Chapter 10 Green Coins: Using Digital Currency to Build the New Power Platform

By Reed E. Hundt, Jeffrey Schub and Joseph R. Schottenfeld

The software breakthroughs that have made possible Bitcoin – the new cryptocurrency, regardless of how the IRS chooses to treat it – also can be used for almost any widespread and equitable sharing of a scarce resource. That’s why the authors, working through a non-profit called the Coalition for Green Capital[1] are exploring ways to link the new software capabilities with distributed solar power. We hope that building owners will not only put solar panels on their own roofs to self-provide power, but also will share that power with each other, using the software behind Bitcoin to enable fair payments to each rooftop power generator.

Today, rooftop solar accounts for an extremely small proportion of total electricity generation. In 2012, for instance, distributed solar generation made up only 0.2 percent of total retail sales of electricity in the United States.[2] But, the federal and state governments provide very large subsidies for solar power. Federal incentives may be worth more than 55 percent of the total cost, and state level incentives can be worth another 25 percent, meaning the system owner may have to shoulder only 20 percent of the actual cost of solar.[3] Here follows an example of the simplest structure of a rooftop solar purchase.

figure 6

Fig. 1: Typical Cash Purchase for Solar

The sun indubitably can provide all the energy needed by the global economy.[4] Technologists have been rapidly advancing the capability to convert the sun’s rays into electricity, and efficiency gains have been accelerating. Furthermore, due to rising supply, especially out of China, panel costs have been dropping very rapidly. Moreover, rooftops beckon for panels – there is no important competing use for the space; installation is easy; and the business creates jobs for which skills are abundant and underutilized. Last year, solar power created jobs in nearly every state.[5]

Scaling distributed solar faces two distinct problems. First, installers and government currently treat distributed solar as a benefit solely for the owner of a particular rooftop. There is little or no community or group-based demand for solar power. Second, by thinking of rooftop solar as a power source for the specific underlying home and not as a communitywide resource, homeowners and installers are not maximizing the amount of panels and power generation that could be obtained from a given home’s roof.

To solve these two problems, we are looking for creative ways to encourage widely distributed rooftop owners to install solar panels and supply solar power both to each other and to other users. They must use the electric grid to connect, of course, but if the group is big enough, it can muster the resources to negotiate a low transmission price from the grid owner. These individuals would need a way to connect – preferably with the option to maintain their anonymity – and their connections would need to allow for constant updating of the account of each rooftop owner. As additional rooftops are added to the group, the capability of the whole system would increase by more than the marginal increments of power added by each new solar provider. A larger number of scattered users creates a smoother, more continuous pattern of power generation. It also provides a greater capacity to offset the variable bursts of consumption and dips in production by each individual rooftop owner.

With these dynamics in mind, we are exploring how the introduction and adaptation of a block chain, the decentralized ledger that tracks and certifies all transactions of Bitcoin, and a solar cryptocurrency might be used by a community of solar rooftop owners. A decentralized, disaggregated ledger-powered currency could be converted to renewable energy credits and other government-driven subsidies. It could even serve as a medium of exchange within solar microgrids or networks, and the network effects created by a robust ecosystem of green currency could organically drive adoption.

Solar ledgers could help assure participants that their electricity use and generation can both remain anonymous. The protocols behind a cryptocurrency like Bitcoin would allow for transactions between users, but not require actual identification of any rooftop owner. Moreover, the absence or near absence of transaction costs and the speed of processing would permit the constant flow of transactions that a network of solar users would need to operate successfully.

Since the introduction of Bitcoin in 2008 by a pseudonymous programmer named Satoshi Nakomoto, cryptocurrencies and “block chains” have provoked significant controversy. Cyberlibertarians praise cryptocurrencies as the end of centralized banking; small business owners look forward to a future when cryptocurrencies will allow them to bypass bank processing fees; law enforcement fears that drug traffickers will use bitcoins to transact drug deals on black market websites such as the Silk Road. Last month, news that Mt. Gox, the largest Bitcoin exchange house, had lost nearly US$500 million worth of bitcoins promptly caused the currency’s value to halve.[6] Driven by speculation, bitcoins’ value is volatile, even in the absence of Mt. Gox-like shocks. With good reason, many wonder about the real worth of fiat-less cryptocurrencies or coins generated by code and “mined” by using computing power to make increasingly complex proof-of-work calculations. (This is especially disturbing because the amount of electricity and computing power now needed to mine bitcoins has an enormous carbon footprint.[7])

