Today we're looking at
the recently published White House paper on crypto assets and
surrounding climate and energy use this is really important if you're an investor at all or
looking into cryptocurrency we're going to approach it from a high
level point talking about the general gist of the paper I'll give some of my views
About the subtleties some of the not so subtle things about it and also some
things that I think are important to keep in mind as a piece of policy that will
probably be used more in the drafting of legislation you can use the chapters below
to skip to any section if you're interested in jumping forward or
back on something and in End of this I'll suppose some
questions I think might be common questions and answer those as well let's
dive into this report so I'll provide a link in the description below so
you can download the version I'm using here which has all
the highlights and I think those are the most important parts This starting
right off the bat there is recognition of some of
the potential benefits that you can see from crypto assets now jump right into it
but some crypto asset technologies currently require large amounts
of work.
It is loud, and it also produces pollution and noise. It has various local impacts
on residents
and local electricity sources now, that's an important consideration
because they jump right in in my opinion to what the
big negatives are, so they kind of look at some of the positives that they talk about later
in depth and we'll do that. Getting to that so they make a statement here
the US government has a responsibility to ensure the stability of the electrical grid now
I think there's a responsibility that the US government has
and it looks like they could use it and we're going to examine some of those
elements for those purposes I think there's also a
larger overarching hypothesis to this paper which It's
mainly electricity usage and the ghgs that it generates so that seems to be the
biggest focus so if we look at the
quadruple and they provide estimates and ranges because it's hard to
predict exactly how much electricity is used but I will note
that they could have gone to hashrateindex.com And that's an excellent way of looking at the
actual projected information, uh, surrounding
theoretical limits and estimated consumption and generally
they're somewhat in the range but as you can see there are
long periods of variance in what we're doing in terms of
cryptocurrency generation and where we were just a couple of months ago it was kind
of The recent high peak is something we've seen in the past in 2019
as well as the equations that they plot out to
the annual global electricity usage for cryptocurrencies, we can We see that they
value the use of 0.4 to 0.9 to generate,
transfer, store, and transact cryptocurrencies so they do that between
different uses as we go over this we'll see that bitcoin
is the largest and more and I think everyone agrees in the audience uh
asics are electrical machines that are electricity hungry 3000 to 4000 watts typical
for a unit ASIC one is graphic as far as
electrical so this report doesn't always reflect the most accurate information on
everything consistently but there are selective areas
that have incredibly up-to-date information and then there are other areas that
have somewhat outdated information i think That it's not
necessarily a terrible thing I can understand that and I think there was a bias towards the
news sources and information portals that they were getting from
consultants that they might have hired to help produce this which
we'll certainly see a clear bent on what they prefer and I think it's
very fair to say that it might be There are or are not influences behind this
paper I would love to know who the advisors are working behind the
scenes if there are actually advisors who helped with this and
I will look into that further why Try to figure out exactly those questions and so you can
see here that they're really talking about some annual
global crypto-asset electricity usage and how that's grown and ebbed over time all the way
up to August 22nd, which is very present to where we are here
, and that's important from a perspective that consolidation is coming Right
about a day and a half and the timing of this report and the consolidation that's
basically happening around the same time indicates that they may have had
some consultants that may have bias and we'll find out more as
we go through this uh that increases the rate of that increase increases
the likelihood of maintaining reliability Electrical so you can see here they're
talking about Texas could see an additional 25 gigawatts of new electrical demand from
crypto assets min ing texas is definitely a haven for people setting up
bitcoin mining we have a lot of electricity we're
by far the largest generator of electricity in the US so it
makes sense that a lot of people would seek to locate
their mining operations here as they can often get fairly decent industrial negotiated prices What
bitcoin is 60 to 77 percent of the total
global crypto asset electrical use and ethereum is 20 to 39 percent so if you
look at this right away you can say the low side numbers on this
and the high side numbers of this won't It adds up to 100 so there are things
definitely I'm wondering they didn't put a footnote to this where they
got those exact numbers but I would like to know this for sure and if you
find that definitely post that in the description below and you can also
see there is proof of stake mentioned here And so
when we look at PoS, you can see that ey estimates
significantly lower electrical usage , in fact, PoS doesn't require as
