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US Senate Committee on Blockchain

On August 21st, 2018, the U.S. Senate Committee on Energy and Natural Resources held a public hearing on Energy Efficiency of Blockchain and Similar Technologies. The purpose of the hearing is to consider the energy efficiency of blockchain and similar technologies and the cybersecurity possibilities of such technologies for energy industry applications. In particular, should we expect electricity prices to increase from rising electricity demand in blockchain applications? In addition, how can we evaluate whether blockchain and similar approaches will soon improve the cybersecurity of computing systems used to supply our energy?

Expert witnesses providing testimony for the Senate Committee:

  • Mr. Paul Skare, Chief Cyber Security and Technical Group Manager, Energy and Environment Directorate, Pacific Northwest National Laboratory
  • Mr. Thomas Golden, Program Manager, Technology Innovation, Electric Power Research Institute
  • Ms. Claire Henly, Managing Director, Energy Web Foundation
  • Dr. Arvind Narayanan, Associate Professor, Department of Computer Science, Princeton University
  • Dr. Robert Kahn, President and CEO, Corporation for National Research Initiatives

These are my notes from the hearing as shared on twitter:

  1. Important: Washington is experiencing significantly increased energy consumption due to Bitcoin mining. It is also estimated that every mined bitcoin used more energy than a household in a month!
  2. The senate sees great potential in the field of consumer transparency, cyber security of the grid and transactions and the ability to trade energy flexible between members of the network, e.g. consumers.
  3. Mr. Skare, speaking to the Senate committee as expert witness, believes that the usage of private blockchain platforms can significantly reduce the energy consumption due to lack of mining processes.
  4. Mr. Skare also states that endpoint security is of upmost importance to maintain the required level of security for any blockchain platform.
  5. Expert witnesses continue to point out that Bitcoin and Blockchain are not the same. Especially the proof of work concept of bitcoin and other cryptocurrency cause the high energy demand to perform the mining.
  6. Energy consumption of current blockchain and cryptocurrency platforms is estimated to be as high as 32% of the total operating costs.
  7. Ms. Claire Henly: Bitcoin’s energy consumption is serious concern. When blockchain platforms would move to alternative methods, like proof of stake versus proof of work, the energy consumption will be reduced.
  8. However, proof of stake come at other trade offs, for example like the need to have again centralized infrastructure which is not in line with the general design of blockchain platform.
  9. Dr. Arvind Narayanan: it is important to discriminate between public blockchain platform which required complex mathematical calculations as mining, and private blockchain platforms which do not depend on it.
  10. The amount of ongoing mining is influenced by the exchange rate of the cryptocurrencies. The higher the value, the higher the incentive to main coins leading to increased energy consumption.
  11. It is highly recommended to review the comments on in the written testimony by the expert witnesses. The testimony will be made available on the website of the committee.
  12. Very important comment: Blockchain is just one tool in the toolbox of !
  13. With the discussion how blockchain could support patching systems, the Senators make the link to the breach. This shows not only how important validated but also enforced patching is!
  14. Key statement: it would be ironic if all good work on energy efficiency is countered by implementing a technology in the energy grids that consumes significantly more energy than we are able to safe elsewhere!
  15. Besides energy consumption, key concerns are privacy and the ability of law-enforcement agencies to access critical information. Further research and R&D is required before rolling out Blockchain/DLT.
  16. Some cryptocurrency mining facilities in the state of Montana belong to the largest energy consumers in the state. They rely on continued low energy prices in Montana, which are not guaranteed.
  17. Besides for example hydro powered plants, Montana also has powered electricity plants…
  18. Somehow out of scope for the committee, it was stated that fired up a electricity plant to provide cheap electricity to cryptocurrency mining facilities…
  19. Key take away:
    1. electricity consumption is a major issue
    2. significant R&D is required to solve current issues with blockchain
    3. significant parts of the grid infrastructure is not ready for distributed tech
    4. public blockchain and privacy needs further development
    5. research on legislation and compliance of blockchain is needed
    6. law-enforcement and anti-money-laundering are major concerns