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Oil and Gas Giant Shell Invests in Fourth Blockchain Venture Called Exergy, Aims to Decentralize the Power Grid

Oil And Gas Giant Shell Invests In Fourth Blockchain Venture Called Exergy, Aims To Decentralize The Power Grid

Royal Dutch Shell, usually simply referred to as Shell, is an oil and gas mega-corporation that has USD 400 billion of assets and pulled in USD 388.4 billion of revenue in 2018, generating an income of USD 35.6 billion. To put this in perspective, the Bitcoin market cap is USD 174 billion as of this writing, less than half of the assets that Shell owns.

In 2017, Shell created a division that was tasked with researching blockchain technology and finding potential applications. Since then Shell has invested in and partnered with four blockchain ventures, and Shell’s most recent investment in Exergy is perhaps the most exciting so far.

Shell Partners with the Blockchain-Based Platforms Applied Blockchain, Vakt, and Komgo

In 2018, Shell successfully completed the first oil derivatives trade that utilized blockchain technology on a platform developed by Applied Blockchain. Since that first trade, Shell has continued to use this blockchain-based trading platform within the company for petroleum products trading. The advantage of using blockchain technology for such a platform is that the trading data, such as price agreements, can only be uploaded by official sources, and therefore traders know that the data is trustworthy since the information stored in a properly built blockchain cannot be tampered with or deleted.

Shell was also a founding partner of the blockchain-based commodity trading platform Vakt, in collaboration with other major energy producers including BP, Equinox, Gunvor, and Mercuria. Vakt utilizes JP Morgan’s Quorum private distributed ledger, which is essentially a permissioned blockchain. Vakt manages physical energy transactions from trade entry to final settlement, creating a single source of truth for a trade’s lifecycle since the blockchain is immutable. Ultimately, this can help combat fraud and inefficiencies in petroleum products markets, leading to a more profitable and efficient market. Also, Vakt eliminates reconciliation and paper-based processes, which saves time. Shell has been trading on Vakt since 2018.

Another blockchain-based trading platform that Shell has partnered with is Komgo, which uses the decentralized Ethereum blockchain rather than a permissioned blockchain. Komgo focuses on the financing of commodities trading, so aside from including major energy companies like Shell, a litany of banks and trading institutions also participate in the Komgo network.

Shell Invests in Peer to Peer Energy Distribution Network Exergy

Perhaps the most intriguing blockchain-based venture that Shell has been involved with so far is Exergy. On July 10 it was announced that Shell had made a major investment into LO3 Energy to fund the development of the Exergy platform.

Essentially, whereas Bitcoin tracks the flow of money in a decentralized ledger, Exergy aims to track the flow of energy between peers in the local power grid. Someone in the neighborhood who is producing solar power in their backyard can send their energy into the power grid, and a neighbor can then purchase this energy while knowing with certainty that the electricity they are receiving is from renewable solar power rather than environmentally damaging fossil fuels. Exergy is betting that there are numerous eco-conscious people who will want to use the platform in order to support renewable energy and transition away from fossil fuels.

@Exergyplatform combines #blockchain, AI and smart meter technologies to create an #energy marketplace that facilitates transacting of energy across existing grid infrastructure. https://t.co/Gp2sQ7P4Mf

— ExergyFoundation (@_Exergy) February 20, 2019

When Exergy launches, there will be a mobile app that will allow users to choose when to purchase from local energy sources and exactly which sources to purchase from. This gives electricity consumers power over their energy usage like never before, and since the data is stored on a blockchain, users can trust that they are receiving electricity from the exact source they chose.

Exergy Paves the Way for a Distributed Energy Economy Fueled by Cryptocurrency

Exergy will have a native cryptocurrency called XRG which will incentivize users of the platform, and also will be required in order to access the Exergy grid. Devices which measure electrical current will be sold to both the people generating power on the Exergy grid and the people consuming power, and these devices require an XRG token to be activated. Customers who sell their energy consumption data to 3rd parties will be rewarded with another cryptocurrency token called Anergy.

Both of these cryptocurrencies will likely be ERC-20 tokens since Exergy uses the Ethereum blockchain. However, Exergy is also being designed to easily integrate with the EOS blockchain, since EOS supports higher transaction volume, which may be necessary to ensure proper scalability as the Exergy grid expands.

