While Proof of Work is, without a doubt, the most robust anti-sybil system out there, it is as wasteful as it gets. According to the “Global Cryptocurrency Benchmarking Study”, a research paper recently published by the Cambridge Centre for Alternative Finance (CCAF), electricity consumption for Bitcoin mining facilities can be estimated at around 462MW which is a conservative value. This figure makes Bitcoin the most secure peer-to-peer network in the world but it also represents an unsustainable waste of resources.
Of course, other systems like Proof of Stake, Leased Proof of Stake and even Proof of Capacity present themselves as an alternative, but many would still consider the Proof of Work system to be ideal in terms of safety.
There is, however, one cryptocurrency called Minereum that is taking coin mining to a whole new level through the use of Smart Contract on the Ethereum blockchain. Of course, this sytem relies on how secure the Ethereum chain is, and at the moment this blockchain is secured by a large network of Proof of Work miners.
Minereum is a token issued on the Ethereum blockchain and it uses a system of smart contracts to issue and distribute coins without the need to apply any Proof system. The Minereum announcement reads:
“Minereum is the first ever self mining Smart Contract Token. Coins are generated on the fly with a mathematical formula.”
So, how does it work, exactly? During April, The Genesis Addresses Collection took place, an event where 4268 addresses were collected from the community. To these addresses, known as Genesis addresses, was attributed 32,000 coins, setting the maximum supply to 136,576,000 MNE which will be fully available in about 47 years.
Now, these addresses hold 32k coins each, but they can’t use them all. The mining process will see each Genesis Address to mine 0.00032 MNE per ethereum block, which means that no new MNE will be given to the address, but rather the MNE on the wallet will become slowly available at a rate of 0.00032 MNE per Ethereum block. The remaining coins continue to be locked on the Genesis address.
This system creates a predictable issuance rate, prevents hyperinflation and ensures a fair distribution to the system’s participants who are prevented from spending all of the initial supply. The whitepaper reads:
“This formula is only incorporated in the Transfer function of minereum Smart Contract and its only function is to prevent that a user is able to transfer more funds than what he is allowed to.”
Although this system is highly interesting, it still depends on the integrity of the Ethereum blockchain which runs on a Proof of Work system. Nevertheless, it is a first step towards a more sustainable mining industry.
Many other projects are also working towards this goal. Coins like Gridcoin and FoldingCoin use the reward computational power contributions to networks like BOINC and the Folding@home, whose sole purpose is to help humanity by researching diseases, climate, and more.
Golem Network is also rewarding computational power in a general-purpose network where users can buy and sell computing power, rather than wasting it on mining.
Lastly, there is also Komodo, a Delayed Proof of Work cryptocurrency that uses Notary Nodes to stamp its block hashes on the Bitcoin blockchain, ensuring a higher degree of safety with a lower hashrate.
Although these projects are all different in essence, they all point towards the same problem with different solutions: The current Proof of Work mining landscape is not sustainable.