Energy Usage and Sustainability of Bitcoin Mining
As the world is moving towards net-zero emissions, so too is Bitcoin mining looking for innovative and cost-effective ways to reach that goal. Bitcoin mining already relies heavily on hydroelectricity, which is the most stable and most commonly used renewable energy source globally. However, solar and wind energy are also used on the way to a “green cryptocurrency”.
Despite sometimes heavy criticism from the media and governments because of the high energy usage of Bitcoin mining and the environmental effect of Bitcoin, it uses only a tiny fraction (220 TWh/y) of the energy that is lost annually (50 000 TWh/y) through transmission and lack of storage facilities in times of oversupply of energy.
Bitcoin miners are economically motivated and look for low-cost electricity in order to maximise profits. Because all miners on the network are in competition with each other, it is in their interest to minimise their operational costs and look for the cheapest energy sources. As they are also location-independent, migrating from one location to another to reduce energy costs is accomplished with relative ease.
After the Chinese government cracked down on miners in 2021, mining locations were moved to other countries, and after the energy crisis in Kazakhstan, mostly to the West. This had a positive effect on Bitcoin mining’s use of renewables as they moved away from China’s heavy reliance on coal power towards more sustainable energy sources. According to the Global Bitcoin Mining Data Review, in 2021, a total of 58.5% of the energy consumption came from renewable energy.
The UN Sustainable Development Goals (SDGs) include climate action, and cryptomining can play its own part in both decreasing the energy wastage of power plants and moving towards a greater percentage in the use of renewables for mining. Hydropower is already a preferred energy source in cryptomining.
Solar and wind are low-cost renewable energy sources. As countries build more solar and wind plants, more and better storage facilities will become available. Where Bitcoin mining is integrated into solar and wind power plants, the wastage at these plants is reduced. Solar and wind are less stable than hydropower, but overall flexibility of cryptomining facilities, such as mobile container solutions, and relative ease of switching on and off, provides options for the use of excess energy from these sources.
According to the International Energy Agency’s (IEA) Report Net Zero by 2050: A Roadmap for the Global Energy Sector, reaching net-zero emissions globally requires all governments to significantly strengthen and implement their energy climate policies. As set out in the IEA’s World Energy Outlook 2020, renewable sources of electricity will rise by two thirds until 2030, and renewable energy sources will overtake coal by 2025 as the primary means of producing electricity. By 2030, hydropower, wind, solar PV, bioenergy and geothermal power will provide nearly 40% of the global electricity supply. With all these developments, Bitcoin mining, which already uses a high percentage of renewable energy for its mining operations, will be able to rapidly move towards net-zero emissions and close to 100% usage of renewable energy.
References:
- krypto-nachrichten. Strommix der Mining-Branche setzt zu 56% auf erneuerbare Energien. 2. Juli 2021
- https://www.iea.org/reports/world-energy-outlook-2020/outlook-for-electricity
- Bitcoin’s Energy Use Compared to Other Major Industries. Hass McCook, 10 August 2021
- Special Report: Energy Backed Money, Satoshi Energy. Bitcoin Clean Energy Initiative Memorandum. April 2021
