Several sectors frequently overlap and it is the same story when it comes to cybersecurity, blockchain and mining. We are talking about actual mining, not blockchain mining. Softpedia claims that 22 mining companies reported significant cyber attacks between 2010 and 2016. Cybersecurity and mining seem to be in conflict of one another and on a collision course but blockchain could be just what is required to diffuse this situation.
These attacks that have taken place ranging from hacking private data to taking over intellectual property. According to Symantec’s Internet Security Threat Report, mining is #1 on the list of sectors that get spam email. It should, however, be taken into account that the difference in amount of spam email when compared to the other sectors on the list is negligible. The important point here is that about one third of the spam emails possess a virus and so this is not a list anybody would want to top even if by a small margin. This is why the mining industry has turned its attention to blockchain. Blockchain eliminates middlemen and this means reduced time for hackers to steal information.
Let us take a look at some of the biggest applications for blockchain in the mining industry.
One of the primary challenges that miners will have to deal with in the future is the shift from a business to business focus to one where the customer is given greater consideration. Blockchain is already being utilised in areas like diamond exporting. Diamonds are marked by a QR code to a digital token which verifies their quality, extraction in an ethical manner and genuineness.
This process reduces fraud, robbery and cost of insurance. It is also creates a transparent view of where the goods are and in whose possession they are.
Blockchain’s level of safety will help in enhancing areas like:
The internet of things (IoT): As more appliances and devices are connected, an increased amount of information will be generated. To process this efficiently, one can use blockchain. This would, in theory, allow an IoT powered device to run itself. For example, a digital ledger links a transport automobile with a storage house which facilitates their communication and allows them to talk about a new stock order where payment can be processed on delivery.
Cost reduction: Mines function across the globe and the cost of payments across borders is a challenge for the whole industry. The process of remittance is going through wholesale change as a result of blockchain. Blockchain is therefore, not only solving a security challenge but also increasing the pace at which payment can be made and received.
- Streamline contracts: Smart Contracts are a method of remotely keeping workers in line in addition to being a wing for commerce. If a gold mine is in India or some other South Asian nation and the company is based out of a country from the West, business standards can still be maintained everywhere. BHP Billiton, the world’s largest mining company is using blockchain for their supply chain and have a market cap of just under $113 Billion.
Blockchain applications bring ease to the process of signing contracts electronically without the need to depend on any third party to authenticate its validity. This is due to the fact that blockchain is a digital ledger which means it can keep track of all transactions and securely encrypt this information.
Mining has many existing pain points today and obstacles caused due to regulation which puts pressure on their results. The process of acquiring minings rights, eliminating the risk of information corruption due to change in custody, complicated accounting and settlement procedure, providing proof for provenance of minerals mined, providing visibility across the supply chain at all times and challenges related to figuring out the amount produced in a mine with the amount transferred to processing plants are just a few.
Several of these challenges can be addressed by utilising blockchain technology, including:
1. Automation of ore acquisition and transfer: Mining companies frequently acquire ore from outside parties to mix with their own. Blockchain allows the automation of acquisition of this ore and transfer among suppliers and mining organisation as well as between ore producers and merchants.
2. Automatic registration of mineral rights and IP: Blockchain can automate the process of registration and replace the rush to government to acquire mineral rights when a discovery is made by the mining companies.
3. Visibility of ore inventory at ports: Ports receive ore from many different places and sources. Blockchain can be utilized to declare and give transparency to the process of receiving the ore.
4. Automatic cargo hire process: Blockchain can provide flexibility to the process of freight hiring and provide an Uber-like automatic cargo hiring process. The ship could be hired by specialised systems which could automatically register the contract in the distributed ledger system which would decrease cost and save a lot of time.
5. Process and secure large amounts of IoT data: Miners can utilize blockchain to add efficiency to how they process the fast burgeoning amount of information being collected by connected devices as discussed earlier. With the start of Autonomous Peer-to-Peer Telemetry (ADEPT) systems that basically facilitate a kind of self managed IoT, ADEPT systems could, for instance, facilitate autonomous vehicles to reorder stock that can be consumed when supplies are low with payment made on delivery.
6. Reconciling amount produced and sent for processing: When grouped with exact measurement procedures and technologies, blockchain can automate and uphold the reconciliation such that each value is registered in the distributed ledger book automatically.
7. Automatically execute procurement and other contracts: Mining companies are large consumers of fuel – primarily diesel, electrical energy, reagents, tires, consumables and other products. Blockchain facilitates the automation of restocking of these items using auction engines which leverages the capabilities of negotiation with the market and allows for opportunistic strategies of purchasing. Contacts are created and registered automatically. Miners could use blockchain to host smart contracts to execute agreements automatically across several different areas. By automating the process, smart contracts could enable reduction in license-to-operate uncertainties in developing nations.
Blockchain in the mining industry: the future
According to an article on Globe and Mail published earlier this year, Peer Ledger, a Halifax startup, has a blockchain based Mimosi application which can track precious metals within the supply chain “to ensure every milligram purchased by buyers has come from an ethical source and is not funding armed conflict in war-torn countries like the Democratic Republic of Congo.” Peer Ledger’s Mimosi platform utilizes blockchain to “instantly” make sure that users are aware of the origin of these precious and industrial metals.
Far from hurting production, blockchain is a solution that improves results and security. Spreadsheets might well be rendered obsolete if blockchain finds wider adoption. Mining is dangerous so any progress that can be made to be sure of establishing good practices is a step in the right direction. Investors would be smart to continue doing research along these lines to capitalize on a future trend.