Congressional Research Service outlines pros and cons of blockchain solution use
Wed, 14 Aug 2019, 03:58 am UTC
The Congressional Research Service has recently released a report that examines the pros and cons of using blockchain in the energy sector.
Entitled “Bitcoin, Blockchain, and the Energy Sector,” the report noted that launching a blockchain solution can make an energy system more transparent, efficient, and flexible for customers. Other potential opportunities include integrating utility bill transaction on a smart grid, providing electric vehicle charging infrastructure, and distributing energy resources.
“Traditionally electric utilities are vertically integrated. Blockchain could disrupt this convention by unbundling energy services along a distributed energy system,” the report noted.
Blockchain could also reportedly offer consumer more choices in the energy market. The research cited the capacity to buy excess energy “produced by their neighbor’s solar panels.”
However, amid the advantages, the report also warned blockchain solutions can come with potential problems with distribution control and cybersecurity.
According to the survey included in the report, at least 77% of the respondents think there is a lack of blockchain solution implementation in the energy sector. In the United States, utilities are already reportedly conducting research and pilot stages for the technology. However, the problem in the country is that various energy laws govern the different states and federal bodies.
The report noted that although states hold the jurisdiction for retail electricity transactions, the Federal Energy Regulatory Commission oversees wholesale electricity transactions and transmissions for interstate commerce. That said, it is important to have a clear distinction on what would classify as retail or wholesale enterprises.
In addition, legislators also detailed the current state of energy consumption in terms of cryptocurrency mining.
The agency found that about 1% of the U.S.’s electricity-generating capacity is used for crypto mining, and this rate is said to be increasing every year. The researchers noted that crypto mining not only causes a burden to the power structure of a municipality but also increases consumer rates.
Moreover, the researchers said that the use of Bitcoin can also contribute to climate change, noting that “the associated energy consumption of Bitcoin usage could potentially produce enough CO2 emissions to lead to a 2 degree Celsius increase in global mean average within 30 years.”
But the researchers called sustainability concerns as “misplaced” and crypto’s energy consumption maybe just a “temporary issue.” They also argued that mining is often conducted on places with accessible renewable energy resources.
To address the problems of increasing energy use, the researchers suggested implementing policies for the crypto industry, including “minimum energy conservation standards, voluntary energy efficient standards, and data center energy efficiency standards.” Moreover, the report noted the federal government should also consider enacting standards at the state level.
Just recently, blockchain-based energy trading platform Power Ledger has successfully completed a 5-month trial with Kansai Electric Power Co. (KEPCO), demonstrating the benefits of their peer-to-peer (P2P) system for post-FIT (feed-in tariff) surplus power in Osaka. The partnership will see KEPCO transacting surplus power autonomously and automatically with settlements made in cryptocurrency using the Power Ledger solution.
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