Will bitcoin mining ever be environmentally friendly?

Bitcoin mining consumes a lot of electricity, which is why it is even banned in some parts of the world. Just recently, the Abu Dhabi Agriculture and Food Safety Authority announced that it will impose fines of up to AED 10,000 on anyone found mining cryptocurrencies on farms.

“At Gryphon Digital Mining, we are focused on off-grid mining solutions that significantly reduce the environmental impact of Bitcoin mining,” says Rob Chang, CEO and co-founder of Gryphon Digital Mining.

Chang says one compelling approach is to use nuclear energy. He sees it as a stable, powerful energy source with a lower carbon footprint compared to conventional energy sources.

Another sustainable method he is considering is hydroelectricity. Chang believes that hydropower mining is particularly useful in regions with abundant water resources. These sites provide a reliable and renewable energy source that can be used for continuous mining operations.

Use of waste

Chang also suggests capturing excess natural gas from oil drilling sites that would otherwise be burned. He believes it could also provide an efficient and environmentally friendly power solution for the mine.

Read | Bitcoin mining: what is it and how does it work

Phil Harvey, CEO of bitcoin mining consultancy Sabre56, is also fascinated by recovering excess gas.

“A significant advancement in this area is the use of gas flare recovery, which captures energy wasted from flare and then uses it in mining, reducing environmental impact and increasing efficiency,” says Harvey.

He strongly believes that off-grid mining mechanisms, especially those using stranded gas, can help increase the environmental sustainability of Bitcoin mining. “These mechanisms involve the use of energy sources that are either underutilized or have excess capacity that is not being used by the grid,” says Harvey.

Stuart Connolly, chief investment officer at investment firm Deus X Capital, agrees. He points to companies such as Crusoe and Giga that are actively developing off-grid mining projects to use flare gas.

However, he adds that these off-grid facilities face challenges such as low uptime and high operational maintenance costs. This leads to lower revenues compared to larger on-grid facilities, which is why there are not many such installations.

Sustainable development moderator

Contrary to popular belief, our experts say that Bitcoin mining helps develop clean energy.

Environmental groups tend to blame Bitcoin’s proof-of-work (PoW) consensus mechanism, which makes it energy-guzzling.

Nathaniel Harmon, co-founder of OceanBit, explains that PoW is intentionally wasteful as a way to secure the network from attack.

“Deliberate waste from PoW disproportionately favors renewable energy sources due to their inherently lower marginal cost, and each gradual halving cycle increasingly encourages a shift to renewable energy sources,” Harmon reasons.

That appeals to Michael Ashley Schulman, founding partner and chief investment officer at Running Point Capital Advisors. He argues that bitcoin mining could actually help renewable energy sources become more economically viable.

“Renewable energy sources such as wind, solar and hydro often generate excess ‘stranded energy’ when consumer demand is low,” says Schulman. “Bitcoin mining ensures continued demand for this stranded renewable energy.”

Moreover, as a flexible and eternal buyer of surplus renewable energy, Bitcoin mining increases the revenue potential of green energy providers. Schulman believes this encourages further investment and expansion of green infrastructure to capitalize on the continued demand for the Bitcoin economy.

“In this way, Bitcoin facilitates the development of clean energy production,” explains Schulman.

Harmon adds another dimension to this. He argues that all forms of renewable energy are location-specific and often do not coincide with large population centers. Therefore, as generation is expanded, these projects also require new transmission networks.

To read: Green finance is financing sustainable progress in the MENA region

This is exactly where high energy density and a modular, containerized design are needed for Bitcoin mining, Harmon says. A Bitcoin mine can be deployed quickly in these locations to “provide a break in revenue for these stranded generation assets.”

But mining is already ecological

According to environmental, social and governance (ESG) analyst Daniel Batten, most Bitcoin mining is done using renewable sources. In the background, Batten strikes back common but incorrect claims about Bitcoin mining with an evidence-based rebuttal.

The document shows that most of the research on Bitcoin’s carbon footprint is outdated. Batten also argues that Bitcoin mining dynamics have changed significantly since his move from China.

He points to Bitcoin analyst Willy Woo’s charts, which are based on contemporary data.

Contrary to popular belief, the charts show this 55.8 percent energy for Bitcoin mining comes from sustainable sources.

Connolly totally agrees. He believes that energy consumption on the Bitcoin network is not inherently negative.

“Because Bitcoin is quite transparent about energy consumption, it’s easy to point to a single number,” Connolly argues. “However, other systems (banking, gold mining and the like) do not provide the same type of transparency.”

For more cryptocurrency news, click Here.