Bitcoin has received some backlash in the media regarding its heavy energy consumption. However, is it possible that this very energy consumption can actually create a net positive environmental impact? With influential crypto proponents, including Elon Musk and Kevin O’Leary, calling for more sustainable mining practices, many firms have conducted research into this very concept. These concerns have a legitimate basis, but as the industry continues to innovate and grow, cost-effective and realistic energy solutions are being explored and actively applied by the bright minds upholding the Bitcoin industry.
The Bitcoin Clean Energy Initiative (BCEI) has shared their findings on the future changes Bitcoin can make on renewable energy, with public figures Jack Dorsey and Cathie Woods’ firms co-writing the report. They have advocated that mining farms can actually "accelerate the global energy transition to renewables".
Bitcoin miners have the flexibility to use energy only when it's available, because the power can be turned off with the flip of a switch. This was proven in early 2021 by Whitstone Inc., the largest Bitcoin mining farm in North America, who turned off tens of thousands of miners to divert energy to the state grid during power outages in Texas. The Electric Reliability Council of Texas even paid the company for not purchasing power amid huge demand. This makes mining an ideal fit for solar and wind power, whose intermittent supply depends on the elements and tends to fluctuate daily. This increased demand for solar and wind power could help achieve economies of scale, further reducing the cost of these clean energy sources and making them more attractive for other use cases that currently supply fossil fuels.
A Response to Environmental Concerns
With media concerns regarding Bitcoin’s energy consumption, Tesla furthered the discourse by halting purchases made with Bitcoin. The company has held $1.5 billion in Bitcoin on their balance sheet since early 2021 as a store of value, purchased before their backpedal from the digital coin. Their main environmental concerns regarded the use of fossil fuels to maintain the network, particularly coal. However, the electric-car manufacturer has stated that they will hold their Bitcoin and use it for transactions once Bitcoin switches to more sustainable power sources. Elon Musk, CEO of Tesla, is a huge proponent of cryptocurrency, often Tweeting and sharing his opinions publicly to his cult-like following.
This switch to environmentally sustainable sources is already well underway in many mining facilities, often done with the support of building companies that can help construct sustainable mining operations. A key issue in the perceived unsustainability of Bitcoin related to a high number of Chinese mining farms using unsustainable energy sources. Now, with the regulatory crackdown in China and the exodus of miners and mining equipment from this region, these individuals are finding new facilities to host their operations. This provides an unprecedented opportunity for utilizing sustainable energy sources in these alternate countries of operation, who offer alternative forms of energy.
How Bitcoin is Incentivizing Clean Energy
Rebuttals backed by research have been made that prove Bitcoin mining will actually incentivize clean energy adoption. Jack Dorsey, CEO of Square Inc. and public Bitcoin supporter, shared his belief that cryptocurrency incentivizes renewable energy. The basis of this argument is that solar and wind power are cheaper than fossil fuels, however current supply and demand issues limit their adoption. This can be fixed with the introduction of Bitcoin mining farms into the existing grid systems, where mines can consume excess energy when available on the grid, and minimize operations during peak energy consumption hours.
Bitcoin is a unique energy consumer as it has an infinite appetite for energy, allowing mining equipment operators to be the perfect buyer for renewable energy. This creates a win-win situation for miners and grid operators alike, further pushing for the development of more renewable energy plants. By creating more solar and wind power facilities, the cost curve will drop further, now incentivizing other companies to make the switch to renewable energy. Bitcoin is capable of creating a domino effect into countless other industries with this adoption of renewables.
A key issue many utility-scale renewable energy projects currently face is having locations that are too far from the grid, resulting in the transmission line cost being too high for a profitable investment to be realized, at approximately $700,000 per km. This creates a lack of interest in opening renewable energy plants. Crypto mining solves this issue and makes it a more attractive deal by consuming the energy on-site which removes transmission and distribution infrastructure. Now these unprofitable, stranded renewable sites can be converted into a lucrative investment opportunity! Off-site hydroelectric power plants can be built and solar Photovoltaic (PV) panels can be propped up anywhere with sunlight, such as on top of a mountain, with little to no environmental impact. Studies have been conducted stating that PV plants (which turn solar power into energy) are more efficient at higher elevations, however this was previously limited by distance from energy grids. Bitcoin mining can offer a clear solution to solve these issues as the energy can be consumed anywhere, eliminating high transportation costs.
A new avenue being pioneered by Bitcoin mining for the development of renewable energy facilities is being actioned on by Greenidge Generation Holdings Inc. The company just announced that they will be using profits from their Bitcoin mining operations to close the Lockwood Hills landfill in Dresden, New York. In lieu of a landfill, Greenidge aims to construct a solar project on the site that will produce up to 5 MW of power. Protecting the environment and fuelling economic growth, in addition to renewable energy, is on the fast track to becoming synonymous with Bitcoin mining.
Become a Clean Facility Operator
Interested in leading with environmental sustainability while increasing your mining margins? Partner with Wattum’s Buildout Division to build your colocation data center that uses renewable energy and join the change that will increase adoption of renewables, fuel innovation for protecting the environment, and cultivate economic growth in communities around the world. We provide customers with real estate sourcing in order to build facilities on land that best suits their needs and goals. For miners looking for more sustainable options, get in touch with our representatives today to learn how you can participate in this trail-blazing development. The best part about these options is that the most sustainable route is often the most cost-effective.
In my opinion, good will does not drive innovation. Monetary incentives do. Every investment is driven by the potential profit it brings investors, and I believe in the coming years this massive profit bump brought on by Bitcoin mining will accelerate clean energy innovation.Azam, Wattum Sales Representative