The Pros and Cons of Blockchain in the Energy Industry

Since its introduction to the mainstream market, Blockchain has disrupted a lot of sectors. From financial, insurance, and shipping industry to government agencies and even the cattle market, the technology has varying effects on these areas.

But arguably the most affected market among all of them is the energy industry. Experts in this field have found that blockchain transactions require staggering amounts of power in order to calculate the complicated equation involved in the process.

To put in perspective, a recent report by an economist estimates that a single blockchain transaction requires energy equal to the monthly average power needed by a Netherland household. And there are hundreds of thousands of such transaction process on a daily basis.

However, despite this negative effect, Blockchain also holds the key to the energy market’s evolution. With the help of renewable technology, Blockchain can potentially transform a household into an energy source. The reason why people aren’t doing this is the lack of incentives. Blockchain solves this because it allows micro-transactions to take place at a flatter, cheaper cost.

So let’s say there’s a community that’s harnessing energy using renewable tech like solar panels. If their energy storage exceeds their daily power consumption, they can sell that extra energy to neighboring communities. On a smaller scale, a household to household trade will take place.

This incentive will ultimately encourage people to transition from traditional power source to renewable energy. And with everyone using it, the global economy will rely less and less on coal and oil lowering carbon footprint as a result.

While this seems far off, governments are actually implementing pilots centered on this very idea. One such example is the Repowering London initiative that’s already enforced by the U.K. The end goal of this program is to ultimately decrease everyone’s energy bill to zero, while incentivizing household at the same time.