Facebook’s latest venture is going to be cryptocurrencies. Recently the company has announced its Libra virtual currency which is to be offer to the over 2 billion Facebook users worldwide. And that poses a question about its infrastructure and data centers.
Libra has the potential to be quite massive. From the start it will have a “default” audience of more than 2 billion people. That’s far more that Bitcoin can even dream about at the moment. And if Facebook’s ambitions about just how popular and used Libra is going to be come into fruition, then it’s going to need quite a lot of computing power. That could be a problem.
A recent study by Cambridge University showed that currently the Bitcoin blockchain network uses more electricity per year than Switzerland. The study claims that the Bitcoin network processes about 100 million transactions per year at a very inefficient rate. For example, the traditional finance industry processes 500 billion transactions per year. Yet, Bitcoin uses more energy than all banks in the world and their data centers combined.
That’s because to generate Bitcoin, you have to “mine” it. And to “mine” it, you need power hungry computers to crunch transaction numbers. As a result, you get a reward in the form of bitcoins. But the more competition there is in the “mining pool”, the harder it is. So, you need more computing power. Plus, the rewards get halved every few years. And, you guessed it, you need even more power to keep up.
Libra won’t have to be “mined”. Instead, the Libra Association, which Facebook co-founded with 27 other companies, will govern the supply of Libra coins via a “reserve” which is a “basket of various fiat currencies and other assets”. The goal is to create the so-called stablecoin – it won’t (shouldn’t) have Bitcoin’s big fluctuations in price. This will make it easier for users to use.
A different kind of power
So, if Libra won’t be so power-hungry why think about the energy? Well, Libra could have a massive scale. Imagine if 500 million people use it on a daily basis. That’s just a quarter of the potential user base Libra could have. Yet, it’s going to be far, far more than Bitcoin, which by unofficial data by Statista, had about 35 million “wallets” in March 2019. Many users have several wallets, so the actual people count is even lower.
Facebook has also said that Libra is going to have top bank-grade protection and will include personal ID data. It won’t be an anonymous currency, although the company vows to not share the data with anyone and not even use it for its own services. Still, it’s going to be quite a massive data trove which will need proper storage.
And if there are hundreds of millions of people using it daily for payments in real time, as Facebook envisions, then it’s also going to need massive computing power. This means more data centers which are focused solely on Libra.
These data centers will be used constantly and will also require hefty power, cooling, and even more security than a data center for social media. As a result, companies will not only further improve their current data centers, but will develop entirely new ones. At least this is what Kelly-Pitou, an urban systems strategist with architecture and engineering firm SmithGroup, says to The Verge.
She envisions new types of locations for data centers. For example, placing them near hydroelectric dams, wind farms and so on. This will allow them to use sustainable energy sources and rely less and less on coal or natural gas. It will also open the door for new types of hardware optimizations, developments and systems.
The results could be a new wave of improved, more energy-efficient data centers. Even if Libra doesn’t achieve the big potential Facebook envisions, it will help companies see the benefits of improved data centers for a variety of applications.