These companies claim blockchain could help fight climate change

Is it a breakthrough, or just a buzzword?

Bitcoin, the much-hyped cryptocurrency, made headlines recently for driving a surge in power use. Around the globe, digital entrepreneurs are ‘mining’ Bitcoins by solving complex math problems, using supercomputers to get the job done. Those supercomputers use a ton of power, which largely comes form coal- and gas-fired power plants spewing gobs of carbon pollution.

But, while hackers wreak havoc on the climate, blockchain, the bleeding-edge technology behind Bitcoin, could one day help clean up the mess. Climate wonks say blockchain has a role to play in the clean-energy economy, helping homeowners sell electricity, allowing businesses to trade carbon credits, and making it easier for governments to track greenhouse gas emissions.

Typically, if you want to send someone money over the internet, you need a third party to validate that transaction. That party, typically a bank, certifies you are not trying to send the same money to two different parties simultaneously, or otherwise trying to deceive the system. Blockchain allows users to do business directly with each other without involving a central authority like a bank.

In this instance, blockchain acts like a digital ledger that simultaneously exists on every computer belonging to the same network, and the ledger is updated with every transaction. Because the ledger exists everywhere all at once, it is incredibly difficult to hack. Because it belongs to everyone, all the information is verifiable, though the privacy of individual users is preserved.

Since users don’t need a bank to validate their transactions, they can do business faster. Additionally, there’s no need to staff up and maintain all the personnel and infrastructure costs associated with a bank. These are the chief appeals of blockchain — security, speed and savings. The exciting part is that blockchain can be used to authenticate transactions of any kind. That’s where climate change comes in.

A major obstacle to addressing climate change is that our energy system is highly centralized, while the technologies we will need to cut carbon pollution, by and large, are not. Currently, most people buy electricity from a coal- or natural gas-fired power plant. As the price of solar panels continues to drop, more people will generate their own electricity from rooftop solar.

Rooftop solar owners want a way to sell their surplus power. Currently, in many places, they can sell that electricity back to the power utility, but this undercuts the utility’s core business of generating and selling electricity. In parts of the country, utilities have gone to great lengths to curtail this practice.

Brooklyn startup LO3 Energy, however, is a company that cuts out the middle man, using blockchain to make it possible for rooftop solar owners to auction off their surplus power to an apartment down the block. “Traditionally, your money really goes towards large corporations. The generating stations probably are located a distance away,” Scott Kessler, Director of Business Development at LO3 Energy, told Nexus Media. “Now, you can make sure that’s staying local.”