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Proof-of-Blackouts? How Proof-of-Work Cryptocurrencies Could Affect Power Grids

Part of the Lecture Notes in Computer Science book series (LNSC,volume 11050)

Abstract

With respect to power consumption, cryptocurrencies have been discussed in a twofold way: First, the cost-benefit ratio of mining hardware in order to gain revenue from mining that exceeds investment and electricity costs. Second, the overall electric energy consumption of cryptocurrencies to estimate the environmental effects of Proof-of-Work. In this paper, we consider a complementary aspect: The stability of the power grids themselves. Power grids have to continuously maintain an equilibrium between power supply and consumption; extended periods of imbalance cause significant deviation of the utility frequency from its nominal value and destabilize the power grid, eventually leading to large-scale blackouts. Proof-of-Work cryptocurrencies are potential candidates for creating such imbalances as disturbances in mining can cause abrupt changes in power demand. The problem is amplified by the ongoing centralization of mining hardware in large mining pools. Therefore, we investigate power consumption characteristics of miners, consult mining pool data, and analyze the amount of total power consumption as well as its worldwide distribution of two major cryptocurrencies, namely Bitcoin and Ethereum. Thus, answering the question: Are Proof-of-Work based cryptocurrencies a threat to reliable power grid operation?.

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Notes

  1. 1.

    https://www.coinwarz.com/cryptocurrency.

  2. 2.

    https://blog.ethereum.org/2016/09/18/security-alert-geth-nodes-crash-due-memory-bug/.

  3. 3.

    http://www.h-online.com/open/news/item/Leap-second-bug-in-Linux-wastes-electricity-1631462.html.

  4. 4.

    We use the term miners as equivalent for mining hardware (and not the operators of this hardware).

  5. 5.

    http://www.antbleed.com/.

  6. 6.

    https://blog.ethereum.org/2016/09/18/security-alert-geth-nodes-crash-due-memory-bug/.

  7. 7.

    According to the author, Ethereum is rather mined at residential homes; thus, residential rates apply.

  8. 8.

    The only arguable parameter is the hardware’s total runtime. Therefore, we followed a twofold approach to test its plausibility: On the one hand, we collected typical runtimes in the community confirming our assumption. On the other hand, we argue that the range of plausible values does not change the result significantly.

  9. 9.

    https://en.bitcoin.it/wiki/Mining_hardware_comparison.

  10. 10.

    Country Codes (ISO 3166-2): AT, BA, BE, BG, CH, CZ, DE, DK, DZ, ES, FR, GR, HR, HU, IT, LU, MA, ME, MK, NL, PL, PT, RO, RS, SI, SK, TN, TR, EH.

  11. 11.

    Mainland Denmark is connected to UCTE, the islands to NORDEL. We split the power consumption according to the region’s population. (54% in the UCTE grid, 46% in the NORDEL grid).

  12. 12.

    https://etherscan.io/stat/miner?range=7&blocktype=blocks.

  13. 13.

    https://blockchain.info/pools.

  14. 14.

    Representing the amount of lost generation/load that can be handled by the power grid, reference incident values are hardly changed in practice despite increased energy consumption and increased network sizes.

  15. 15.

    http://www.dailymail.co.uk/news/article-5161765/Bitcoin-mining-causing-electricity-blackouts.html.

  16. 16.

    http://www.scmp.com/business/banking-finance/article/2132009/china-stamp-out-cryptocurrency-trading-completely-ban.

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Acknowledgments

We thank Peter Pratscher operating ethermine and ethpool for providing valuable insight into hashrate population on a per country basis. This research was funded by Bridge Early Stage 846573 A2Bit and Bridge 1 858561 SESC (both FFG), the Christian Doppler Laboratory for Security and Quality Improvement in the Production System Lifecycle (CDL-SQI), Institute of Information Systems Engineering, TU Wien and the Josef Ressel Centers project TARGET. The competence center SBA Research (SBA-K1) is funded within the framework of COMET - Competence Centers for Excellent Technologies by BMVIT, BMDW, and the federal state of Vienna. The financial support by the Austrian Federal Ministry for Digital, Business and Enterprise and the National Foundation for Research, Technology and Development is gratefully acknowledged.

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Ullrich, J., Stifter, N., Judmayer, A., Dabrowski, A., Weippl, E. (2018). Proof-of-Blackouts? How Proof-of-Work Cryptocurrencies Could Affect Power Grids. In: Bailey, M., Holz, T., Stamatogiannakis, M., Ioannidis, S. (eds) Research in Attacks, Intrusions, and Defenses. RAID 2018. Lecture Notes in Computer Science(), vol 11050. Springer, Cham. https://doi.org/10.1007/978-3-030-00470-5_9

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  • DOI: https://doi.org/10.1007/978-3-030-00470-5_9

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