much electricity that comes in trade-offs and that's something that's
not been talked about in this paper just those specific trade-offs, so When
we look at the global electricity generation of crypto assets you can see
that they estimate that's 140 million metric tons of carbon dioxide
per year plus or minus 30 million metric tons that's
a huge variance that you see there and that's what It looks like
0.4 to 0.8 total US charges that
we see there are other impacts and in fact there are
other impacts that you see in most of my operations that I really have a prop
towards not creating e-waste and reusing things until they can no longer
be viably used there's a trade-off point that happens And that's why I use a
lot of old equipment because that keeps it from going to the recycler once
you actually retire a product and then a new product needs to be made and there's
electrical use in that as well so what are the potential uses
for blockchain technology that could support climate control or mitigation Its acuity so
this is important for one reason in my estimation
they totally missed the boat with not mentioning chia in that specific context
because we do see chia with the climate repository and also what
they're doing on an international scale is facilitating global transaction capabilities
with the carbon fund which is something that's not included in this right
now which It came out in August we see references up to August here so
there was a gap somewhere in terms of including that information in this report
or very likely a bias against putting that specific kind of
Information in this report how that bias is going to
manifest so we go through this we're going to see some of the consensus mechanisms mentioned we're
going to see some really weird things mentioned and we're going to see some things that should have been
mentioned left out so let's continue here until the report talks
about distributed ledger technologies are Basically what is a blockchain it's
a distributed ledger technology you can see they're talking about one thing
and that's the potential benefits of a distributed ledger technology that needs to
outweigh the additional emissions and other environmental externalities that
result from its operations to merit its wider use in
the carbon markets ecosystem So that's a fairly high bar for
some cryptocurrencies that you'll never be able to meet that bar that's
on the fence for others and that's the bar that if you look at where you can
actually make a valuation and if you look at proof of stake that
obviously makes proof of stake stake is the clear winner except for the fact
that it's not a really distributed technology and I've had people pair this with me
recently so that proof of stake is a very distributed technology, because Be that as it may not if
they could be shut down because data centers
go dark ProjectSyndicate ar you don't have distributed technology
so where the paper starts to go next is important to every
productive cryptocurrency user or anyone who is just interested in space and
seeing what happens next That so the United States in an attempt to meet its climate targets can
make policy decisions and R&D decisions
that may mitigate the bottom line and perhaps certainly regulate the use
and production of digital assets so when we look down here we can see
reducing greenhouse gas emissions environmental justice impacts And other impacts
on crypto assets EPA —
the DOE and other federal agencies should
provide technical assistance and begin a collaborative process
with state communities, the crypto asset industry, and others
to develop effective, evidence-based environmental performance standards for the
development of responsible design and use of environmentally
responsible crypto asset technologies, so this is Here is where things get
very dangerous because the employee and most certainly the US Environmental Protection Agency and Balt Sure
other federal agencies have regulatory powers that
even without laws specifically written for them can
greatly affect cryptocurrency generation and especially when you look
at things like bitcoin this is definitely big news for them so
here's a shot across the bow for proof of work if you're proof of work
you're short Pay attention to this because
there's something in the works which I read again there's something in the works that
should include standards for very low energy intensity, low water consumption,
low noise generation, use of clean energy by operators
so sure to be able to use energy sources Renewable energy, whether on site or from a source
obtained from clean energy sources.
Low noise generation
is interesting I think it would be hard to achieve without using fans
I don't know how things happen and now maybe re is liquid cooling
sure we see s19 with Hydro is a new generation
I think it's less noisy ah asic for bitcoin but still energy intensive
Very and I think maybe use water uh or some kind of
liquid cooling to actually provide it with the required cooling capabilities that you
'll see so
if those measures prove ineffective in reducing the impacts
the administration should explore executive actions Congress might consider legislation
to reduce high energy use Or limit or eliminate
density consensus mechanisms for mining crypto assets
so like I said this is obviously a shot across the bow for a lot of
different types of cryptocurrency generation projects out there
I don't feel like this is actually going to be exclusive to
bitcoin specifically though Bitcoin is obviously the first currency to be
dealt with with such legislation or regulations prohibiting or it probably won't be the
last, and I think we'll go forward with that.
