on Oct 23, 2022
on Oct 23, 2022
Cryptocurrency mining has been in the spotlight in recent years for its energy-intensive nature and its potential impact on the environment. However, the energy consumption of crypto mining operations can also be harnessed to drive the adoption of clean, renewable energy sources. In this article, we’ll explore how cryptocurrency mining can help power the clean energy revolution and how the demand for low-cost, reliable energy from miners can help drive the development and adoption of renewable energy technologies.
Cryptocurrency mining involves the use of specialized computer hardware to solve complex mathematical problems in order to validate transactions on a blockchain network. The process requires a significant amount of energy, as miners compete to solve these problems and earn rewards in the form of cryptocurrency.
As the popularity of cryptocurrencies has grown, so too has the energy consumption of mining operations. In fact, some estimates suggest that the energy consumption of the Bitcoin network alone could be equivalent to the electricity consumption of a small country.
However, the energy demand created by cryptocurrency mining can also be a driving force for the adoption of clean, renewable energy sources. Miners are typically motivated by the need to find low-cost, reliable sources of energy to power their operations, and this can create a demand for renewable energy sources.
For example, many cryptocurrency mining operations are located in areas with access to low-cost hydropower, such as in China’s Sichuan province or in the Pacific Northwest in the United States. These operations can help drive the development and adoption of hydroelectric power as a renewable energy source.
In addition, cryptocurrency mining operations can potentially invest in renewable energy infrastructure, such as solar or wind farms, to power their operations. This can help to drive the development and adoption of these technologies, as miners provide a consistent demand for clean, renewable energy.
Furthermore, the intermittent nature of some renewable energy sources, such as solar and wind, can make it challenging to store and use this energy consistently. Cryptocurrency mining operations may be able to help drive the development and adoption of energy storage technologies, such as batteries or pumped hydro storage, by providing a consistent demand for energy storage solutions.
Recent publication by the Bitcoin Mining Council (BMC) has published its Q2 2022 survey, showing that the sustainable power mix for Bitcoin mining is now at 59.5%. The survey also showed that the global Bitcoin network’s technological efficiency grew by 46% YoY from 14.4 exahashes per gigawatt in Q2 2021 to 21.1 exahashes per gigawatt in Q2 2022. The data was collected from over 50% of the global Bitcoin network, representing 107.7 exahashes as of June 30, 2022. The BMC, which was founded in May 2021 and now represents 50.5% of the global Bitcoin mining network, aims to promote transparency and educate the public on the benefits of Bitcoin and Bitcoin mining. Full article here: https://bitcoinminingcouncil.com/bitcoin-mining-electricity-mix-increased-to-59-5-sustainable-in-q2-2022/
According to a recent publication from Deloitte, the current state of the renewable energy sector is one of growth, despite facing challenges such as rising costs, supply chain disruption, trade policy uncertainty, inflation, increasing interest rates, and interconnection delays. In the first eight months of 2022, the United States added 5.7 gigawatts of utility-scale solar generation capacity and 7.5 gigawatts of wind capacity, accounting for nearly 70% of capacity added. Renewable energy’s share of US electricity generation rose to 23% from 21% during the same period. Despite these challenges, the renewable energy industry is expected to continue growing in 2023 due to competitive costs, supportive policies, and burgeoning demand, including incentives in the Inflation Reduction Act, state clean energy policies, utility decarbonization efforts, corporate renewable procurement, and growing residential solar demand. However, this growth may be hindered by supply chain constraints and interconnection bottlenecks, which could lead to rising prices and extended project timelines.
On the other hand, according to a recent study by Lokesh Gundaboina,Sumit Badotra, Tarandeep Kaur Bhatia, Kulbhushan Sharma, Gulzar Mehmood, Muhammad Fayaz, and Inam Ullah Khan. Cryptocurrency mining operations can potentially impact the renewable energy sector in both positive and negative ways. On the one hand, the energy demand created by mining operations can create a demand for low-cost, reliable sources of energy, which may drive the adoption of renewable energy sources such as hydroelectric power. In addition, mining operations may invest in and support the development of renewable energy infrastructure, such as solar or wind farms, to power their operations.
The energy consumption of cryptocurrency mining operations has been a source of concern due to the high levels of energy required and the potential impact on the environment. The energy consumption of the Bitcoin network alone is estimated to be equivalent to the electricity consumption of a small country. Additionally, the use of fossil fuels to generate the electricity needed for mining operations may contribute to carbon emissions and climate change.
