Spreading the Risk Around
The core idea behind decentralized infrastructure and computation (DePIN) is to distribute computing tasks across multiple servers located in different geographical areas. This contrasts with traditional business practices, where large multinational companies often centralize their data servers into one or two locations.
For instance, even a giant like Facebook relies on centralized data centers for most of its computations. Should an earthquake occur at these vulnerable points, it could disrupt the company’s operations significantly. While such events may not happen immediately, they pose a real threat that businesses must consider.
The decentralized architecture of DePIN addresses this by spreading computational resources globally. If nodes fail, other network components can take over to maintain service. Additionally, blockchain technology ensures secure access and storage, protecting data from unauthorized manipulation or third-party attacks.
A Model Arising from Mining
The journey of DePIN began with the evolution of bitcoin mining. Initially using simple computers and laptops, the difficulty in creating new assets increased over time, pushing miners to develop more efficient hardware. Today’s specialized equipment not only solves complex algorithms faster but also operates much more efficiently, consuming less energy.
Centralized systems typically require massive 100 megawatt-hours of power daily, whereas decentralized systems consume significantly less, around half the amount. This reduced energy consumption translates to lower operating costs and environmental benefits. Moreover, decentralized mining has introduced alternative sources of electricity, such as small hydroelectric plants in remote areas.
In regions like Texas, where both bitcoin mining and oil drilling are prevalent, these operations can even support each other by providing additional load to the grid when needed. This model could be applied globally, enhancing resilience across various electrical networks.
Explorations in Other Businesses
DePIN’s principles are being explored beyond just mining, influencing other industries such as artificial intelligence (AI). AI models like DeepSeek are beginning to leverage decentralized computing for open-source projects, reducing overhead and broadening their computational power.
The cloud, despite having decentralized components, typically operates through centralized infrastructure in large data centers. In contrast, DePIN offers a more distributed model, making it better suited for various business needs that demand resilience and cost efficiency.
Next Steps
Cryptoanalyst Joel Hugentobler suggests that financial institutions and tech providers should start considering decentralized computing networks. Tasks such as AI model training, high-volume data processing, and real-time financial computations could greatly benefit from this approach.
As with the evolution of bitcoin mining to specialized integrated circuits, decentralized computing is expected to follow a similar trajectory. Innovations in blockchain technology will enhance performance and cost efficiency over time. Companies are advised to include these networks on their strategic roadmaps for further study but should be prepared to engage in pilot projects to fully understand and optimize them.