They want to control
basically all the electrical consumption that's used for all
of the distributed ledger technology something that I think is
going to show up over the next couple of years here for sure if you look at the
effects that could manifest I do n't think it's limited to bitcoin as we continue
to look at the paper Research we'll see that this actually
has broader implications that they're talking about for a lot of
different types of cryptography and that's something that I think everyone should realize it's not
just the use of electricity for a6 bitcoin that they're targeting it's
actually the use of electricity to generate whatever
consensus mechanism looks like it's what they're going to use in
the policy document These and this is now part of the policy making process that will be cited and
used by various agencies by Congress
potentially by state legislatures so this is a very important document while
it may be inaccurate in some hings and we'll get to those that
you'll see that this It may be used and cited as the justification
and call to action for opening commissions and also various impact studies and
analysis and this basically gives the EP and EPA the message
they need To start and these things are likely to be on the way to —
these entities should consider developing updated and enforcing
reliability standards and emergency operating procedures to ensure
system reliability and adequacy in light of the growth of crypto-asset mining and
that's really interesting in the fact that they don't just want to know
It's happening they want to be in charge of how that happens so this
is not just a call to action for the study it's also a call to action for the implementation
so get the data to understand the monitoring and mitigate the impacts so they can demand
data that includes energy use and mix Fuel from
energy used PPAs in the environment Implications of internal fairness and
responsiveness Demand for sharing requires responding back when you shut
something down an electrical emergency so the grid can balance
electricity from your use of it cryptocurrency or something like that
so improving efficiency standards Energy so if you're looking at bitcoin assets I
don't understand how roughly that's going to be possible all
captive based consensus mechanisms are going to be hard pressed under That is, so
the administration should consider working with Congress to enable
DOE and encourage other federal
regulators Federal regulators regularly release and update energy conservation standards
for blockchain networks crypto asset mining equipment and other operations so that
again that's a call to action that they need information and they need to regulate
That's why when I say it's coming I have a very strong suspicion that it's actually
in the pipes It's coming Promotes transparency and improves
environmental performance Crypto-asset industry associations including mining companies and
equipment manufacturers should be encouraged to publicly report
crypto-asset mining locations Annual electricity use and emissions GHD
and e-waste recycling performance so those are definitely things that
will certainly have a bottom line impact on the cost of production because
compliance with regulations is sometimes expensive so you might see
additional pressure if you're a large producer that uses a lot of asics in a
place where you're going to disclose that information, It is
possible that the scrutiny you will be subject to has escalated over time
, while this may not be the best case scenario For you to make a profit that's
definitely something you should consider because that's really
what's at work here including modeling the impact of crypto assets
if anyone can model the impact of crypto I
'd just like to know because that means they have a crystal ball that
works and not I have one of those but I'd like to have one
that emphasizes innovations and next-generation digital asset technologies and
that's a tacit acknowledgment that changes are ever happening
there's always new players in the entrance definitely this channel says a
lot about chia because as an l1 technology they have a lot to take advantage of
They've got a lot to offer they've seen a lot of this in the pipeline years ago that's going
to be things that will come up and you see most of the
electrical concerns have subsided with hard drives versus very expensive asics that
will basically do shaw 256 over and over and need a
lot of electricity to do Doing so as soon as you can also see
purpose-built devices with non -reusable ASICs The reusable material does not
contain anything else that functionally becomes e-waste at the end of its lifecycle Ha
vs commodity hardware that retails in consumer chains and
resellable channels n so there can be an extra life to it after
its efficiency curve is you know outside of everything you're looking for as far as
producing a crypto asset so if you're looking for some older like
s9 or something like that it's kind of hard to imagine the price point
I think it was like three two cents seven three cents something like
that last time I checked to make sure it was profitable and that's a very difficult price point to get to
then they move on to talking about uses Cryptocurrency
and maintaining financial records and facilitating transactions uh they provide
an overview at a very high level of this and they don't really dig into
it they start to talk about some consensus at this point and we see the
captive networks of the cycle again being flagged as using more Electricity of
uh generation of them compared to other consensus mechanisms and they also
mention pos again and they talk about the proposed ethereum 2.0 merger that's coming out
as they mentioned ed solana and cardano on that
plus we move down can As you can see that point of sale validators rely on risk assets rather
than computing power to validate transactions the power usage of point of sale crypto assets is
much lower than pow crypto assets while that in itself is
true you can see that they are also starting to talk about Other consensus mechanisms
like poc and this is proof of capacity and practical Byzantine fault tolerance so they
don't actually mention proof of space and time which is in my opinion the
best hard drive based consensus mechanism we've seen today
and one of the best consensus mechanisms ever invented
so it didn't come around The crypto-asset community has come to an agreement on what constitutes
best practices for consensus mechanisms now I don't think there should be a
consensus on what the crypto industry thinks uh that doesn't actually sound like
something that should be up to the government to define
best practices for cryptocurrency cause why why because this is
an innovative field And innovative areas, unexpected things will come
up and when those things come into the market
, that's a revolution and that's a profoundly revolutionary technology that
we're dealing with in the next major part of the paper that we saw
talking about common assets Plenty that impact electrical use and how do they do
that in four major areas of cooling and communications of storage compute
so these are really areas where traditional computing and crypto computing overlap
and so it draws a lot of
uh similarities between the two that
I think you'll look at and say that makes sense , but it doesn't
necessarily take into account everything on the telecommunications side now
different electrical use of different types of crypto assets to prove
that stock blockchain computing tasks can be performed by public computers
or servers some of which require high spec servers
uh with
high spec network connections and yeah C to be located in
a traditional data center so I mean when you see the use of the word
traditional data center makes me interested in
a specialized data center I think they think of coding a DC controller as a specialized controller versus a
traditional controller is definitely something that's prohibited in certain terms of
services in Major providers, we're seeing a lot of these compute resources configured
around major providers like AWS
alternately, Ith mining operations can The business is building facilities
to generate some or all of their electricity and that's actually what
I think is probably one of the best ideas out there is
to be able to have your own electricity generation that's
renewable and not have compensation that you know will be measured
and impacted would be one of the things that I think if I was giving recommendations to
someone who was building a working farm proof right now, I would say
maybe I want to look at how solar or
wind energy has been used for a lot of this generation .
