Can quantum computing save Bitcoin from itself?

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It’s been a volatile year for the cryptocurrency industry, to put it mildly. The industry has faced unprecedented levels of scrutiny, scandal and bad press thanks to high-profile fraud and financial missteps such as the collapse of crypto futures exchange FTX and of the crypto-based hedge fund and the subsequent indictment of its now infamous co-founder and CEO Sam Bankman-Fried.

Although most of the buzz has since dissipated, the industry remains under regulatory scrutiny and many companies are still embroiled in litigation. This month, the Securities and Exchange Commission sued two crypto companies in two days over alleged misconduct: Binance, the world’s largest crypto exchange, is accused of operating an illegal trading platform in the United States and misusing customer funds, while Coinbase, the country’s largest crypto platform, failed to register as an exchange, a legal requirement .

But the crypto seems to have survived its dark night of the soul and come out the other side with a surprising rebound. In fact, as Bitcoin prices have increased in recent months, so have mining operations – and their associated carbon footprint. Despite all the industry uncertainty, Bitcoin’s carbon emissions are currently at an all-time high, using nearly the same amount of energy per year as the entire nation of Austria, according to the Consumer Index. Bitcoin electricity from the University of Cambridge. And that staggering energy footprint will almost certainly continue to swell as proof-of-work issues become increasingly complex for miners to solve.

Bitcoin’s shocking power consumption is the result of the cryptocurrency’s mining process, which relies on a blockchain-powered public ledger. To keep Bitcoin transactions secure, authenticated, and anonymous, each ledger entry is made by solving complex computational problems, a process known as “proof of work.” The “miner” who solves this puzzle the fastest receives a newly minted Bitcoin in exchange for their efforts. “Proof of work” is a process of pure trial and error – plugging in random solutions and hoping to hit hard. This means that high-powered supercomputers, which can perform more calculations in less time, have an advantage.

But to prevent the currency from being devalued as more and more miners mint new coins, solving proof-of-work issues becomes increasingly difficult depending on the level of competition. By design, mining one Bitcoin always takes around 10 minutes. As a result, Bitcoin miners constantly have to use more and more computing power and often have entire warehouses filled with supercomputers. The result: the same amount of Bitcoin produced annually, but with ever-increasing energy consumption and carbon emissions. In 2009, you could mine Bitcoin using only seconds of household electricity; now you would need to consume about 9 years.

But there may finally be a solution to this complex problem: quantum computing. According to recent reports from CoinsPaid Media, quantum computing-based systems have been modeled to be “significantly superior to conventional mining equipment in terms of energy efficiency.” This finding is based on a study conducted by researchers from the University of Kent in the UK, who compared the power consumption of three different quantum computers when mining cryptocurrencies using the blockchain.

The resulting potential energy savings are staggering. “We show that the transition to quantum mining could lead to an energy saving – according to relatively conservative estimates – of around 126.7 TWH, or in other words, Sweden’s total energy consumption. in 2020,” the study said. And, unlike traditional mining equipment, which is already extremely advanced in its technology, quantum computers are still in their infancy and will likely become more refined to be even more energy efficient in the near future.

However, this finding comes with some important caveats. “Quantum mining is only energy efficient when using equipment of around 512 qubits,” explains CoinsPaid Media. “Meanwhile, the most powerful quantum processors available on the market, the IBM Osprey and D-Wave D2, have only 433 and 512 qubits, respectively.” More importantly, quantum computing has yet to evolve and will still have a long way to go before we can realize these kinds of savings. Quantum computing may save Bitcoin’s climate, but it won’t be soon. And the time to avoid the worst impacts of climate change is short.

By Haley Zaremba for Oilprice.com

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