Bitcoin Mining as a Catalyst for Advancing the Shift to Renewable Energies

  • February 2, 2024
  • Jennifer Moore
Bitcoin Mining as a Catalyst for Advancing the Shift to Renewable Energies

Bitcoin mining has caused quite a stir causing huge environmental effects. But, what if it could enhance the shift towards renewable energy? Bitcoin mining consumes high energy consumption, carbon footprint, and water usage. It’s important to consider the potential benefits it could bring to the shift toward renewable energy. While these metrics are often highlighted as the negative impacts of BTC mining, it’s important to consider both sides of the coin. Let’s explore how the technology could be utilized to promote more sustainable and eco-friendly practices.

Is Bitcoin Mining Eco-Friendly

The global popularity of Bitcoin is not unknown to anyone. With its crazy adoption, the network consumption of the asset is at 147.3 terawatt hours every year. Thereafter, making the network consumes an average energy consumption of several countries. 

As per Cambridge University, these are Poland, Ukraine, and Malaysia. The high energy consumption of BTC mining, equivalent to that of entire countries, has raised concerns about its environmental impact. Thereafter, conspiring that Bitcoin mining is harmful to the environment. Mainly since a significant portion of the energy used to power it comes from non-renewable sources. 

According to the Bitcoin ESG Forecast, on Jan. 18, 2024, Bitcoin mining sustainable energy usage reached a new all-time high of 54.5%. This is a significant step towards a more sustainable and eco-friendly approach to Bitcoin mining.

Bitcoin Can Boost the Shift to Renewable Energies

Encouraging Bitcoin miners to utilize clean energy can contribute to the improvement of the global climate. Additionally, Bitcoin mining can serve as a valuable opportunity to accelerate the shift towards renewable energies. Furthermore, creating potential revenue streams for the green energy sector.

A study reveals that BTC mining can help monetize the excess power collected by renewable energy. Thereafter, potentially earning hundreds of millions of dollars. During the pre-commercial development phase of wind or solar farms in the United States, developers could recover millions of dollars by mining Bitcoin. The study identified Texas as having the highest potential. With 32 planned renewable projects that could generate a combined profit of $47 million by mining Bitcoin during pre-commercial operations. This could be a valuable source of revenue for future renewable projects.

Bitcoin mining can offer a flexible customer base for wind and solar energy installations. This may not always align their peak production times with periods of peak demand. In addition, renewable utilities may have the opportunity to leverage Bitcoin mining to play the arbitrage between electricity prices and Bitcoin prices.

Margot Paez of the Bitcoin Policy Institute and an environmental consultant is specializes in Bitcoin mining sustainability. According to her, Bitcoin mining can act as an off-taker for excess renewable energy production. This is because there is often a supply-demand mismatch that leads to excess production of renewable power. By consuming this excess renewable energy, Bitcoin mining can benefit from using eco-friendly energy sources instead of fossil fuels. Thereby improving the network’s carbon footprint. This approach is a win-win for both BTC mining and renewable energy sectors.

Bitcoin Mining: Independent of Geographical Constraints

BTC mining can be carried out wherever there is an excess of energy production, making it independent of geographical constraints. As pointed out by researcher Fengqi You at the Cornell Atkinson Center for Sustainability in the study mentioned earlier, the profitability of a mining system depends on a steady energy supply since renewable energy sources can fluctuate. Therefore, it is important to strategically locate the mining farm to maximize productivity. According to Jaran Mellerud, co-founder and chief mining strategist at BTC mining company Hashlabs, Bitcoin miners have the option to use two types of renewable energy sources.

Bitcoin Mining Relies on Two Types of Renewable Energy Sources

Bitcoin mining can rely on two types of renewable energy sources, according to Jaran Mellerud, co-founder and chief mining strategist at Bitcoin mining company Hashlabs. The first type is variable renewable energy sources. Such as wind and solar, which can pose challenges due to low up-time and constant interruptions. The second type is baseload renewable sources like hydro and geothermal. These are more stable and offer a higher up-time. 

Hydroelectricity is expected to be one of the most cost-effective sources of power for many years to come. According to Ben Gagnon, chief mining officer at Bitcoin mining company Bitfarms. In a real-life scenario, Hashlabs implemented a BTC mining facility in Ethiopia. It was powered by 94% hydro, 5% wind, and 1% solar energy. With new hydroelectric power plants opening up, the country’s electricity surplus is expected to increase.

According to Mellerud, the utility in Ethiopia is selling the excess electricity to Bitcoin miners while waiting for the country’s electricity consumption to catch up. This is a mutually beneficial arrangement as Bitcoin miners are helping the utility to finance new electrical infrastructure buildouts for the growing population in the country.

Bitcoin Mining Faces Obstacles With the Transition Due to Regulations

The regulation and political risk associated with BTC mining remain a significant challenge for the industry, according to Jaran Mellerud, a Bitcoin miner. However, the Cornell study suggests incentivizing environmentally responsible cryptocurrency mining with economic rewards like carbon credits to encourage miners to adopt clean energy sources. While the Biden administration’s approach of applying taxes to  crypto miners differs from this proposal, Ben Gagnon, Chief Mining Officer at Bitfarms, believes that Bitcoin’s economic incentive is already sufficient for the industry to thrive. He argues that BTC mining is the only economic incentive that voluntarily reduces energy waste and emissions without requiring subsidies and that there is no need for government policies to incentivize such behavior.

Use of Energy is Not Good for the Ecosystem

Mellerud is optimistic that larger countries will begin to recognize the potential of Bitcoin mining for energy optimization and become more friendly towards it on a state level. He believes that as the benefits of utilizing renewable energy sources for Bitcoin mining become more apparent, governments will be more inclined to support the industry and promote sustainable practices.

To achieve its objectives, Gagnon emphasizes the importance of the Bitcoin industry focusing on education. Thereafter, outreach efforts to highlight the positive impacts of BTC mining operations. According to him, Bitcoin mining has significant potential for positive contributions. However, this narrative hasn’t reached a wide audience yet. Gagnon believes that as BTC mining continues to demonstrate its positive aspects, it will garner more acceptance.

In line with Cornell University’s findings, a shift in perspective is crucial. Rather than solely being seen as an energy consumer, Bitcoin should be recognized as a catalyst for enhancing efficiency and promoting sustainable energy usage. It is imperative to consider both sides of the argument, especially when the ultimate goal is to enhance global climate conditions.

Also Read- Popular Crypto-Friendly Cities in the World

Looking Forward

In the debate on Bitcoin mining’s environmental impact, it’s important to consider both sides of the coin. While it’s true that mining consumes a significant amount of energy, efforts to shift towards renewable sources can make it a force for good. The key lies in viewing Bitcoin not merely as an energy consumer but as a facilitator for more efficient and sustainable energy use. By working towards this goal, we can improve global climate conditions and show the world the positive benefits of Bitcoin mining.

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