Ink is interesting they're also talking
about stranded natural gas I don't know what is stranded natural gas vs
normal natural gas so that's something hopefully
someone can enlighten me in the comments below so they assume an issue with total
energy use today isn't being monitored Directly encrypted asset networks because
many computing and mining data centers don't disclose their location and
don't report their electricity usage so this is really one of
those facility level things that you wouldn't necessarily see disclosed
unless you also had to legally disclose it so
that there seems to be Really also indicates that there will be increased scrutiny of
high utilization electricity especially in the data center they keep talking about the
use and consumption of electricity on a household basis for the
production of crypto assets so it doesn't look like you'll
only see focus on huge data centers in my estimation We see a focus on
all crypto asset creation and then the government is seeking information
on whether or not you're going to have to generate that kind of
information it's not seen yet but they are To confirm they're setting a precedent
here with this paper for what could come next and what could
happen next is actually those regulations so as of August 2022 two proof-of-work groups
represent the vast majority of electricity use again talking
about ethereum and bitcoin so they've mentioned Again ethereum 2.0 is
proof of that I think it's interesting how many times they mention in this
paper I think the timing of this paper is interesting too
if you look down here you can see them draw some comparisons between
the Argentinean popular target of comparing
cryptocurrencies and also bitcoin Global electricity generation you can also see things like home computers and
televisions and also lighting built into these metrics and also certainly
when you look at nanograms in gigawatts of electricity and billions of
kilowatt-hours used there are significant uses for things like
bitcoin even in estimated ranges still no doubt
Very large amounts of that and you can see that they're
compared to Australia and global data centers and global crypto assets now
is another interesting thing.
An interest to consider in this paper that isn't
specifically talked about is Web 3 and this is basically where you allow people
in their own home to do things that would be considered
a traditional data center. So while distributed ledger technology is one
thing to consider in offering a service that's in your home
that allows people to access gpu access volume for a
variety of tasks, that's something that's also possible, as you can see
network networks are capable Being across some of these web 3 technologies
they don't specifically mention that and they don't talk about there being
certain offsets as a result of that I think there are some
web3 impacts that aren't mentioned in this that need to be talked about
and considered if they're looking at the possibility that the industry Global data centers
may not have the same amount of services that they need to provide if
there's a Web3 tech company that actually takes off and makes it
really big we could see a drop in certain ranges I don't think organizations
would necessarily go in but certainly smaller players could decide
This is better to use the web3 platform here versus the datacenters here
just because some of the costs that can be associated with it
suggest that miners should report their actual electricity usage
to reduce uncertainties to Policy makers so
going over here and they're comparing it to other financial instruments and
that's one of the reasons why I think Visa MasterCard credit card uh
blockchain transaction comparisons and
these capabilities and capabilities were n't always necessarily where you
want to choose to fight because the visas that the Americans express
In the world you probably don't see startups that can
change or challenge it very well it would be better if we just sneaked in
under the door and boom de facto one day that's what it's used for instead of
trying to call people directly because we're trying to match you or beat you up
because of this xyz also the government certainly has a huge interest in
protecting the people that they're paying and let's be clear the
United States has a lot of money to play and certainly the credit card companies the
traditional financial banks they pay your senators your senators
uh large sums of money uh to be able to have their ears
and access to them and produce legislation through think tanks so
this is a very powerful entity maybe even one of the most powerful entities in
the United States The micro tech industry that you really have to be interesting
uh naive to think you want to go head to head against them so when
you see distributed ledger technology again is the focus of what they talk
about as much as they talk about it in terms of ethereum and bitcoin networks and they don't don't I'm really talking
about any of the appendices surrounding distributed ledger technology and so
there's also an aspect of cryptocurrency liberalization that you don't
necessarily get with credit cards in the current state and those
are interesting things to consider as we think about continuing to read
distributed ledger technologies make up with In that bitcoins and blockchains ethereum
are complete payment systems this again is the ultimate
in cryptocurrency payment and allows for real time total settlement between parties while
credit cards in comparison need formal banking relationships to settle
transactions so yeah like ach in other words these three entities
consume less From one percent of the electricity consumed by bitcoin and others
it was used for the same year despite processing many times the number of
transactions On-chain and supporting
broader company operations so that's why this isn't a fight to pick in my estimation because
there are strong things you can only see the bottom of that they've been mentioned
here and when you look at the policy document that's coming out
there will certainly be winners and losers on the The other side of that coin
and I don't think anyone in the fintech industry wants to be on the losing side
that's an interesting part here they're talking about the reliable
and fair and equitable and climate-ready electrical system that the US requires
and the new requirements on that system should help In
not hampering the nation's climate goals so this
really sets a burden bar for cryptocurrency and it paints a picture of the industry
which is decidedly negative so let's not mince words here this report is not in
favor of cryptocurrency pre bias that's been brushed off in my estimation it's
anti For crypto, I don't think you can read this and get away with the feeling that
crypto in general is being viewed positively from the eyes of this report now, there are
some challenges that cryptocurrency must
definitely address.
