Nearly a quarter of all Bitcoin miners use water to power their facilities, while wind and nuclear energy are the second and third largest contributors. Most of the energy used in Bitcoin mining comes from renewable energy sources, according to research by ESG analyst and investor Daniel Batten. Bitcoin advocates argue that the demand for electricity by Bitcoin miners can lead to an increase in renewable electricity capacity. We rigorously evaluated this statement by estimating a Bitcoin electricity demand curve and included this demand curve in a long-term model of the Texas electricity market.
We found that while Bitcoin mining can increase renewable capacity, it also increases carbon emissions. When Bitcoin miners provide network management services in response to demand, their impact on emissions is greatly mitigated. Last month, a study published in the journal Joule found that Bitcoin mining worldwide may be responsible for around 65 megatons of carbon dioxide a year, an amount comparable to Greece's emissions. Saylor created the Bitcoin Mining Council, a forum for the industry to exchange ideas and coordinate environmental strategy. Instead of relying on traditional sources of energy, some Bitcoin miners have started to capture natural gas and channel it to a generator on the well platform.
This energy is then used to power the Bitcoin miners. Recently, I was invited to give a talk at the Texas Blockchain Summit on the topic of the growth of bitcoin mining in Texas. This has been beneficial for power grid operators as it has allowed them to take advantage of this new feature of Bitcoin mining. The authentication system which is the basis of Bitcoin is known as “proof of work”; some companies in the sector are choosing to create new cryptocurrencies with a different system called “proof of participation”, which uses only 0.01 percent of the energy consumed in the mining process. Argo, a Bitcoin mining company, is trying to do something environmentally responsible by capturing natural gas and using it to power their operations. A Bloomberg analyst reported that the percentage of energy used to mine Bitcoin from renewable sources had exceeded 50% due, in part, to the fact that miners fled the ban imposed by China.
This has led me to believe that Bitcoin mining is suitable and beneficial for renewable energy, both at the first and second order levels (indirectly). Lifecycle mining is a concept that I learned in a talk given by Ro Shirole, from the mining company Compute North, at the Bitmain Mining Disrupt summit in Miami. Without knowing anything about bitcoin mining in Texas, I questioned about two dozen mining entrepreneurs, wholesale energy traders, academics and energy experts. In short, bitcoin mining is converging with the energy sector with amazing speed, resulting in an explosion of innovation that will decarbonize bitcoin in the medium term and greatly benefit increasingly renewable networks. Elon Musk recently announced that Tesla would no longer accept cryptocurrency payments due to the “growing use of fossil fuels for mining and bitcoin transactions”. However, this does not mean that Bitcoin mining cannot be done sustainably; it just means that more effort needs to be put into finding ways to make it more environmentally friendly. In conclusion, it is clear that while Bitcoin mining can have an impact on carbon emissions, there are ways to mitigate this impact and make it more sustainable.
With more research and innovation into renewable energy sources for powering Bitcoin miners, we can ensure that this technology remains clean and green.