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Key Takeaways
This paper aims to present the opportunities and relevance of blockchain innovation in tackling climate change, starting with Bitcoin and expanding towards blockchain more generally as a foundational infrastructure for the future of grids.
It underscores that limiting global warming below 2°C will require significant investments in decarbonization and that the electric grids are a central pillar to succeeding. The investment required to grow and decarbonize the grids globally could be as much as US $3.5 trillion a year until 2050.
The paper discusses the issues of intermittence and of the non-dispatchable nature of renewable energy sources, the number of additional connections required due to lower power generation per connection, and the implications associated with being more geographically distributed and inverter-based, grid-following. Supply must match demand at all times, and rapidly growing the necessary renewable sources of energy to decarbonize the grid will require being able to rapidly address this fundamental requirement, notably through innovative technologies and approaches. This is likely to include demand-management systems in order to reduce demand on different time scales.
The paper also explores how Bitcoin mining can help address some of the challenges associated with grid decarbonization and expansion through greater deployment of renewable sources of electricity, and therefore the opportunities for complementing and accelerating ongoing efforts.
Bitcoin miners' flexibility differentiate them from other industries and stakeholders in providing demand response.
Bitcoin miners globally have also adopted innovative ways to reduce their carbon footprint, beyond transitioning to zero-emission electricity sources, and make mining (and other industries) more sustainable.
Blockchain innovation could be used in a variety of ways to address some of the key challenges facing the energy sector over time, such as blockchain-based smart microgrids to enable decentralized demand response, blockchain-based voluntary carbon markets to ensure trust and credibility, the tokenization of carbon credits, renewable energy certificates or green bonds, and the use of blockchain to facilitate the funding of renewable energy projects.
Recommendation paths are provided to foster a constructive dialogue between the blockchain industry, government and other stakeholders so as to reduce the barriers to communication that exist, reduce the information asymmetry and knowledge gap and accelerate common action to rapidly and responsibly tackle climate change.