Some of the things that crypto has to deal with but the facts and the facts
about it is that it hasn't been at a consensus level that's been addressed by a lot
of the entities out there you see people like chia with really decentralized L1 technologies that
take these things and analyze them into account when they
think about the kind of technology that they're going to produce and
there's been from day one there's a consensus mechanism for low energy use
but you also see government calling for increased regulation
and they don't necessarily mention something this one time they don't mention
simultaneous space and time evidence that's good or
bad that's a good question we'll get to in End of this also
talk about the demand for the ercot system in texas and the crypto generation that was
basically offset by an agreement that's interesting I didn't
really know that the person who brought that electricity back to the system actually came out
really well they did pretty well by doing that increases the
probability That the Bitcoin process is able to
look for profit at certain times, maybe they can create claims that they need,
and then they can look for profit
; You also have quite a bit of focus on
Texas so I think if you're looking for crypto operations in Texas you're going to come
under increased scrutiny at the federal level very soon
you can see here July 11th 2022 high temperatures expected and that's
very significant lately This was actually as if it was very hot in Texas as
well but high temperatures and high electrical demand expected ercot to
announce a major emergency event for bitcoin miners with one gigawatt
reportedly responded to ercot demand response request by reducing
power use in MINING OPERATIONS In all of July 2022 one publicly traded bitcoin miner operating a
facility in Texas got 9.5 million
DRP from the Texas network which was more than equivalent
out of the 318 bitcoins the facility produced in the same month so you can see that
there is A compensation factor that does not necessarily give you a complete picture of it,
which is 9.5 million, equivalent to the value of the
rest of those currencies other than included in that 318 would have been so
there are some interesting things that are not talked about nece ssarily in
there so they even broach into internationally
legislation and regulation have addressed environmental concerns about
crypto asset activity the ecs pending markets and crypto asset legislation
will likely require increased environmental and climate impact
information and within two years the introduction of mandatory minim um
sustainability standards for consensus mechanisms in china the incompatibility
of large-scale bitcoin mining with the country's environmental goals has been
cited as one of the several reasons that the government banned crypto asset
transactions in 2021 so this is interesting them saying this without
talking about the side effects of what's happened as a result of that without
talking about the actual tenor of the chinese government towards its
producers of cryptocurrencies and also looking at the entirety of the ec which
is a very not easy place to be a crypto mining operation with the incredibly
high electricity rates and again you don't have to regul ate something if the
electricity rates are high enough people probably just have to economically make
the decision that it's not a good idea to go towards a certain project
and so in the next part of the paper we're going to talk about crypto we're
going to talk about the government's assessment of crypto assets that result
in ghgs and other environmental impacts so they talk about an onsite dedicated
power plant purchasing electricity from the power grid or producing
and disposing of computers and mining infrastructure and the product of power
plant fuels and structure as being scope one two and three this is actually
one of the most concise definitions of scope that I've seen
out there so if you're ever interested in that make sure that you read that
again that is basically what you're talking about when you're talking scope
1 scope 2 scope 3.
