A Hybrid Blockchain Consensus Algorithm Using Locational Marginal Pricing for Energy Applications

Abstract

Blockchain technology has recently witnessed a rapid proliferation across multiple industries and has the potential to evolve as a popular energy transaction platform for grid operators and general users. The current proof-of-work consensus algorithm used by many blockchain protocols suffer from vulnerabilities such as the majority attacks problem and strip mining. The algorithm often requires specialized application-specific hardware and involves energy-intensive computation, making it an unlikely candidate for power grid applications. On the other hand, the proof-of-stake consensus algorithm is susceptible to the well-known nothing-at-stake vulnerability issue, making it equally unlikely to be used in large-scale secured energy transactions. An energy-efficient locational marginal pricing-based hybrid proof-of-work, proof-of-stake consensus algorithm is proposed to mitigate such risks. The hybrid consensus algorithm uses an optimized market-based energy pricing model to select the mining and forging nodes. A detailed framework of the hybrid consensus algorithm is provided, along with an overview of its potential application to record large volumes of energy transactions and execute obligatory smart-contract agreements.