There is awareness among Bitcoin (BTC) proponents and the general community alike, that green energy is the way to go for Bitcoin mining. For Bitcoin miners, greener technologies are already available that reduce costs and devices that help increase efficiency.
Bitcoin mining is the digital equivalent to physical mining in gold or other precious metals. When mining gold, energy is required in order to extract it from the ground. The difference is that rather than mining equipment, Bitcoin requires the use of computers that run in a decentralized network.
This is required for producing Bitcoin’s asset called BTC. Those who participate (i.e. the miners) are incentivized for providing the computing resources required by the network. (For more on Bitcoin mining read Mastering Bitcoin by Andreas M. Antonopoulos)
Bitcoin's Energy Consumption Issues
The Bitcoin network is energy intensive by design as a feature to secure the network and produce value. This has become a point of criticism because of the amount of energy consumed which critics claim is a waste of electricity and adds to increased harmful carbon emissions. Proponents of Bitcoin would argue that the energy used is not wasted, but utilized for productive use.
According to a study (Based on 2019 data from The U.S. Energy Information Administration- Study by The University Of Cambridge - Cambridge Bitcoin Electricity Consumption Index), Bitcoin mining uses up a total of 147.6 TWh/y (Tera-Watt Hours per year). If it were a country, that would make Bitcoin as an energy consumer rank number 27 (up from 31 in 2016). The amount of electricity used is close to the amount used by Malaysia (150.8 TWh/y) and more than a smaller nation like the United Arab Emirates (87.13 TWh/y).
These are staggering figures, and as Bitcoin becomes more heavily utilized as its popularity grows, the amount of energy consumed will further increase. The University of Cambridge have written on their website that these figures are not 100% accurate, but based on their own calculations.
Some reports indicate that most of the energy being used in mining Bitcoin still comes from fossil fuel sources. Taking a look at other industries, the industrial, transportation and manufacturing sector also use up plenty of fossil fuels.
Those sectors easily affect the environment, but Bitcoin has a much smaller carbon footprint. According to the same University of Cambridge study, Bitcoin uses up 0.57% of the world’s total electricity consumed in a year. That is still far smaller than other industries by comparison. Even if Bitcoin does not consume as much energy as other sectors of the economy, there is still the need to become more efficient in reducing the carbon footprint.
Shifting To Renewables
The good news is that miners have been setting up in places where the source is green energy in the form of renewables. They can also be cheaper and more sustainable, allowing miners to maximize their profits.
Miners are exploring renewable energy as a source for powering mining rigs. In a Cointelegraph article, about 76% of miners (includes Bitcoin miners) use renewable energy in their operations. In total, cryptocurrency that use mining consume 39% renewable energy and that number is expected to grow.
According to another study by the Bitcoin Mining Council, in 2022 Bitcoin mining used 58.9% sustainable energy. That includes renewable sources in the mix. There are operations in Iceland which make use of geothermal energy, wind energy in Texas (USA) and hydropower sources in China.
The problem with renewables is their intermittent nature. No electricity from energy can be produced if the sun is not shining, or the wind is not blowing. There are solutions to these concerns.
When there is a surplus of energy, it can be stored in battery systems for later use. The challenge is how to optimize energy distribution and find the balance in supply and demand.
In regions where renewable energy is plentiful, it is less of a problem. This is ideally where miners can move to and set up their operations. This keeps the opportunities in the market open to new miners as well, which keeps the network running.
Efficient Use Of Wasted Energy
There is always justification for Bitcoin mining in certain areas where there is an abundance of energy produced. Miners utilize the energy that would otherwise go to waste. One source is provided from the flaring process at oil fields.
At oil production centers there is excess gas which cannot be put back in the ground. Flaring burns methane in the gas, which is released into the atmosphere as carbon dioxide. Since the process will release energy, Bitcoin miners can make use of it.
Producers of green energy can also find customers among miners. There is often a surplus of energy from producers of solar power in places like California. Rather than go to waste, the surplus can be sold to the miners.
A successful relationship of green energy producers and Bitcoin miners can help build sustainable ecosystems. This can further open up investments in clean green energy production.
Bitcoin mining helps to make the most efficient use of energy, and gives value back to producers. This is also considered a harm reduction approach when it comes to the environment.
Bitcoin Mining Regulations
Regulatory frameworks are a possible way to make miners adopt greener technologies. A carbon tax and/or green incentives could be applied to make miners seek out more efficient systems that don’t consume as much electricity or emit carbon gases.
Can it work even if Bitcoin is energy intensive by design? A tax leads to less profits for miners, but the incentives should lead to the necessary actions to go greener. That should not be a problem because according to Bitcoin Magazine, more investors are ready to get into Bitcoin as it transitions to green energy.
Greener Future For Bitcoin
Bitcoin miners can contribute to the global effort to reduce the consumption of fossil fuels and increase sustainable energy practices. In the long run this can be more cost-effective than traditional energy sources and help reduce further carbon emissions.
Green energy is sustainable and can be replenished naturally. As Bitcoin mining operations grow and energy demands increase, relying on renewable sources helps ensure a long-term, cleaner and sustainable energy supply. This is crucial for the future of Bitcoin mining, as sustainability becomes a key consideration in global energy strategy.
Miners and producers of green energy can help each other out by stabilizing power grids. During periods with high production and low demand, miners can maximize energy usage and remove the pressure on the grid.
As technology advances and the efficiency of systems improves, the costs of Bitcoin mining powered by green energy may become more competitive. This can eventually help drive miners to further transition to renewable sources.
As a way to monitor the progress of the use of green energy sources in Bitcoin mining, more studies are needed. What is important to see is an increase in mining activities that run on renewables and a decline in fossil fuel usage.
