Bitcoin Accelerates Green Energy Infrastructure. Do Litecoin and Doge?
Bitcoin is leading the way for mining innovation. As ESG conscious capitalism grows, so does the the need for Bitcoin to justify its energy use. Trailblazing work and FUD debunking by Nic Carter and The Bitcoin Policy Institute (in addition to others) are showing the way.
The establishment of the Bitcoin Mining Council is now providing the real life evidence that has lead to a narrative change from "boiling the oceans" to something closer to financing the green energy revolution. Previously untapped geothermal energy in El Salvador, miner migration to stranded hydroelectric, and more recently ExxonMobil partnering with Crusoe Energy Systems to reduce flaring emissions show glimpses of a powerful energy trifecta.
Enable energy abundance to less wealthy areas of the globe.
Increase price competitiveness of green energy sources.
Reduce current carbon emissions from US shale flaring.
What's not to love? If Bitcoin has shown the way, can these techniques and results be reproduced? If so, what properties would allow other proof of work cryptocurrencies to contribute in a similar way?
The proof of work currency must have market value, scale, be on-demand, and be transportable. Let's look at the more well known examples:
Bitcoin already fits the bill as explained above.
Ethereum does except for the known agenda to switch to proof of stake.
Monero would except they purposefully have changed mining algorithms to avoid ASIC mining, and would likely do so again if needed.
Litecoin, Doge, and merged mining of the two have all the ingredients needed.
Prior to the Doge price pump, the Scrypt mining incentive was dominated by Litecoin. As we all know, Doge now commands an astronomical market cap compared to its relative position only a few years ago, and now provides an equally handsome mining incentive.
What superficially appears as a rising competition for security between Litecoin and Dogecoin is in reality a mutualistic relationship. To simplify, since 2014 when the two began merge mining, each chain's block reward and fees pay to the same pool of miners. This increases the revenue available to miners, dramatically increasing the ability to profitably sustain a high hashrate to secure each individual blockchain.
Energy Consumption & Scalability
What Bitcoiners have established is the power of proof-of-work (POW) mining to serve multiple roles as an energy capacitor, load balancer, and green energy infrastructure accelerant. If this is new information to you, follow Nic Carter on Twitter and just start reading.
Assuming that's old news, new questions start to arise. The first is more philosophical. Will other POW cryptocurrencies survive and maintain a value sufficient to justify mining at scale? Dogecoin's value arises both from its security with merge mining, pop culture virality, and powerful billionaire backing. If using fundamental views of a network's health, Litecoin is healthy and growing under the radar with organically rising active addresses, market cap, and transfer volumes. Looking at real world use, Litecoin continues to widen its moat as the second most used cryptocurrency for everyday transactions as measured by BitPay.
Looking at hashrate, Litecoin + Doge are currently rallying to new all-time highs, demonstrating a robust and economically viable mining industry. This is before considering the new generation of miners with drastically improved power efficiency. The newly released Bitmain L7 lowers the J/MH for mining to ~0.36 J/MH, compared to ~1 J/MH for many current miners. One unique aspect of Litecoin and Dogecoin's pairing is the indefinite security they provide each other through transaction fees and coin issuance. Even after the last of the 84 million Litecoin is mined with no new coins to be issued to miners as compensation, Dogecoin's annual fixed issuance of 5 billion Doge per year will continue forever as a boost to miner revenue.
Bitcoin ASICS fall in a sweet spot for power consumption with divisible units. If a 20,000 ASIC warehouse is appropriate for the amount of excess power being generated, then you can set it up. If all that's justified for gas flaring in the middle of nowhere are mini-pod containers of 70 miners, it's just as easy to divide, shut down, and start up ASICS, regardless of whether the hashing algorithm is SHA-256 or Scrypt. This combination of divisibility, intermittency, and general fungibility of ASICs are powerful attributes. With the Bitmain L7 Scrypt ASIC, Scrypt mining is now elevating Litecoin & Dogecoin into this conversation.
As specified by Bitmain above, the L7 is made with industrial scale in mind. The jump from last generation miners (L3) to the L7 is not only a 19x jump in hashpower, it is also explicitly to place it on par with flagship Bitcoin miners in form, stability, and efficiency.
What the specs comparison shows is the parity between Bitmain's SHA-256 and Scrypt lineup. Notice:
Comparable power on wall (orange underline)
Near identical physical form (green underline)
Lighter L7 compared to the S19 XP (blue underline)
To the last point, if anything, the L7 Scrypt ASIC is slightly more mobile due to the net weight decrease. It will be a same method and nearly identical difficulty to rack, pack, and maintain these miners.
Hellopal follows the Blueprint
Is Bitmain's newest miner going to scale industrially in the real world? Hellopal (HLLPF) is the first public example it possible.
Hellopal is a publicly traded, global chat and livestreaming platform primarily operating in Asia. While the core of their business is not crypto, they have moved aggressively and have already secured 100% renewable mining facilites in North America and started mining with 100 L7s in a recently constructed data center in Victoria, Australia. This Australian facility was constructed to contain up to 20,000 miners to allow for expansion of operations, as stated in Hellopal's press release. Although the energy source of Australian facility isn't disclosed, the company has previously stated a commitment to 100% renewable energy. Read more about their ambitions in their April 2022 investor presentation.
The two impediments to Scrypt mining at scale do not appear to be tech or algorithm related. Scaling is hindered by Bitmain's production of L7s and the combined market cap of Litecoin and Dogecoin. For the sake of a green future, let's hope neither of these hold-ups last much longer, and that all appropriate POW currencies find a seat at the table to enabling renewable energy.