You don’t have to dig too deep to discover that crypto has a problem with energy consumption. For a product that’s built for the modern world, this just doesn’t work.
Green Bitcoin mining is no doubt the answer, but how do operations move away from fossil fuel energy and make their operations more energy efficient?
Why the Need for Green Bitcoin Mining?
The fact is, Bitcoin mining is incredibly energy-intensive. Studies have shown that the electricity used to power Bitcoin mining is equivalent to the annual energy consumption of the Netherlands. This is a huge amount of energy, and it’s made worse by the fact that a lot of it is powered by fossil fuels.
In an environmentally conscious world, this simply isn’t a manageable way for the industry to proceed. Such consumption puts a huge strain on the environment and simply isn’t compatible with many governments’ environmental targets.
Why Does Mining Use So Much Energy?
Let’s take a quick look at how Bitcoin works (here’s a more detailed overview).
Bitcoin is sent from one user to another.
That transaction is put into a block with lots of other transactions and sent to a miner to “verify.”
This is where the energy consumption comes in. To verify the transactions, miners have to solve complicated mathematical problems. To do this, they use intelligent computer chips that are energy-hungry. To add to the consumption, the computers are working so hard that they give off lots of heat and have to be cooled by fans.
This is happening on a huge scale which results in energy consumption levels higher than medium-sized nation-states.
Public Demand and Governmental Pressure
Crypto is a relatively new phenomenon so it’s natural there are things that need to be worked out. The environmental impact of Bitcoin and other cryptocurrencies is right at the top of the list.
Green Bitcoin mining should be a priority and plenty of innovation is going into this endeavor.
One of the most recent developments is a shift in where Bitcoin mining is taking place. In the past, this has been largely in China, where fossil fuels have powered huge mining facilities. Recently, China has enacted a crypto ban though, and this has seen lots of mining operations move to the US.
This is a great opportunity for clean crypto mining to flourish, and there are plenty of people working to make this a reality.
With public demand for a cleaner product, and governmental pressure to move to cleaner energy sources, it’s time to embrace green Bitcoin mining.
What Is Green Crypto Mining?
Green crypto mining relies on two developments. The first is a reduction in energy consumption and the second is a switch to renewable energy.
With technology, both of these goals are achievable.
The Challenges with Renewable Energy
At present, around 39% of energy used by crypto miners is renewable. On the face of it, this is a reasonable figure (the figure for US energy consumption as a whole is 12%) but when it occurs on such a large scale, it has to be improved.
Technology is helping us to harness the power of the sun and wind in larger quantities but there still remains a question over consistency. We can’t guarantee that the sun is going to shine and the wind is going to blow.
What this means is sometimes there’s not enough renewable energy to meet demand and at other times, we have a surplus.
One way green Bitcoin miners are making more of renewable energy is through demand-response contracts. This allows miners to expand operations when there’s a large supply of renewable energy and reduce consumption when renewable energy supplies are low.
This allows miners to get a good rate on their energy and maximize the amount of renewable energy they use. Still, this is only part of the puzzle, and there are lots of other forms of energy that are being considered.
Other Renewable Efforts
Mining companies will look to solve the problem of green Bitcoin mining in different ways.
For example, some will focus on using the energy more efficiently, others are turning to nuclear energy, and so on. One option that looks particularly promising is using the excess gas from gas flaring during oil drilling.
Too often, this gas is burned, releasing millions of tons of CO2 into the atmosphere. If crypto miners can instead use that gas to power their operations, it would make a big difference to the environment and take a big step towards green crypto mining.
Technological Innovation Is Essential
The fact that crypto is a young industry can be no excuse for the huge impact it has on the environment.
Governments around the world are setting targets for emissions and they’re not going to turn a blind eye to crypto’s huge energy consumption. Yes, you can point to industries with much bigger carbon footprints, but when you talk about industries like concrete production, it’s likely to be seen as more essential than a digital currency.
This means that crypto miners and investors need to embrace green Bitcoin mining. Those that do are going to have a big competitive advantage in the near future, while those that don’t fall behind and face big challenges.
With the China crypto ban, we’ve seen how government legislation can change the industry overnight. Miners and investors need to be ahead of future legislation and when it comes to the environment and energy consumption, this is only a matter of time.
Conclusion: Green Bitcoin Mining
Bitcoin mining requires energy and it always will. At the moment, the level of energy consumption is extremely high and that’s one of the key challenges the industry faces.
With time and technological advances, the process is only going to become more efficient though, and miners will find ways to harness more renewable energy.
The public is conscious of environmental impact and it will affect investment decisions. Those mining operations that have prioritized green Bitcoin mining will benefit and those that can’t modernize their energy consumption will struggle.