Zooming out, Exergy is a complete paradigm shift from the current situation where customers have no choice regarding where their energy comes from, and are forced to use the electric infrastructure that is installed in their neighborhood. Exergy will turn the power grid into a peer to peer economy fueled by blockchain technology and cryptocurrency, giving peace of mind to eco-conscious customers who do not want to contribute to the burning of fossil fuels, and incentivizing the generation of renewable energy like wind power, solar power, and hydrothermal power. This will create business opportunities for locals who want to generate power, as well as increase the overall adoption of renewable energy, which benefits the environment long term.

Shell Is Hedging the Risk That Renewable Energy Will Overtake Oil and Gas Mega Corporations

An important question to ask is why would a petroleum products giant like Shell build the infrastructure for a renewable energy grid meant to replace fossil fuels? The Exergy White Paper explains that 1000 GW of solar and wind power generators have been installed between 2010 and 2018, with the next 1 million GW expected in the next 5 years. Indeed, the cost of solar panels has dropped 70% since 2010. It is expected that solar power will reach cost and performance parity with grid-sourced electricity in Australia by 2021, followed by Europe in 2022.

Clean energy technologies threaten to overwhelm the grid. Here’s how it can adapt. @voxdotcom #Exergy #blockchain #energyblockchain #energydata https://t.co/grUBbDK85P

— ExergyFoundation (@_Exergy) December 3, 2018

Apparently, the production of renewable wind and solar energy is already creating problems for wholesale electricity producers and forcing their returns down long term. This is just the beginning. Currently, renewable energy accounts for 11% of total global electricity consumption, and Exergy projects that it will be 70% by 2050. Eventually, the cost of producing electricity from fossil fuels and then distributing it will exceed the cost of generating and storing power locally.

Therefore, Shell seems to be hedging their risk by joining the renewable energy revolution, since the math seems to indicate that peer to peer renewable energy infrastructure may eventually replace the current energy economy that is dominated by oil and gas giants like Shell.

If Exergy’s vision of the future is correct, perhaps it will soon be commonplace to choose from various sources of renewable energies on your mobile phone, and to pay for electricity with cryptocurrency microtransactions, while a TV in the corner broadcasts the news that the air is becoming less polluted and global warming is slowing down.

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Bosch and Wien Energie Set up the First Blockchain-Driven Refrigerator

Blockchain powered refrigerator by Bosch and Wien Energies

Electronics giant Bosch and Wien Energie – heating, cooling, and decentralised solutions provider has presented the first Blockchain-driven refrigerator to achieve inspection of electricity consumption in a transparent manner. The device is currently demonstrated at the Anon Blockchain Summit, Vienna.

In a press release, Wien Energie said, “The refrigerator shows how households can control and influence their electricity consumption”.

The refrigerator is supervised by an application which allows the performance of various functionalities such as notifying the user in case the refrigerator door is left open. It also allows supervision of the electricity consumption periodically and examination of the CO2 footprint. The customer has full control over the data and the settings.

Peter Gönitzer, the CEO of Wien Energie, said

“We see the Blockchain technology as an opportunity for us and are already testing the possibilities in practice with pilot customers. The goal is to make the topic of energy more vulnerable and comprehensible in the future. So far, the power is simply coming out of the socket, while the Blockchain can give the power a machine. “

For every unit of electricity consumed by the refrigerator, there is a transaction validation on the Blockchain network and the proof of origin is delivered to the user. From production to consumption of energy, a transparent report is made available to the consumer.  This is realizable through Blockchain’s forgery-proof control by which all the transactions are public, yet they are stored anonymously.

The project will be verified with three parties in the upcoming months. This plan is a huge stride to involve citizens in the electricity market and to increase awareness in power generation and consumption to develop an eco-friendly environment. The citizens will be taught how the electricity tariff prototypes and the smart meters will work with the help of Blockchain technology.

This being said, Blockchain with the help of its secure network protocol will enable a widespread application to procure efficient technology-based business models in the years to come.

Gönitzer said,

“The Blockchain infrastructure should enable new business models in the energy market. For example, an e-charging station could then use a computer protocol on the Blockchain and automated contracts to purchase electricity from both the solar [energy generation] system on the roofs of a neighborhood and from the wholesale exchange and then market it to an electric car”.

