By Leïla Rebbouh, Chief Scientist Officer & Founder, LR Physics
In an effort to reduce losses in solar energy production, the blockchain research team at LR Physics came up with a set of ideas realized in a proof-of-concept. The project NRmine (Energy Blockchain Mining) develops innovative mining farms for cryptocurrencies.
These mining rigs (i.e. a set of computers working on mining cryptocurrencies) will be built in the most energy-efficient way in Israel and in Belgium. The system’s main objective is to deliver cryptocurrencies at the highest level of profitability by using solar energy.
How do cryptocurrencies work?
Cryptocurrencies are based on the blockchain technology. The latter works as a huge decentralized register in which all transactions are copied. Each of these copies, as well as the machines hosting them, constitute a node of the network. It could be pictured as a book where we add – at regular intervals – new pages (blocks), on which are registered the latest transactions.
This writing work is done by ‘miners’. Everyone can become one if they have the necessary hardware resources. And as any work deserves a salary, the system pays its miners by transferring them cryptocurrency created ex nihilo. Once a miner has completed a block, he or she sends it to the other nodes in the network, each of which confirms the new block and adds it to their copy of the chain.
The proof of work: the basics of mining
Using blockchain’s proof of work validation method, each miner in the network has to perform time and energy costly calculations to encrypt all of the transactions. The computer or group of computers which finds the encryption solution broadcasts the result to other network participants; these ones can easily validate without requiring computing power. The miner having found the solution is rewarded in new money according to the modalities defined by the cryptocurrency protocol.
From the rig to the the trading of cryptocurrencies
The more the network grows, the bigger the amount of computing power required – increases exponentially. Power constraints tend to centralize mining activities around dedicated pools or physical mining farms. It is nowadays unlikely for a single individual to engage in mining; and successful miners are invariably the ones with the most financial means to buy dedicated hardware. The rig is the basic unit of tools for mining. It consists of several graphics cards that deliver enough GPU (ed. note: graphic processor) to mine.
The necessary building architecture of a mining farm is the same as a data center. Both consume electrical energy proportional to computing power and reject lost thermal energy.
Our mining farm will use off-grid electricity thanks to solar panels and the thermal energy will be reused through ORC (Organic Rankine Cycle) machinery to reinject electricity. The idea is to develop a green system combined to circular economy.
Once cryptocurrencies are created, they can be traded in other crypto (or traditional) currencies on a marketplace to optimize the profitability.
This Energy Blockchain Mining process is therefore highly profitable, reaching between 12 and 30% return per year, depending on the local cost of energy.