Uh now if we move on further down here you can see that they
talk about the energy mixture that's used for generation there's tons of
sp ecifics given in here however this one stood out hydropower in china provided a
majority of renewable electricity for bitcoin during this period this is again
during bitcoin's massive surges that were happening in 2019 to 2021 and the
huge amounts of electricity that did come from hydropower in china as a
result of that we can see that the rule-making process for the epa and the
department of interior does have new proposed rules for reducing methane from
oil and gas and they talk about using that methane for crypto mining
operations now this is not a zero cost operation to set this up these machines
that would be converting methane into flaring into electricity into
basically uh mining cryptocurrencies is probably a fairly expensive operation to
get set up so flaring operations are something that if you live in the state
of texas and you' ve driven outside of a major city ever you've very likely seen
them operating out in fields that is one of the things that they're talking about
mayb e we could go out here and get some electricity now yes you can what is the
cost of going out there to get the electricity is not something that's
talked about in here but i do believe that it's pretty expensive especially
when they do things like mention transporting that methane via pipelines
to end users that pipeline building is ve ry expensive very very expensive and
it is in itself also a destructive process so there are two primary ways
crypto asset mining using grid electricity would result in zero direct
greenhouse gas emissions one constructing or contracting for new
clean electricity sources to power the mining of the crypto assets this is why
i said earlier if you are setting up an operation right now looking at how you
might offset your electricity usage or dedicate a specific facility to your
electricity usage could be a very good use of your time and money factoring
that in as a cost could be something that would be interesting to do or
number two using existing renewable e electricity that would otherwise be
curtailed by the grid so that one is a little bit harder to anticipate exactly
how that would happen so the us climate objective industries
could volunteer or be required to build zero carbon energy capacity that
produces more electricity than the crypto asset mine requires selling
excess clean energy back to the grid so they're talking about not just
creating a regulatory environment where you would be required to produce
electricity that you would consume but also potentially needing to be compelled
to sell that energy back to the grid that part i think is a little over the
top so in 2019 2.6 of wind power in the united states was curtailed uh this is
talking about curtailing of this is basically wasted energy in texas five
percent of the annual solar power was curtailed in california 2.4 of solar
power was curtailed now this is in 2019 and making efficient use of curtailed
power is a difficult thing to facilitate because essentially you're talking ing about
building lines somewhere or putting products somewhere
close to where the power was curtailed and the point where the power is
curtailed if you're looking at a state size of texas or california
that is a lot of feet that is a lot of miles that could
be between two points so crypto asset miners here would not be likely to
operate e only during periods of curtailment this is a fact this is one
of the reasons why grid balancing via cryptocurrency mining is a hard
construct to get your mind around and envision a scenario where it's okay to
not be mining during certain periods of time because mining during all periods
of time is what you want to do so you can recapture and maximize your profits
so they're talking about something that would be antithetical to profit seeking
so that really does make the curtailment usage of electricity a little bit harder
to envision actually coming to light and in the fourth part of this paper they
look at emerging digital asset technologies that co uld support climate
monitoring or mitigation now this is where i think there is a lot of just
lost faith that i had in this paper so certainly i'd been checking many of the
footnotes that existed most of them were actually pretty decent a surprising
amount of them went to paywall articles which i don't understand that
they should definite ly not go there but there also is a large bias towards
going towards just specific entities and we're going to look at
digiconomist and how many times did economist has mentioned in This and it
is a shocking amount of sourcing for just that information not to say that
that's good or bad but the
variety that you might hope for in a research-based article that is
probably being considered for legislative purposes
should have a bigger basis of information coming in and also
independent research and analysis that is documented
than just what they found on the internet that's my take on it so we can
see executive order 14067 calls for the discussion of pot ential uses of
blockchain that could support technologies for monitoring and
mitigating climate impacts certainly we see with chia and the videos that i have
produced recently on chia and the climate warehouse and the carbon fund
and everything they're doing to actually tokenize and acidize this usage
that that's just not mentioned here th at right there is the bigger problem than
them mentioning chia anywhere else is that they failed to mention them in the
environmental markets where chia is in my estimation at this moment in time
the largest player and so they do also just draw the distinction
between compelled markets and voluntary markets
for carbon and definitely chia is a player in i believe the vcms i'm not
sure about in the compelled markets whether or not they're a player or not
but that's something that is interesting i Think that when you look at a robust
market infrastructure it should include mechanisms for trade execution payments
clearing settlements record keeping and securing rity that is exactly what chia has
provided with the climate warehouse technology so i don't think that them
mentioning or failing to mention as far as the consensus and stuff like that and
electrical usages of chia is anything uh i think that actually might be good i
think flying under the radar of this report might be not a bad thing at a ll
also so even though they didn't mention chia here i think they would have had to
have mentioned shia elsewhere if they were going to mention it here so
possibly that's a good thing because being mentioned in this report is only
good for one type of dlt and we're going to get to that here in just a little bit
if you can guess it already sound off below and let me know what it is today
Administrators of compliance markets have not adopted blockchain or dlts
today no but we are seeing quite a few different changes in the voluntary sea
carbon markets that definitely does tend towards chia being one of the larger
players in that sphere to the extent b lockchain trading uh
hides the identity of end-user carbon credits they would be antithetical to
