Cryptocurrency critics frequently point to Bitcoin’s environmental footprint. Just recently, researchers of the university TU Munich found that Bitcoin’s CO2 emissions are as high as those of entire countries, like Jordan or Sri Lanka.
Indeed, Bitcoin’s energy consumption is high, too high, some may argue. The main reason is the way how the mining process works.
Bitcoin mining depends on computational power
Whenever a Bitcoin miner mines a new coin, the machine needs to solve a cryptographic puzzle, which requires computational power. The more the network grows, the more complex the puzzles, and the more computational power will be needed to mine new currency.
That’s also the reason why mining facilities are moving to locations where energy is cheap, like Northern Europe. But moving mining facilities won’t solve the environmental issue.
One of the first attempts to create a more energy-efficient cryptocurrency was Timekoin. The project launched in 2011 but disappeared again around 2014.
Mining through on a gradual time-based function
Like Bitcoin, Timekoin was decentralized and every node received a complete record of the transaction history. However, instead of a Proof-of-Work consensus mechanism, currency within the Timekoin network was created via a controlled and gradual time-based function.
The algorithm for currency creation was running independently of the transaction processing. Nodes on the network received coins based on the amount of time they spend being part of the network. The issuance took place at predictable intervals. The longer a node had been online, the more currency it would receive.
To avoid abuse, the following rules were set up:
Firstly, the network enabled the nodes to create currency via an election. These elections took place at specified times during the day.
Secondly, the selected node had to mine currency at least once every two hours or it would be excluded from the mining process.
Thirdly, mining nodes had to be internet-accessible by all nodes on the network and could only use one IP address at a time.
Timekoin never took off and finally disappeared
The Timekoin network was one of the first attempts to create a more energy efficient version of Bitcoin. The mining process didn’t consume much power, but it was slow.
The project disappeared around 2014. The website is down and Timekoins are not listed for trading on any digital exchange.
The project looked promising in the beginning, but never received the community support it would have needed for the project to take off. Part of the reason was that at the time all eyes were on Bitcoin.
Nowadays, various other ways to cut down cryptocurrencies’ energy consumption are being discussed: Some favor to change the consensus mechanism and switch to Proof-of-Stake, which requires less computational power but comes with security risks. Another idea is “sharding,” meaning every node only stores part of the blockchain, not the entire blockchain.
…and who knows, maybe the Timekoin project will also get picked up again at one point.