Recent publication by JERRY USMAN on Bitcoin Magazine says there has been progress made towards using renewable energy for bitcoin mining, but the cryptocurrency’s greenhouse gas emissions are still high. The Cambridge Bitcoin Electricity Consumption Index shows that emissions have decreased from 59 metric tons of carbon dioxide equivalent in October 2021 to 48.88 metric tons today. However, bitcoin mining is still being criticized for its energy consumption. To reduce this, various strategies are being implemented, such as load balancing, energy swaps, hybrid systems, and additional battery storage. The Bitcoin Mining Council’s 2022 report showed that 59.5% of the total bitcoin mining global energy comes from renewable sources, with a 46% increase in efficiency on a year-on-year basis due to improved mining efficiency and technology. Profitability in bitcoin mining is mainly impacted by electricity cost and mining difficulty, and with cheap electricity, mining can remain profitable even with low bitcoin prices. Solar energy and other hybrid options can provide alternatives, but geography and capital can be advantages for mining success. Solar energy is already being used for bitcoin mining in some parts of the world, such as in China’s Xinjiang region, where cheap coal-based electricity and a sunny climate make it a profitable location. Full article here : https://bitcoinmagazine.com/culture/renewables-will-optimize-bitcoin-mining
Recent publication by Bastian Stolzenberg on PWC Switzerland says cryptocurrency mining has been criticized for its high energy consumption, with the carbon footprint of bitcoin mining estimated at approximately 129 TWh per year. In order to address this issue and make bitcoin mining more sustainable, some have suggested incorporating renewable energy sources into the process. An ESG (environment, social, governance) strategy of building renewable energy power plants specifically for the purpose of mining bitcoin could help support the transition to a more sustainable economic model and future. This approach could also address the issue of intermittent renewable energy sources by using excess energy for bitcoin mining, and could provide earlier grid connection and faster return on investment for renewable energy projects. However, critics argue that the high capital costs and regulatory hurdles make this approach unfeasible. Full article here : https://www.pwc.ch/en/insights/disclose/33/bitcoin-mining-as-an-esg-strategy.html
But innovation doesn’t happen without questions, asking the right questions drives the present state of affairs further not backwards.
Publication by Sean Stein Smith on Forbes says there is ongoing debate about the amount of power and energy consumed by crypto transactions, with some saying that crypto mining consumes significant amounts of power and energy. However, every large industry consumes large amounts of electricity, and the question of whether the power consumed by crypto is worth it must be answered. Crypto can encourage green innovation by working with energy producers to find market-based solutions and already leverages green and renewable energy sources, with some studies showing that crypto mining and operators use more renewable energy than the average organization. The rise of proof-of-stake (PoS) blockchain protocols could also decrease energy consumption in the crypto industry, as PoS requires users to show ownership of a certain number of tokens to validate transactions, rather than requiring energy-intensive proof-of-work (PoW). Full article here : https://www.forbes.com/sites/seansteinsmith/2022/06/05/crypto-power-usage-is-helping-to-spur-renewable-energy-investments/?sh=358917ad2cb6
Publication by Jonathan Spencer Jones on Smart Energy International Canadian battery tech companies Extreme Vehicle Battery Technologies and its subsidiary IONiX Pro Battery Technologies have launched the Smart Miner, an energy storage system that claims to be the world’s first carbon-negative crypto-miner. The Smart Miner is based on IONiX’s Pro Home SmartWall battery and uses advanced battery management system and artificial intelligence to verify the generation and consumption of renewable energy using the Renewable Obligation Base energy economy (ROBe2) protocol, which is based on blockchain smart contracts that create an obligation to generate renewable energy each time the underlying token is mined and transacted. The Smart Miner is designed to be compact, affordable and easy to install, and is aimed at households looking to store renewable energy or generate passive income from mining cryptocurrency, particularly in developing countries where access to electricity is limited. Full article here : https://www.smart-energy.com/storage/energy-storage-cryptocurrency-miner-launched/
There are several policy and regulatory measures that could be put in place to encourage the use of renewable energy in cryptocurrency mining operations:
There are a variety of policy and regulatory measures that could be put in place to encourage the use of renewable energy in cryptocurrency mining operations. By adopting a combination of these measures, governments can help to drive the adoption of renewable energy in the mining sector and reduce its carbon footprint.
To address this issue, policymakers must take a holistic approach to the problem and focus on three dimensions: clean energy use, improved efficiency, and offsets. Policymakers should evaluate the costs and benefits of mining operations, engage with industry groups and civil society stakeholders to develop and disseminate efficiency standards, regulate through appropriate instruments, and incentivize innovation and best practices. Some specific recommendations include imposing energy-efficiency limits on miners, incentivizing renewable energy usage, requiring transparency regarding carbon pollution, protecting communities and small businesses, and establishing rules for e-waste disposal. International coordination is also key to addressing the transnational nature of the industry and ensuring consistency in regulations. Read “Cleaning Up Crypto’s Emissions: Why Policy Shouldn’t Be Binary” article by Ariana Kiran Singh (Senior Operations Analyst), Olamide Oguntoye (Policy Lead, Science & Innovation Unit) Lauren Packard (Senior Policy Analyst, Science and Innovation Unit), https://institute.global/policy/cleaning-cryptos-emissions-why-policy-shouldnt-be-binary
Cryptocurrency mining has the potential to play a significant role in driving the transition to a clean energy future. By investing in and supporting the development of renewable energy infrastructure, offsetting energy consumption through the purchase of carbon credits or clean energy, collaborating on research and development projects, and advocating for clean energy policies, the cryptocurrency industry can work with the renewable energy sector to reduce carbon emissions and address climate change. Through these efforts, cryptocurrency mining operations can not only reduce their own environmental impact, but also contribute to the larger goal of transitioning to a clean energy future.