Bitcoin-inspired SolarCoin aims to fuel renewable energy boom

Innovative altcoin shines light on environmental impact of leading cryptocurrency

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      Rob Baxter likes to ask people if they know what country generates the largest proportion of its electricity with solar power. The answer often surprises them.

      Standing next to 14 photovoltaic panels being installed on the roof of Vancouver’s Mountain Equipment Co-op store, Baxter told the Georgia Straight that Germany, which occupies the same latitudes as southern British Columbia, leads the world in producing electricity from the sun’s rays. Meanwhile, according to the Society Promoting Environmental Conservation president and Vancouver Renewable Energy principal, solar power remains a marginal source of electricity in B.C.

      “We’re not ideal as far as climate and latitude go, but we’re not bad, especially if you compare us to some of the other leading countries when it comes to solar,” Baxter said. “Really, the problem here is our cheap electricity prices.”

      Vancouver Renewable Energy installs photovoltaic systems for a growing number of businesses and homeowners who want to reduce their carbon footprint. However, Baxter noted that, despite the environmental benefits of solar power, there’s little economic incentive or government support for people to convert to it in this province.

      In B.C., Germany, and around the world, a new digital currency aims to give people and organizations another reason to generate solar power. SolarCoin, which launched in January, is an innovative, Bitcoin-like cryptocurrency that’s designed to stimulate the production of 97,500 terawatt-hours of solar electricity over the next 40 years.

      While computers performing cryptographic proof of work “mine” all bitcoins into existence, the vast majority of solarcoins will be tied to solar-power production. Producers who provide the SolarCoin Foundation—so far an unincorporated group of volunteers—with verified meter readings are eligible to receive one solarcoin (SLR) for every megawatt-hour generated since 2010.

      “With SolarCoin, we took a look at it and realized we could use the proof of work in the physical world as a way of incentivizing solar-electricity generation,” SolarCoin spokesperson Nick Gogerty told the Straight by phone from Greenwich, Connecticut. “In economics, the general rule is the more money something has flowing into it or thrown at it, the more of it you’ll get.”

      Gogerty, an investment adviser who is the principal of Thoughtful Capital Group, coauthored the 2011 white paper that provided the basis for SolarCoin. The paper argued that a central bank could, by backing a currency with electricity-delivering assets, invest in energy infrastructure and promote economic growth. However, with the rise of Bitcoin, Gogerty realized that “you can effectively become a central bank.”

      SolarCoin is a fork of Litecoin, the most popular of the Bitcoin-based altcoins. The plan is to grant 97.5 billion pre-mined solarcoins (99.4 percent of the 98.1 billion solarcoins to be issued) over the next four decades to residential, commercial, and industrial solar-power producers. A “genesis pool” of 500 million solarcoins (0.5 percent) will be used to pay the currency’s developers, keep the foundation running, and support renewable-energy organizations. Finally, 105 million solarcoins (0.1 percent) will be mined using the scrypt algorithm—mostly in the first four years—in order to get the network established.

      In March, Arizona resident Lisa Shock became the first recipient of a SolarCoin grant (23.4 solarcoins for 23.4 megawatt-hours). Since then, grants have gone to producers in Australia, Greece, Italy, and the Netherlands. The foundation is waiting for the first claim from Canada.

      Gogerty noted that the three-month-old SolarCoin economy is “tiny”, with only a handful of businesses and charities accepting the cryptocurrency and two exchanges listing it. Wallet software is available for Linux, Mac, and Windows. As of April 14, one solarcoin was valued at US$0.0062, according to the CoinMarketCap website.

      Each solarcoin issued to renewable-energy producers represents an estimated carbon offset of 680 kilograms of carbon dioxide equivalent. In contrast, Gogerty is working on a model that currently suggests each bitcoin is backed by 2,720 kilograms of greenhouse-gas emissions. The model tentatively estimates that the Bitcoin network may be producing 9,800 tonnes of emissions every day.

      According to Eric Liow, managing partner of Crypto Think Tank—a Vancouver-based cryptocurrency start-up—one estimate pegged the electricity cost for maintaining the Bitcoin network at US$160,000 per day. But Liow told the Straight that it’s difficult to quantify the amount of energy expended by bitcoin mining.

      “We know how much hash rate there is in the whole network,” Liow said in the Student Union Building on the University of British Columbia’s Vancouver campus. “That’s essentially how much computer power is being put towards solving these computer problems. But we don’t know who has what type of machines and how much energy each of these machines is using.”

      Regardless, Liow asserted that the environmental impact of Bitcoin due to its electricity consumption is insignificant in the context of the global financial system. After all, it takes immense amounts of energy to print money, run credit-card networks, keep the lights on at banks, and transport employees to work. (For example, the Royal Bank of Canada reported creating 159,491 tonnes of emissions between November 2011 and November 2012.) Liow also pointed out that “tremendous” advances in technology are leading to increasingly energy-efficient bitcoin-mining machines.

      SolarCoin isn’t the only cryptocurrency with purported environmental benefits. Every transaction involving Clean Water Coin, released in March, sees 0.1 percent of its value donated to Charity: Water, a New York–based nonprofit that funds drinking-water projects in developing countries. Permacredits, expected to launch later this year, is billed as an asset-backed cryptocurrency that will support a network of ecodevelopments and permaculture projects.

      Across B.C., 286 solar-power systems, with a total capacity of almost 1.3 megawatts, are connected to the electrical grid. According to B.C. Hydro, 22 of those are located in Vancouver, representing 110 kilowatts of capacity. (For comparison, B.C. Hydro’s own hydroelectric and natural-gas power plants have a total capacity of 11,000 megawatts.) The utility pays customers 9.99 cents per kilowatt-hour for excess electricity generated from renewable sources.

      Aside from a provincial sales tax exemption for photovoltaic panels, the B.C. government doesn’t offer any incentives for solar power. The federal government provides an accelerated capital cost allowance that lets businesses deduct from their taxes the cost of eligible photovoltaic systems at a rate of 50 percent per year on a declining-balance basis.

      With a combined capacity of 2.78 kilowatts, the Society Promoting Environmental Conservation’s eight monocrystalline and six polycrystalline panels will offset less than one percent of the electricity consumption of MEC’s West Broadway store. The Bullfrog Power–funded project is expected to generate three megawatt-hours—potentially worth three solarcoins—annually.

      Baxter characterized SolarCoin as an “interesting idea” that’s “a bit complicated”. He’s not so sure that the cryptocurrency is the incentive the solar-power industry has been waiting for.

      “I think incentives that work and are viable are good things,” Baxter said. “If it’s a bad incentive—it gives people a bad taste about solar—then that’s not good.”

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      3 Comments

      foxxe wilder

      Apr 17, 2014 at 11:49am

      so another false currency appears in the news. As there is really nothing to back it, (such as gold) how the hell is it supposed to be worth anything?

      It's not like you can trust the 'stock market' at all.

      Mike Cantelon

      Apr 18, 2014 at 10:26am

      LOL

      mateo renolds

      Apr 21, 2014 at 3:07pm

      foxxe there is nothing to back it? You missed the article apparently as the cost to make the energy in any local currency will be the backing/standard of this currency just like gold was for the dollar.

      The only difference is that they could remove gold when they wanted to, this standard can never be removed as it is the basis for how people will be paid, only the price per MWh can be negotiated as we become more efficient at doing it.

      1MWh will always equal 1 SolarCoin, therefore the cost of the MWh will then be the "standard" of the currency.