Bitcoin mining could change the world if it uses renewable energy
The most popular cryptocurrency in the world, bitcoin, after twelve years of existence, is in an unprecedented phase of adoption, however as we know its environmental impact is high. As its diffusion increases, the energy consumption required for mining should receive more attention from national regulators. Running the bitcoin network globally uses as much energy as Washington state, which accounts for less than half of 1% of total global energy consumption.
Bitcoin mining (using a specialized computer to solve a cryptographic puzzle), like the extraction of any other resource, requires energy. The inventor of bitcoin, Satoshi Nakamoto, has compared bitcoin mining to gold mining. “Gold mining is a waste, but that refusal is less than the usefulness of having gold available as a medium of exchange”. The same goes for bitcoin.
Unlike many other resources, however, the power to mine bitcoin can be obtained from renewable resources. Currently, as of mid-September 2021, it takes $ 12,500 to mine a block of bitcoin, which is worth just over $ 312,500.10. This is a positive attribute because the effort and energy spent reflect the value of bitcoin, just like with other scarce assets. However, 90% of all bitcoins that will ever be mined already exist.
It is estimated that it cost around $ 28 billion to create all the existing bitcoins and that those 28 billion are now worth nearly $ 1 trillion, in constant growth. For reference, the US Treasury spends over $ 1 billion annually to maintain the US currency, and this is just one of around 190 currencies on the planet. The cost of money on a global scale also uses energy resources, and those totals easily outweigh the cost of mining bitcoin, even at today’s costs.
Today, the Bitcoin network uses around 140 TW / h of energy, just under the gas burned by the US oil industry alone, which could generate 150 TW / h of electricity. The cost of running a miner is almost entirely his electricity cost.
Earlier this year, China banned bitcoin mining and initiated a migration of miners around the world in search of low-cost energy sources to run their business. This migration will take 12-18 months to take place. During this time, the United States and others will compete to make their positions the most attractive to miners.
The opportunity we face is not just to build a bitcoin network that relies on renewable energy, but one that also uses waste streams from oil and gas production operations and even the unused baseload from operations. utility to add energy efficiency to the overall energy production market.
The problem is that the Bitcoin network will not use less energy in the future, it will use more – and the challenge will be to make sure it uses clean energy sources. For example, tax changes for mining bitcoin from renewable or waste energy sources could provide a tax advantage that conventional mining would not receive. Additionally, mining facilities, which will grow in size and energy consumption as bitcoin becomes more energy-intensive to mine, will need to follow state and local code requirements for safety and efficiency.
Small and large utilities will need assistance in gaining regulatory approval so they can enter into long-term contracts with miners and demonstrate added value for their customers by using their standby power to mine bitcoins. Likewise, oil and gas operators will need assistance in entering into contracts with bitcoin miners to use the burnt gas to power bitcoin miners.