Green Energy: Sustainable Future for Bitcoin Mining | Opinion

[ad_1]

In the previous bitcoin mining article, we already covered many aspects of the industry’s energy use. We also compared the usage with other sectors and energy consumers around the world based on the most recent data.

This article will focus on the future of energy use in crypto mining and how it can contribute to the global transition to sustainable energy use.

What are green energy and renewable energy?

The terms green energy and renewable energy are often used interchangeably despite some technical differences.

Green energy is a part of renewable energy from sources that have the most environmentally friendly potential.

The following illustration from the United States Environmental Protection Agency shows that green energy is a subset of renewable energy sources.

Source: United States Environmental Protection Agency

Benefits of Green or Renewable Energy from the Perspective of Bitcoin Miners The most important advantage of green energy is its virtually unlimited availability. The global supply of fossil fuels is expected to end by 2060, according to estimates by Octopus Energy. However, green sources such as wind, solar, geothermal or hydroelectricity will continue to be there as long as the earth is maintained. As bitcoin mining is expected to continue until 2140, miners have to rely on sustainable energy sources for so long according to its protocol. The other big advantage of green energy is that it preserves the environment. The most important criticism of bitcoin mining concerns environmental concerns. It went around the world when Elon Musk said he no longer accepted bitcoin payments for Tesla cars, citing the adverse effects of environmental degradation caused by mining operations. CO2e or carbon dioxide equivalent, which is the emission of carbon dioxide to produce per kWh of electricity, is an excellent indicator for comparing the environmental impact of different energy sources. The following illustration shows that natural gas emits 250 to 1000 grams of CO2 to produce 1 kWh of electricity. In contrast, the CO2e from wind power is only around 9 to 18 grams throughout its lifecycle. Source: Union of concerned scientists

Thus, the bitcoin mining industry can quickly capitalize on this factor, as it will propel a significant positive mood.

Tesla CEO Elon Musk mentioned that Tesla could again accept bitcoin payments if the industry demonstrates more than 50% energy consumption from environmentally friendly sources.

Price stability is another positive element of green energy consumption that promotes the sustainability of mining in financial terms.

As renewable energy resources are not limited in supply, they are not subject to sudden price fluctuations.

More interestingly, with ever increasing global production and greater adoption across all industries, the price of natural energy sources has steadily declined over time.

As a result, the entire renewable energy industry has achieved greater efficiency, higher production capacity, and economies of scale over time. The following graph shows how the production costs of energy sources such as solar photovoltaic (PV), concentrated solar power (CSP) and wind power declined from 2010 to 2021. Source: Energypost Europe

In addition, the cost of installation has also decreased over time. According to IRENA, with an investment of $ 1 million in 2010, it was possible to set up a photovoltaic power plant with a capacity of 213 kW.

However, the same amount of investment now enables a 1,005 kW plant to be set up, thanks to increased efficiency and technological upgrades.

This feature can be of great benefit to the bitcoin mining industry as it is economically sustainable and attractive to investors.

Bitcoin’s current scenario on sustainable energy use

A new committee known as the Bitcoin Mining Council was formed in May 2021 to promote and report on sustainable energy use by Bitcoin members.

One of the council’s goals is to regularly publish statistics on energy consumption by the global bitcoin mining industry.

Bitcoin miners already use 56% of their total electricity from sustainable or renewable sources, according to a recent report.

For council members, usage is even better, 67.6%.

The following illustration compares the energy mix used by bitcoin miners with different countries and regions around the world.

Source: Bitcoin Mining Council

Promisingly, the mix has improved very quickly in recent months.

It is more evident from the following chart which shows that in the first quarter of 2021, the combination was 36.8% which increased by 52.2% to reach an impressive 56% in the next quarter.

It shows the sincere intention of bitcoin miners to switch to increasingly sustainable sources of energy.

Source: Bitcoin Mining Council

Green technology with greater efficiency: the future of Bitcoin mining

Bitcoin operates on the PoW (Proof-of-Work) chain, as there has been a gradual shift towards adopting a more energy efficient PoS (Proof-of-Stake) method in recent years.