Nevertheless the promise of a distributed ledger and cryptocurrency is very great for distributed solar generation. The ability for one individual, group or entity to transfer funds directly to another, with the community (the miners) digitally verifying the transaction in the place of a third party (generally a bank) has nearly limitless potential.[8] Positive uses of block chains enabling currencies or commodities are already proliferating. Donors used dogecoin, originally viewed as a meme-based spoof of Bitcoin, to fund the Jamaican bobsled team’s appearance at the Sochi Winter Olympics. More recently, an anonymous user moved more than US$10,000 worth of dogecoins through Twitter – the largest donation ever made by tweet – to fund clean water projects.[9] Developers and programmers are creating entirely new cryptocurrencies aimed at providing social benefits: Gridcoin, for example, rewards miners for donating computing power to the Berkeley Open Infrastructure Network Computing Grid, which employs a global, decentralized network of computers to conduct scientific computing.[10]

SolarCoin has begun to explore how the concept of a cryptocurrency could be adapted to incentivize solar. Introduced in February 2014 by a group of volunteers associated with The SolarCoin Foundation, SolarCoin promotes solar adoption by creating an added motivation to produce solar power: in addition to renewable energy credits and other government subsidies that individuals already receive, solar producers would receive one SolarCoin for every megawatt hour (MWh) of energy produced.[11]

Unlike Bitcoin, SolarCoins are not, strictly speaking, fiat-less. Their value derives from the generation of solar power, which has some demonstrable economic value. Rather than only using computing power to demonstrate proof-of-work solutions and thereby mint new coins (“mining”), users can also earn new coins by producing more solar power. The more power produced, the greater the quantity of SolarCoin introduced into circulation. The open source code promises an equitable distribution between coins rewarded for cryptographic mining and coins earned through verified metered readings of solar electricity generation.

Of course, the coins have no intrinsic value. For now, earning a SolarCoin equates to little more than receiving a certificate of appreciation – a valueless acknowledgment. Over time, the coin’s founders hope that a community of interest will help create economic value for the coins: foundations and concerned parties could donate value as a means of rewarding others for purchasing solar panels and producing solar energy. Added value may derive from green businesses or solar-dependent businesses doing the same – out of altruism or to lower solar energy costs and increase their own margins. In the future, should the digital coins gain real monetary value, other vendors could pledge to accept the coins to boost their perceived social value.[12]

But there are other ways that a new solar cryptocurrency supported by a block chain could gain value and drive solar. By aggressively recruiting vendors to accept the currency or trade in it – rather than waiting for vendors to sign on – SolarCoin or a different solar cryptocurrency could gain value from its usability, such as the use of block chains in transactions between solar users. The block chain itself could become a kind of “fiber” connecting solar producers who want to be able to bargain directly with the grid or, over time, trade or move energy within the network of solar providers. Perhaps best of all, in a time of extreme data hunger, solar producers could do much of this while remaining pseudonymous for as long as they wish.

It will be a while before SolarCoin or something similar gains such widespread acceptance that people would consider using the currency to trade for energy credits or subsidies (or that the government would permit this to happen). A reasonable question to ask is why we are discussing our plans in this publication. The answer is that we are inviting collaboration. We want to figure out how to get there, and in the classic open source tradition, we believe that at least some of the readers of this volume will have crucial ideas and connections to help us reap the full potential of this vision. We can be contacted by emailing Jeffrey Schub at

Reed E. Hundt is the CEO of the Coalition for Green Capital, a nonprofit organization headquartered in Washington, D.C., that works to establish green banks at the state, federal and international levels. He is also the Principal of REH Advisers, a business advisory firm. He was Chairman of the Federal Communications Commission from 1993 to 1997. He sits on various corporate and nonprofit boards including Intel Corporation, and the Connecticut Clean Energy Finance and Investment Authority.

Jeffrey Schub is Vice President of the Coalition for Green Capital.

Joseph R. Schottenfeld is a research associate at REH Advisors and the Coalition for Green Capital.



[2] “Bernstein Commodities & Power: The Empire Strikes Back: How the U.S. Distributed Solar Revolution Could Be Nipped in the Bud,” Bernstein Research, January 3, 2014.

[3] See

[4] Tom Murphy, “Solar Data Treasure Trove,” August 7, 2012,

[5] Katie Valentine, “90 Percent of States Added Solar Jobs in 2013, Fueled By Growth In the South,” Thinkprogress, February 11, 2014, at

[6] Rachel Abrams, Matthew Goldstein, and Hiroko Tabuchi, “Erosion of Faith Was Death Knell for Mt. Gox,” The New York Times, February 28, 2014, available at

[7] Michael Carney, “Bitcoin Has a Dark Side: Its Carbon Footprint,” Pando Daily, December 16, 2013,

[8] Tom Simonite, “What Bitcoin Is, and Why It Matters,” M.I.T. Technology Review, May 25, 2011,

[9] Rob Wile, “Anonymous Redditor Makes Massive $11,000 Dogecoin Donation on Twitter,” Business Insider, March 17, 2014,

[10] See:

[11] See:

[12] Lauren C. Williams, “Could A Solar-Powered Currency Be The Next Bitcoin?” Thinkprogress, February 21, 2014,

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