”. Erst nach ein paar solcher Bestätigungen kann der Miner dann anfangen, BitcoinClean zu minen.

BitcoinClean klingt vielversprechend. Wir werden den Ansatz hier weiter verfolgen.