The Impact of Bitcoin Energy Consumption: Is Renewable Energy the Solution?
Everyone has an opinion on Bitcoin, whether it’s banks, governments, or everyday folks with an interest in tech and personal finance.
It was only a matter of time before environmentalists chimed in on Bitcoin, and they make a fair point – Bitcoin is not exactly the most energy-efficient platform in the world.
However, when you compare Bitcoin to the legacy financial system, is it really so egregious?
Consider all the wasted resources and inefficiencies of traditional banks and institutions, and the proposition of Bitcoin – not to mention other eco-friendly cryptos – starts to be quite appealing.
Comparisons aside, how do we change course from Bitcoin’s current energy requirements to something more sustainable and better for the environment. There is a strong case for renewable energy mining as the most promising route forward, so let’s explore this concept in greater detail starting now.
Current Bitcoin Energy Usage
The reason why Bitcoin mining is so resource-intensive is the steep amount of computing power required to solve cryptographic functions known as hashes. This is the foundation of blockchain technology which secures a decentralized ledger and facilitates transactions.
These hashes, when solved, have the potential to earn real Bitcoin for miners.
Considering the attractive prices of Bitcoin in recent years, it’s no shock that more individuals and institutions are getting into the Bitcoin mining game, eager to secure a portion of this digital gold for themselves.
But just how much energy does the Bitcoin network use in its current form?
The University of Cambridge estimates that 231.7 gigawatt-hours are required to fuel one day of Bitcoin mining, while a whole year of mining consumes about 84.6 terawatt-hours, numbers which rightfully raise some eyebrows.
Comparisons
Unless you have experience in the energy field, you might not have a frame of reference for how much energy Bitcoin needs to run.
A useful exercise is to compare Bitcoin’s energy use to familiar use cases, a tactic used many times by researchers and media.
For example, if Bitcoin were a country of its own, it would rank 34 on a global scale in terms of how much energy it uses annually, sandwiched right between the Netherlands and the Philippines!
Of course, compared to the world’s biggest consumers like China and the United States, Bitcoin is just a blip on the radar in terms of energy use.
Another interesting comparison to make is between Bitcoin and other industries or products that require a lot of resources in our modern world.
Heating and air conditioning in residential and commercial buildings are extremely resource-intensive, making Bitcoin’s needs look rather small in comparison.
However, yearly energy use of Bitcoin is nearly twice the amount used by all the lighting in the United States, and roughly on par with the energy used by US refrigerators.
As many have pointed out, it’s really a matter of apples and oranges when comparing all these activities, since it’s hard to conceptualize these things and make judgments in terms of importance.
Also, keep in mind that the banking industry uses more than twice the amount of energy than all cryptocurrencies combined, a point that often goes overlooked by crypto critics.
Energy Sources
We know that Bitcoin needs a certain amount of power to function – whether that’s too much or too little comes down to your opinion of crypto and a range of other economic factors.
But in terms of real energy usage, it’s worth exploring where this power comes from in order to keep the Bitcoin train chugging along.
After all, we know that some types of energy are far more sustainable for the health of the environment, while others are more associated with pollution and harm to the eco-system.
Unsurprisingly, natural gas and petroleum are the two most common types of fuel used to power Bitcoin mining operations, since these tend to be more accessible and abundant resources across the planet.
The typical breakdown of a modernized nation will show that natural gas and petroleum each account for about a third of the primary energy consumption, while nuclear power, coal, and renewable energy make up approximately the remaining third.
It’s no surprise, then, that Bitcoin miners are seeking ways to improve upon these foundations and create a more renewable system that benefits both themselves and the environment.
Renewable Energy Types
The energy industry has come a long way in terms of renewable energy, which wasn’t even on the map a century ago. Thanks to current incentives like Bitcoin mining and others, these renewables are seeing more interest and investment.
Here are the core three forms of renewable energy and how they relate to Bitcoin mining.
Hydroelectric
It may come as a surprise that China is home to Bitcoin mining operations that use the majority of hydroelectric power on the planet.
Water flows in abundance throughout the wet season, creating cheap and renewable sources of power to mine Bitcoin and fuel other competitive industries in the region.
While hydro may not be as viable in some regions of the United States, it’s certainly a promising technology to power Bitcoin miners in certain parts of the world with heavy rainfall.
Solar Power
In the deserts of Texas and the southwest United States, there is more than enough sunshine to go around. Solar power generation is on a steep incline since the turn of the 21st century, with more of these resources are being funneled into local crypto mining operations.
Solar has its limitations as far as storage and transport go, but for intrepid Bitcoin miners in America and beyond, it should prove useful as a source of highly renewable energy.
Wind Farming
The most productive wind farms in the United States are found in the Midwest, where crypto mining has yet to fully take root.
Nevertheless, wind is a reliable source of cheap energy that will certainly play a role in the mining industry moving forward.
Mapping the Future of Bitcoin Mining
We’re starting to see the next phase of Bitcoin mining shape up as money flows and institutional support stays strong.
Here are some points to watch as renewable energy becomes a bigger player in the crypto mining space.
Clear Metrics and Goals
Is it possible for a Bitcoin mining company to go rely on majority renewable energy? How about going completely carbon neutral? These are lofty goals pursued by industry innovators looking to get an edge and set an example for others in the world of crypto, finance, and tech.
Furthermore, initiatives like the Crypto Climate Accord show that these goals are more than just talk. There are dozens of crypto participants looking to accomplish similar feats, and are willing to combine forces for a better future.
Power of Incentive
Renewable energy Bitcoin mining not only has the power to change the status quo in crypto.
It can also incentivize other industries to wake up to the realities of energy, efficiency, waste minimization, and the coordination required for advancement. After all, money talks.
The Change Has Just Begun
Bitcoin mining isn’t going anywhere, but it is changing for the better.
Renewable energy has the potential to power Bitcoin in a far more sustainable and profitable way, while setting a strong example for the future of finance and beyond.
Sources:
Bitcoin Mining Map | University of Cambridge