Chemical Engineering applications using the Bitcoin blockchain

Created by Steven Baltakatei Sandoval on 2020-12-30T23:29Z under a CC BY-SA 4.0 license and last updated on 2020-12-31T01:15Z.


I composed the following post in response to a discussion prompt in the AIChE Engage forum.

Table of Contents

  1. Chemical Engineering applications using the Bitcoin blockchain
    1. Summary
    2. Prompt
    3. Reply
      1. Idea 1. Historian archive integrity
      2. Idea 2. Micropayment-facilitated process miniaturization
      3. Blockchain inefficiency


To: Discussion Central

Subject: Blockchain technology

Blockchain technology is an upcoming trend when it comes to immutable hack-proof digital technologies. Bitcoin is a classic example. I have a strong feeling that blockchain could be the next big thing since ARPANET become our INTERNET.

Anyone aware of the potential of this technology being implemented in chemical process industries (CPI)…

Ideas are welcome..

Rohit Korde MSc,CEng
Program Manager
Thane (W)


To: Discussion Central

Subject: RE: Blockchain technology

I run my own Bitcoin node and maintained a Lightning channel before. I'm not as familiar with Ethereum or other proof-of-stake blockchains beyond knowing that they gain scalability and flexibility over Bitcoin (which uses proof-of-work) at the cost of decentralization. In contrast to its token price volatility, the dominant (in terms of market capitalization) Bitcoin software changes less frequently over time. Therefore, some ideas I have regarding applications may prove significant in the chemical process industries. Although I use Bitcoin as an example, none of these ideas requires involvement of any particular commercial entity or blockchain, so long as a permission-less blockchain is used (i.e. one based on proof-of-work). These ideas are influenced by time working as a Plant Engineer / MOC Coordinator for a small independent oil and gas company's carbon dioxide reinjection plant in southern Utah.

Idea 1. Historian archive integrity

The idea is to prove the existence of process data using the Bitcoin blockchain. This may be accomplished by software that periodically (e.g. every 3 hours) constructs and submits a bitcoin transaction (e.g. OPRETURN) containing the merkle root of a hash tree. Each leaf of the tree is the cryptographic digest (i.e. "hash", e.g. SHA256) of a small file.

Take, for example, a situation in which each leaf is a file containing the time, equipment tag, and instrument reading of a gas composition transmitter. Already there exist public APIs known as calendar servers which accept files submitted through a website or Python script. In theory a process plant's historian could extend a calendar server's merkle tree by creating a local hash tree every 3 hours from many instrumentation readings across the entire facility and then submitting as a file this tree's merkle root. The plant's historian software could then maintain a database containing these trees. Linking individual instrument readings in this way is useful because it would then be possible to prove with a hard cryptographic guarantee that particular sets of historian data existed at (or after) a certain time. Additionally, the prover (e.g. a process engineer with access to the merkle tree database) need not provide entire trees to a verifier (e.g. an emissions compliance consultant); only a "merkle branch" need be sent for each individual leaf of the tree, reducing data bandwidth and storage requirements. Each merkle branch consists of a set of cryptographic hashes of cryptographic hashes pointing from the embedded bitcoin transaction (immutable) to a gas composition reading. The novelty of this arrangement derives from two facts:

  • The Bitcoin blockchain did not exist until 2009-01-03T18:15:05+00:00.
  • The Bitcoin blockchain is timestamped and immutable.

The bottom line is that the Bitcoin blockchain permits creation of proofs that specific data existed in the past. This may be useful for investigating/preventing rewriting of history that two parties may disagree about (e.g. process data of a costly upset, fraudulent mill test reports).

Idea 2. Micropayment-facilitated process miniaturization

The idea is use blockchain micropayments to increase economic viability of expensive process intensification that reduces the size of a process plant. Cost savings comes from reducing the time (and overhead costs) between an operations service company (e.g. equipment maintenance, feedstock suppliers) performing a service and receiving payment for that service. Additional revenue can be obtained by installing small plants in locations where a larger one is not cost effective. For example, crude oil pumped from a marginal well in a remote location today likely must be transported through a pipeline to a distant refinery where unit operations may be applied to produce petrol products useful to the human population near the wells. Due to distance, the pipeline may prove too uneconomic to construct or maintain. If a well owner installed a miniaturized refinery at each individual well in order to bypass the need of a pipeline, the mundane issue of the monthly billing cycle appears. A contract service company may judge a single small well-refinery operation as not large enough to justify allocating accountant time to process checks. In theory, existing financial institutions equipped with modern computers have the capability to facilitate micropayments but most efforts have floundered.

In this example, the mini-refinery could directly pay services providing maintenance labor and expendables (ex: TEG, lubricant, refrigerant, etc.) through the Lightning Network (LN). For a summary of how LN works with Bitcoin, I refer you to the background section of this 2020 Scientific Reports paper. The bottom line is that the mini-refinery could purchase service technician time or sell dispensed product with transactions carrying fees as low as 0.00000001 BTC (0.00029 USD) per transaction.

With such low transaction fees, sale of a product stream could be performed nearly continuously; with the refinery's LN channel's bitcoin balance state updated on a per-minute basis based on flowmeter readings. A purchase order for technician time could be issued and approved automatically for every minute the technician is on site. Only when a refinery's LN channel balance becomes lopsided (e.g. with its own earnings) will the refinery owner have to submit anything to the blockchain. The channel can be closed at any time by the owner or their LN channel partner since every LN transaction is also a valid Bitcoin transaction. A customer receiving product (e.g. gasoline) need not have a channel with the well owner in order to purchase product, so long as a path of channels exists in the Lightning Network connecting the customer to the owner.

The well-refinery in this example could be replaced with other processes described in this session of the 2019 AIChE Annual Meeting such as electrical power generation and biomass conversion to fuels.

Blockchain inefficiency

I would warn anyone reviewing the applicability of "blockchain" technology to beware of the fact that a blockchain is extremely inefficient method of accounting compared to a centralized trusted database. I would argue that utilizing a blockchain for accounting is only justified in applications where parties cannot be trusted to attempt to steal funds via chargebacks (e.g. a customer filling their automobile's gasoline tank but later claiming the credit card used to pay for the gasoline was stolen). Examples of blockchain inefficiency include:

  • Data storage requirements. Blockchains maintain integrity of transaction history by recording every transaction ever performed. Due to this limitation, Bitcoin can only support approximately 3 to 7 non-LN transactions per second; up to approximately 1 megabyte of new data must be permanently stored every 10 minutes. As of the latest block (number 663,744), 362,023,310,633 bytes are required to store the Bitcoin blockchain.
  • Proof-of-work energy requirements. Permission-less blockchains (e.g. Bitcoin) achieve decentralized consensus by expending electrical energy to perform mathematical calculations. See this 3Blue1Brown video for an explanation. This article estimates Bitcoin power consumption to be on the order of 4 gigawatts in January 2020.
  • Time delay. In contrast to a centralized trusted database that can add a new record nearly instantaneously, Bitcoin transactions should not be considered finalized until at least an hour has passed; that is, until enough "confirmations" have occurred. This limit varies according to the rules of each blockchain type but is a function of the protocol's target time delay between each block of transactions (e.g. 10 minutes for Bitcoin, 2.5 minutes for Litecoin, image).


Steven Baltakatei Sandoval
Vancouver WA