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Blockchain Tech to Develop Next-Gen Energy Micro Grids in South Korea

In a press release today, South Korea’s largest power provider KEPCO said it plans to develop future micro-grids (MG) that use blockchain technology alongside other open energy community solutions.

Kim Jong-gap, president and CEO of KEPCO, said in the announcement that they are pursuing the KEPCO Open MG Project to develop future microgrids. The aim is to improve the already established energy infrastructures, especially those of the green energy systems by bridging the gaps between independent MG providers.

The current energy infrastructure being developed is seen as a solution to energy supply problems: “If electricity can be traded between MGs, it will be helpful to stabilize the power system of new and renewable energy by eliminating the system connection bottleneck.”

Previously existing MGs were based on the systems of photovoltaics, wind turbines, and energy storage devices which made it difficult for the electric power producer to supply stable power. However, with the newly introduced Open MG system, which is equipped with a fuel cell as a power source, there should be an increase in the energy dependence rate and efficiency, which will also promote eco-friendly energy practices as it does not emit greenhouse gases.

KEPCO is leveraging on blockchain’s decentralized aspects, one of the three major trends Kim believes are in the future of the energy industry: decarbonization, decentralization, and digitalization.

KEPCO is responsible for the generation, transmission, and distribution of electricity for most of South Korea. About 50% of the equity shares in the company is owned by the government and a government-owned bank, despite it being a public company. However, it continues to explore new technologies and innovations to improve energy distribution models.

In April this year, Power Ledger announced its partnership with KEPCO to begin exploring peer-to-peer energy trading. With the promise of increased funding from the South Korean government and the recent partnerships between KEPCO, Mitsubishi UFJ Bank, IT service management company Nihon Unisys, and the University of Tokyo, the country may well be on its way to transforming the energy distribution sector domestically.

 

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New Study Finds That Bitcoin Mining Consumes Far Less Energy Than Previous Estimates

Christopher Bendiksen and Samuel Gibbons from Coinshares Research released an analysis of the Bitcoin mining network on 21 May 2018 and found that Bitcoin mining consumes 35 TWh annually, 0.14% of global capacity and less than the energy consumption the tiny European nation of Luxembourg. This is less than half of the 71 TWh estimated by Digicononomist, which would be 0.32% of global consumption and comparable to the large South American nation of Chile.

The Coinshares study estimates the spectrum of rig types being used across the Bitcoin mining network in order to make its calculation. Quite the opposite, Digiconomist uses the Bitcoin Energy Consumption Index (BCEI) which is based on the philosophy that it is too difficult to calculate energy consumption based on hash rate because of all the different types of mining rigs and their varying efficiency. BCEI simply assumes that Bitcoin mining electricity costs are 60% of Bitcoin mining revenue, and calculates electricity consumption from the resulting figure by using a global average of 0.05 USD per KWh.

Furthermore, the Coinshares study finds that the Bitcoin mining network is primarily fueled by renewable energy, especially hydroelectric, massively reducing its carbon footprint. Apparently, Bitcoin miners do a good job of setting up farms where there is an excess of renewable energy being generated, like in parts of China and Quebec, Canada.

This would make the estimates on Digiconomist of carbon footprint far overestimated. Currently, they say each Bitcoin transaction releases 500 kg of CO2 into the atmosphere, but if Coinshares is right then the amount of CO2 released per Bitcoin transaction is less than half this estimation.

On 16 May 2018, Alex de Vries published a study on Bitcoin mining energy consumption in ScienceDirect that used the BCEI, and his study made rounds through cryptocurrency media causing much discussion on how Bitcoin mining is bad for the environment due to the burning of fossil fuels, and would soon lead to increased electricity costs globally.

Apparently the BCEI calculation used by Digiconomist and Alex de Vries is overly simplistic and makes no attempt to calculate Bitcoin mining energy consumption by summing up the power consumption of the mining equipment that comprises the Bitcoin network, which is what the Coinshares study does.

It can’t be known for sure which methodology is right or wrong, what can be known for sure is that experts disagree on the amount of Bitcoin mining energy consumption and it may be far less than what the media has been reporting previously.

