nChain is pleased to see the larger, record-breaking blocks recently mined on the Bitcoin SV blockchain, following an increase in the cap on block size. The increase marks an important development for our enterprise customers, including those accessing blockchain technology through Kensei, the platform we announced on July 22, 2021.
Increasing block sizes has two related benefits for our customers. Firstly, a larger block size, or increased bandwidth, means that more data can be bundled into a block, which, assuming a stable amount of data per transaction, ultimately means that more transactions per second can be processed. The increase in capacity presents reassuring news for enterprise and government capturing high volumes of data and looking to ways of enabling real-time processing.
Before going into the second benefit, it’s important to understand that the time, effort, and energy required to write data to the blockchain through the process of mining are not directly impacted by the size of the block. The resources needed to mine a block, or write data to the blockchain, are dictated by competition among miners—and therefore not primarily related to the number of transactions.
This dynamic has an important implication for enterprise clients concerned with their energy consumption, namely, larger blocks mean less attributable energy per transaction, assuming a constant data size per transaction. This assumption is reasonable given the typical data of our clients and that most write a hash (a unique value that represents a piece of data, or even an entire document) to the blockchain.
The following table presents the combined effect of larger block sizes on energy consumption. For illustrative purposes, the transaction size has been modelled at 250 bytes, sufficient for a hash of data, while we use an estimate of 8,134 KWh per block (which reflects our average estimate of mining a block in the first half of 2021).
We are excited about the recent update and even more excited that it is the first of many increases in block size to come. Reducing the energy required per transaction supports our goals of sustainably partnering with enterprises to improve the integrity of their data.
The same in-house nChain blockchain experts developing solutions and products for our clients were key contributors of the infrastructure team that expanded throughput capacity to 1GB, before rapidly doubling it to 2GB. Such capabilities position our experts at the nexus of delivering solutions for enterprise and driving the evolution of system infrastructure that enables the solutions to meet enterprise needs.
The team is currently hard at work on the Teranode project, which will enable block sizes of up to 1TB or 500 times the size of the recently introduced cap.