Bitcoin’s Energy Consumption
In theory, Bitcoin mining can be compared to the process of mining for traditional metals, such as gold, copper, and platinum. While ‘traditional’ miners search for gold by hacking away at rocks, Bitcoin miners work to find the exact code that will provide them with valuable assets. However, Bitcoin miners extensively use the power grid in order to generate revenue.
Bitcoin’s solid stream of revenue has made people willing to continuously run power-hungry machines, in order to profit from the increasing currency-price. This has caused tremendous growth in Bitcoin’s total energy consumption over the years, and as a result, led to the cryptocurrency network consuming even more energy than most African countries.
Did you know that according to estimates, in 2017, Bitcoin consumed the same amount of electricity as the entire nation of Ireland? Moreover, making up for 0.24% of the global energy consumption, Bitcoin would be able to power more than five million U.S. households.
The Environmental Impact of Bitcoin Mining
We can’t deny the fact that Bitcoin’s massive energy consumption is a huge problem. However, the major issue lies in the fact that most of Bitcoin’s mining facilities are located in parts of the world that rely heavily on coal-based power.
Due to China’s low electricity costs, almost seventy percent of the world’s cryptocurrency mining takes place there. Moreover, the two largest Bitcoin mining companies — Antpool and F2pool — are located in China, and are responsible for more than fifty percent of Bitcoin network’s mining.
Regarding carbon emissions, it has been noted that Bitcoin’s network has been producing the same annual amount of carbon emissions as one million transatlantic flights.
Furthermore, the environmental impact of Bitcoin varies per region. For example, cryptocurrency mining in China generates four times as much CO₂ as Canada.
A Sustainable Solution for Bitcoin Mining
According to research published in the monthly journal ‘Nature Climate Change’, Bitcoin’s network alone could be responsible for pushing the world’s global warming above 2°C within less than three decades. It is needless to say that a solution is necessary, especially in the coal-powered industry of China.
A recent study has stated that renewable energy will not solve Bitcoin’s sustainability problem, as hydroelectricity is weather-dependent and has high seasonal variability. This can be problematic for the 24/7 energy demand of Bitcoin’s network, as the power generation will not be able to fully rely on the renewable energy resource.
Fortunately, there are clean technology companies out there that are developing innovative solutions that can help lower the environmental impact of cryptocurrency mining. One of those companies is Eden GeoPower. The company aims to develop off-grid power plants, which include hydrogen production.
Most power plants need steam in order to generate electricity. This type of geothermal energy produces electricity through turbines from underground sources of heat. The geothermal process can also be found in natural hot springs or in lower temperature projects, such as using ground source heat pumps for water heating.
Eden GeoPower’s ultimate goal is to build a renewable energy infrastructure for cryptocurrency mining companies. Keeping the 24/7 energy demand of miners in mind, geothermal energy could provide a great solution, as it is one of the only renewable energy resources that can supply energy on a continuous basis.
In addition to geothermal energy, other renewable energy sources such as solar panels can help ensure that cryptocurrency mining companies will have sufficient energy supply. Moreover, even though solar panels are weather-dependent to a certain extent, a solar battery system can store renewable energy over a longer period of time, making it easier to generate off-grid power.
Financial Benefits of Sustainable Mining
According to the most recent data, Bitcoin’s annual mining costs are estimated at nearly three billion USD, with electricity consumption being a major component of the total cost. In addition to lowering the environmental impact of Bitcoin mining, mining with renewable energy resources also increases companies’ profit margins.
With Bitcoin’s heavily fluctuating prices, relying on the equivalent of thirty nuclear power plants running at maximum capacity on a 24/7 basis does not seem particularly cost-effective. Besides draining on resources, electricity needs to be generated for other purposes, too — ventilation is often necessary to keep the computers cool.
In other words, electricity bills easily run high, and the fluctuating market makes it attractive for miners to secure their business in areas where affordable clean energy is more accessible. Right now, such places include Iceland, Switzerland, Canada, and Paraguay.
All in all — with cryptocurrency mining companies searching for ways to lower their electricity bills, as well as ways to attract environmentally-concerned investors — green energy seems to become more and more attractive from an environmental and a financial perspec