high integrity vcms so it's almost as if they had no idea because literally chia
is solving all of that like chia solves that and what we're seeing with the
carbon fund solves that the issue of trust in vcms is not the trust issue
that blockchain s or distributed ledgers solve so yeah there is where things just
got wrong i mean things got very wrong here and i possibly is just because they
failed to research it if this could be amended and updated
with correct information that would be interesting but unfortunately this is
very likely a baked cake at this point and so
it's going to be served and people are going to eat it it's my guess that's
unfortunate because that paints a picture that is so hard to
overcome in the eyes of uneducated policymakers and legislators and
regulators that exist at the federal level who will not do anything aside
from consuming this report and possibly some o f the footnotes that are linked in
this report so that right there i really wish they
actually would have included something in this report they made a surprising
inclusion of a different hard drive based on uh consensus mechanism but again
not mentioning proof of space and time not mentioning chia
could also be not a horrible thing because
this is n ot a positive report this is not something you want to be looking at
if you are a bitcoin operation and saying i feel better you should actually
feel a lot of trepidation
uh resources emerging uses of blockchain technologies for energy management
include enabling california's flex alert system this i didn't know i thought this
was interesting also like this here smart grid technology that has the
potential to harness the services of millions of distributed energy resources
such as electric vehicles residential fuel cells commercial batteries solar
systems and enhanced grade reliability uh basically you would be looking at a
web 3s moment for power that would be actually pretty cool and if you got
rewarded for that in a demand-based response kind of situation that could be
very very cool um did not know that this existed that
it was california's flex alert i see those every now and then on twitter but
i don't actually like know how they happen but apparently they are using
blockchain te chnology of some sort i'm going to look more into that myself here
in the future the dynamic could change in the decade
ahead as more electrocity consumers also become providers i love that like you're
not just a consumer of electricity you're a producer of electricity and you
sell it back to markets i do think there are risks and they do
talk about those risks so every dirt is a potential physical
cyber security risk that could actually damage the grid and all the things that
are connected to it so there are problems uh that would still need to be
solved um they do talk about using zero knowledge proofs so it's interesting in
the production of ene rgy here in the dur situation in relation to california's
flex uh using zero knowledge proofs that are commonly used in the crypto asset
community dlts could provide potentially provide these services while also
protecting the identity identity and privacy of the aggregator or the der
owners so hear privacy Important other places
privacy not im important that is interesting need more information
we need people to voluntarily disclose information but if you're producing
electricity and selling it back well then we need to provide you
anonymously interesting interesting interesting and here we see them
completely missing the mark as far as what you would actually want for being
able to provide a lot of what they just talked about with a p2p energy trading
network that uses low energy consumption consensus mechanisms such as proof of
stake because proof of stakes reliability is
in question when you consider the fact that it's hyperlocated in data centers
honestly most proof of stake chains could just be written as apps and a
distributed database technology and function significantly better with
higher reliability so as we go to the appendix here let's
take a look at table a1 so this is where a lot of people are like my crypto was
mentioned or my crypto wasn't mentioned and is this good or is this bad so if
you're looking at a t bitcoin and you're looking at the mechanism and you're looking
at the amount of terawatt hours used that probably not something you wanted
to be mentioned in also this is where i'm saying digi-economist is
very highly relied upon i think it's actually too highly relied upon
and you've also got some things that i just don't know how to say it's well
sourced i mean it's interesting but at the same time is
it well sourced is a good question about table one a1
now if we look at table a2 there's a lot of people in the especially chia
community right now who are up in arms because they're saying proof of capacity
got mentioned Yet we didn't get mention ed let's talk about why that is
potentially not a bad thing here so first off they got a lot wrong like
security subject to further testing i mean if you know the history of burst
coin you would probably come to a significantly different uh
understanding about security decentralization you would probably come
to maybe medium i don't know how you get to
high throughput medium okay scalability hi really okay well exactly define high
like this is where we're missing the kind of legend if you will the
electricity consumption expected to be low due to energy efficiencies of
storage drives but current adoption scale is low so
that right there is you know a truth for cigna uh also
you know formula formally burst coin but when you look at some of the other
things that are mentioned here they also are just
Surprisingly like the security of proof of stake i mean there is never been a
consensus mechanism in my estimation that has had as many successful attacks
against it is that high security i don't 't really feels like that is
security anything but low decentralization hundreds of thousands of independent
nodes like chia has or a couple hundred nodes
or in some instances some some proof of stake chains have had
like 10 15 nodes uh that is not decentralized and to group all of proof
of stake into high this stupid chart here uh
i don't know wh at to say this this table is just not
right it is not accurate and honestly it should be subject to correction
this is an unfortunate thing that has made it into this report i don't know
what to say other than this
is at best
a bad representation of what the actual
differences between these two here really are i'm not going
to say that the security and decentralization of proof of work is not
high however decentralization is probably closer to medium this is where
how are you gagging and i mean zakila putting that at medium to high
for decentralization just still doesn't make sense like where are their
targets that they're estimating it really does need to be
explored more there's some some bizarre choices here as far as what's mentioned
what's not mentioned and also the assignments of
levels of security or decentralization to it uh
table a3 computing device numbers and power requirements for select crypto
assets in 2021.