Ethererum 2.0, for example, is moving from PoS to PoW. However, the bitcoin white paper suggests that bitcoin will remain PoW-based for the foreseeable future.

However, some recent technological advancements regarding the management of data centers could help improve the efficiency of bitcoin mining.

Will it be economically feasible for Bitcoin miners?

According to Digiconomist, as of 2021, the total annual income of bitcoin miners is approximately $ 9,874,580,767, which is the total value of mining rewards.

The mining industry therefore has to pay around 6,755,868,299 USD for electricity.

A fixed rate of 5 cents per kWh is an assumed price for electricity. Thus, the calculation shows that a miner must spend 68.42% of his total income to buy electricity for mining. The figures show that if miners want to achieve higher efficiency in production costs, the key is to find electricity at a lower price.

And as mentioned above, with the cost of renewables steadily falling globally, this can be a great opportunity for miners.

According to IRENA, 56% of the green energy added in 2019 provides electricity at a lower cost compared to coal-fired power plants that went into service at the same time.

Sustainable mining and its effect on the global energy economy

Square, a financial services group led by Twitter CEO Jack Dorsey, announced in December 2020 a project known as the Bitcoin Clean Energy Initiative (BCEI).

With a $ 10 million fund, the project aimed to support companies that would contribute to the green energy use of the bitcoin mining ecosystem.

The CBIE released a white paper in April 2021 highlighting the excellent prospects for the bitcoin mining industry going forward.

Few promising factors are:

Bitcoin mining can act as a complementary technology for sustainable energy management, as the mining industry is a sole purchaser of electricity. The uniqueness comes from the very flexible nature of the sector in terms of payment method, indifference of location and distribution of electrical load. Despite being the cheapest sources of energy, solar and wind power have bottlenecks due to their inability to provide uninterrupted power supply. Bitcoin miners can solve this problem by consuming the excess electricity when production is plentiful on a sunny or windy day. This flexibility in load distribution will further reduce the cost.

Source: Square White Paper

According to the graph above, electricity demands vary considerably depending on the time of day. By combining their energy sources with traditional energy and renewables, bitcoin miners can consume this excess electricity during off-peak hours. At the same time, the mining industry can also supply the grid with excess electricity that it could generate from traditional sources.

Machine learning and artificial intelligence can quickly improve the thermal efficiency of data centers through smart cooling. Placing data centers in cooler environments will help reduce energy consumption for thermal management. In addition, the greater availability of renewable energy sources in the region will help to mitigate the carbon footprint. Smart data centers will help move load effortlessly during battery shortages by combining renewable and traditional sources. Sector coupling can also take advantage of bitcoin miners through which they can deliver affected waste to local areas where it is needed. Bitcoin mining can act as a complementary technology for sustainable energy management, as the mining industry is a sole purchaser of electricity. The uniqueness comes from the very flexible nature of the sector in terms of payment method, indifference of location and distribution of electrical load. Despite being the cheapest sources of energy, solar and wind power have bottlenecks due to their inability to provide uninterrupted power supply. Bitcoin miners can solve this problem by consuming the excess electricity when production is plentiful on a sunny or windy day. This flexibility in load distribution will further reduce the cost. Many renewable energy projects are easier to build in rural areas far from the city. However, it is not easy and cost effective to store and transport energy to cities. As bitcoin miners have no location preferences and can set up a mining rig anywhere with a good internet connection, they can be excellent consumers of locally produced electricity. For example, only 7% of total electricity production in the United States comes from hydroelectric sources. But surprisingly, that small percentage contributes 62% of the mining energy used for chopping facilities, according to the University of Cambridge. Therefore, it is clear from the discussion, recent progress and decarbonization that the bitcoin mining industry has the full potential to rely 100% on green and sustainable energy sources. The mining industry is therefore not acting as an obstacle here. Instead, it dramatically propels the global renewable energy economy.

[ad_2]