A few days ago I got a call from the mining industry (a non-customer) and asked me if our solutions consider blockchain. He didn't ask me what our solutions consist of, what does it cover or how do it solve the problems, only if it "uses blockchain". I kept thinking and, since I was on vacation and had time, I started to write what I think of this today. Read it today, because tomorrow I have no idea.
I am a computer engineer, specialized in mining software implementation. In my more than 25 years involved in the mining IT world, I have seen new concepts appear and become "key", something that everyone should be in. Things like "object oriented", "stored procedures", "datawarehouses", "open source", "microservices", "cloud", "NFT", "tokens", etc. There are dozens of new technologies or methods that emerge year after year, many that are born in B2C and move to B2B, many that last a short time and others that seem eternal. For some they are cult, for others (like me) tools.
But let's get to the point. Very simply, the blockchain is a technology that appeared with cryptocurrencies, especially with the Bitcoin and are distributed databases on multiple computers in different locations, where in each are duplicated. Everyone has a copy, they are divided into blocks of information, which to be added, the miner (which is a computer running algorithms to win) must decipher an encrypted code in each transaction (cryptography). For that they use a method called Proof of Work, which is where the headaches begin.
Blockchain is powerful in transparency and security, but expensive, slow to implement and even users have not assimilated the concept. But the worst thing is the huge consumption of energy resources, which obviously causes damage to the environment and goes against what we should be doing, right. Block mining occurs with hundreds and thousands of dedicated computers, grouped in "mining farms" and many of them in places where electricity is obtained from non-renewable sources, such as coal. There are people taking farms to places with a clean energy matrix, such as some islands, but is it sustainable?
*The figure shows global electricity consumption in BTC mining and prices per coin. Based on these estimates, in 2020 BTC mining used 75.4 TWh per year^-1 of electricity, which is more energy than that used by Austria (69.9 TWh per year^-1 in 2020) or Portugal (48.4 TWh per year^-1 in 2020). From the study "Economic estimation of Bitcoin mining's climate damages demonstrates closer resemblance to digital crude than digital gold" Benjamin A. Jones, Andrew L. Goodkind & Robert P. Berrens
Independent of the tough time cryptocurrencies are having, blockchain is interesting. It has applications that benefit the environment, such as waste management and recycling, but its use, because of the high level of processing, generates a lot of carbon. While there are mixed opinions, it is believed that the new mining mechanism proposed in September 2022 by Bitcoin's competitor, Ethereum (Proof of Stake), will be less aggressive; but it is not yet proven for sure.
I share the opinion that while blockchain has multiple benefits, it does not apply to all types of businesses and if in supply chain many say it applies perfect, there are cases where, despite the business experience, resources, networks and reputation, its implementation simply does not work. Such as the highly publicized case of Maersk-IBM with TradeLens (a project that even we had faith in and even met with them about) to trace containers across the ocean, which was cancelled in November 2022.
There are successful projects, like the BMW pilot for cobalt in 2018 that has just been restarted, but it is worth asking...if it was successful, why did it take so many years to restart it? Why didn't it consider only blockchain technology and is it mixed with Cloud computing?
The focus should be on the needs of the use case, on what the customer needs to solve and not on the technology. Many of us entrepreneurs look for what problem to solve with an artifact and not what artifact solves a big problem.
"Let's not fall in love with the solution, let's fall in love with the problem," Uri Levine.