The Sustainability of Complete Decentralization
One of the most discussed topics in crypto is energy consumption and sustainability. Commentators ranging from climate researchers to corporate executives have provided perspective on the impact of crypto and a desire to find more environmentally responsible solutions.
When exploring this theme, it is essential to assess the impact of crypto compared to other systems. In their May 2021 research report, Galaxy Digital estimates that today's banking systems consume twice as much energy as Bitcoin. The impact of the Gold industry is only slightly behind that of banking. Nonetheless, recent concerns about cryptocurrencies and even the crackdown in China place high energy consumption as a primary reason.
When a blockchain has competing miners and centralized server farms, the incentive to earn rewards outweighs the energy cost. It is no surprise that calls to make blockchains more sustainable continue to gain traction.
Some blockchains are moving away from a proof-of-work mechanism towards proof-of-stake, proof-of-burn and proof-of-weight. Instead of recruiting miners to solve problems, these models are focused on less energy-intensive tasks to secure blockchain networks and validate transactions. These solutions are sufficient for specific uses that require permissions to be in place, but for a public blockchain to have intrinsic value and be truly permissionless, it has to be backed by proof-of-work.
This is the approach Bitcoin is taking. However, while Bitcoin’s competing miners, in increasingly centralized server farms, use the most economically viable amount of energy to mine their coins and secure the chain, Minima’s collaborative approach means that each user expends the least amount of energy required to make their transaction and secure the chain.
Furthermore, Minima distributes the proof-of-work across exponentially more servers, using mobile phones and IoT devices to run nodes. This is significantly more sustainable and resilient than Bitcoin’s centralized energy production, which is also coming under attack.
Ultimately, Minima uses energy in a completely different way to other blockchains, and as it is natively mobile, users can source energy for their devices in more sustainable ways. We believe that blockchains with centralized elements such as miners and producers, incentivized to compete against each other, are fundamentally unsuited to be environmentally responsible. We believe that complete decentralization and collaboration is the ultimate way of achieving optimal sustainability, and that is what we have created with Minima.