Again they I mentioned several of these
out here and this is also interesting because
ethereum 2.0 didn't exist in 2021 so i don't understand that hopefully somebody
else can explain that to me table 8.4 a compilation of published ghg
estimates for crypto assets and you can see that they probably do have fairly
decent sourcing here i believe these reports are actually fairly decent
except for again we see a larger reliance on digi economist as we move
into some of these other more recent time scales this is interesting uh
the centralization of this information around digi economist in all the recent
sourcing is something that i think should be
investigated like why did this happen because this is a surpr ising amount of
digit economist sourcing uh and ii hope that it's not something that we're
seeing where there actually is a dearth of information outside of digiconomus i
think that would be pretty calamitous for everybody if we have one source
of trusted information for cryptocurrency
uh infos out there uh also another one that
i thought was pret ty interesting yeah the time article here that was the one
that i showed you there and this was unfortunately the one where they were
talking about the crypto industry was on its way to
changing the carbon credit markets until it hit a major roadblock
may 26 2022 uh so this was before uh chia came out and actually did change
the entire scope of the way things were going with truly decentralized truly
effective carbon technology markets that i gotta say that that sucks uh hopefully
there can be some updates to this i doubt it at this point baked cake okay
so those were some of my thoughts on this so let me just go ahead and shoot
out a couple of potential questions that people might have and what i think are
good answers to them so chia not mentioned is that good or bad i think it
could actually be viewed both ways i think this as a largely not great report
for crypto as a whole to be out there i think that it's going to have a lot of
ramifications and i think not being specifically named in this report may be
a good thing then missing the ball on the actual
accomplishments of chia specifically related to climate technologies that
could be beneficial that's a big negative they should definitely have
included that in this report the next one if post is banned in the
united states would you still farm would you still
chia farm they say hey post
pow only proof of state can exist are you
still gonna farm sound off below let me know or just keep
your answer to yourself but i think that's an interesting question i know
that i am going to lean on the side over there where i'm going to keep myself up
and running what about other c ryptocurrencies are you a asic bitcoin
miner doubtful most of those are in large facilities are you a gpu miner
that's looking at other things because most of pow that they're talking about
here is also going to be kind of inclusive of you you still keep mining
if they ban it i honestly feel that there is a freedom
and economics of it that we would have to see
come from a different source other than legislation i think it would actually
make its way to can this industry be
effectively regulated and a whole industry shut
down in a large the largest country that produces this technology
that is probably the next big wave of technologies out there that transform
and revolutionize the world i think there is a certain power to be
a node operator and i think there are certain ways that you can get around
being publicly identified as a node operator
so if it is it legal to ban an entire industry
is it legal to ban an entire industry so i would take the viewpoint that while
they could it w auld take a lot to do that
and you don't have to go that far if you can get electricity prices high you can
kill pow if you can get regulation that limits and requires reporting you
can get a lot of people to opt out and finally the biggest question that i've
got after reading this entire report was this produced by consultants who
have large vested interests and proof of stake and that one right there is
troubling to me because if it was and certainly the entire bias of the paper
read it yourself i'm going to link this paper with my highlights so you can
download it from my website and that will be you know between you and me
i'm going to put it up on my website you can download it from there you can view
my highlights that i put in it let me know what you think on those highlights
in the comments below you can also hit me up echo spaceport on twitter the
website digitalspaceport.com can also shop at
shop.digitalspaceport.com that supports the channel and if you're a channel
member th at gets you either a three percent or five percent discount
i think that there's a power to it i think there's a power to the government
saying we can get you guys to do it our way
and i think that there's a lot of those entities understand that and i
think that this is also why we don't want to pick fights with credit card
companies because they're not the people that you want to
fight with i don't think at the end of the day i don't think we want to pick
fights with banks they're not the people that you want to pick fights with at the
end of the days you probably
in my estimation are looking at efficiency standards
coming from regulatory agencies limiting certain products being able to
come into the united states that can become a de facto ban on also
certain types of proof of blanks now when you're looking at post and even
proof of consumer capacity hard drives hard to track electrical usage hard to
fingerprint i don't think you could fingerprint most operations in the
united states that are doing that so let me know what you think i know where i'm
going if a crypto ban comes down the pipeline i don't think it'll be a ban i
think it'll be regulations and i think it'll be onerous regulations towards
certain things first and i think it'll probably be spreading after that all
right everybody you have a great rest of your day