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Walmart Patent Integrates Crypto to Control Electricity Usage

Walmart has filed a patent application with the United States Patent and Trademark Office which would control electricity usage by integrating cryptocurrency and blockchain technology.

The system described in the patent would allot a fixed amount of cryptocurrency for electricity usage in a house, and this cryptocurrency would be used to purchase electricity from a utility company. This provides a mechanism to control electricity expenditures in a household or store and, therefore, would save money.

Each appliance and device in a house or store will have its own fixed amount of cryptocurrency that it could use to buy electricity, and this is recorded in a blockchain ledger. If a device uses up all of its cryptocurrency and electricity, it can query other devices that are using electricity slower than expected in order to get more cryptocurrency to purchase electricity.

If a device does have extra cryptocurrency, it sends it to the device that needs more, and all of these transactions are recorded in a blockchain ledger to facilitate easy auditing. The person paying the electric bill could review the blockchain ledger and find out which devices are using more electricity than they should and make appropriate changes in behavior or repairs, if necessary.

Essentially, this creates an autonomous system where devices interact with each other through cryptocurrency and blockchain technology to use electricity efficiently. The system guarantees there won’t be nasty surprises when the electric bill arrives since the fixed amount of cryptocurrency set aside for electric usage cannot be exceeded.

This system would need a cryptocurrency with very low transaction fees. Even more ideal would be zero transaction fees like with Bitcoin’s Lightning Network.

If there is extra cryptocurrency, the system could share it with another store or household that needs more cryptocurrency for electricity. It can also sell it for fiat on the market, or it could roll it over for the following billing period.

Walmart’s research branch has been embracing and experimenting with blockchain technology. It has filed patents for blockchain-powered autonomous vehicles that deliver products, as well as a marketplace that uses blockchain so customers can resell products purchased at Walmart.

It is only a matter of time until the technology that Walmart is developing becomes operational in the 11,700 stores it owns worldwide, which would facilitate blockchain technology reaching more people than ever before.

 

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Bitcoin Mining To Comprise 0.5% of Global Electricity Consumption

A new study authored by Alex de Vries and published in Science Direct forecasts that Bitcoin mining will comprise 0.5% of total global electricity consumption by the end of 2018, and is currently consuming 2.5 GigaWatts. This is the first scientific peer-reviewed paper on Bitcoin mining energy usage, and the author hopes this study will be the impetus for getting the conversation started on the best way to handle this problem in the future.

Bitcoin is the most popular cryptocurrency in the world with a market cap of USD 137 billion and trading volume of several billion dollars per day as of this writing. It uses the proof of work (PoW) algorithm where computers cryptographically hash transactions and organize them into blocks, which are added to the blockchain in order to maintain and secure the network. Computers that participate in PoW calculations are called Bitcoin miners, and they receive Bitcoin for their efforts.

Mining Bitcoin has become an extremely popular way to earn Bitcoin, and the amount of processing power used to has snowballed. As more computers mine, each computer already mining Bitcoin receives less income, causing the people to buy more mining machines so that they remain competitive. This has turned into a self-sustaining positive feedback loop that has led to exponential growth of the Bitcoin mining hash rate.

Currently, over 32 million TH/s of processing power is maintaining and securing the Bitcoin network. This uses a tremendous 67 TWh of electricity per year, which is enough to power 6.2 million US households, and is approximately the same amount of electricity that the Czech Republic uses annually.

Fossil fuels burned for Bitcoin mining releases 33,000 kilotons of carbon dioxide into the atmosphere per year, which is contributing to global warming, not to mention the damage from other toxic pollutants that are released into the environment when burning fuel.

This environmental damage that Bitcoin mining is causing has brought up the question if there is a more energy efficient way to maintain and secure the Bitcoin network. One answer lies in switching to Proof-of-Stake (PoS) mining, which some believe is just as secure as PoW but uses almost no electricity in comparison. Any changes to the Bitcoin protocol are met with extreme controversy, however, and this is unlikely to happen. Miners would be particularly opposed, considering that PoW provides such a large amount of money to Bitcoin miners, and switching to PoS would take away their income and make all their mining rigs obsolete.

Bitcoin mining hash rate and electricity usage will continue to rise until the point is reached that the revenue earned from Bitcoin mining equals the amount spent on equipment plus electricity. Currently, Bitcoin electricity usage is more than doubling every year.

 

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