How Green Mining Will Become the Norm for the Bitcoin Network
Learn about green Bitcoin mining and why renewable energy-powered crypto mining will most likely end up becoming the norm.
By Patrick Lowry, CEO of Iconic Holding
Bitcoin mining has come under fire in recent months because of the high energy consumption required to keep the Bitcoin network running. What Bitcoin critics fail to realize, however, is that Bitcoin mining is becoming increasingly green. What’s more, Bitcoin mining encourages the development of more efficient renewable energy solutions.
Bitcoin Mining is Already Greener Than You Think
According to a Q4/2021 report from the Bitcoin Mining Council (BMC), Bitcoin mining uses “a higher mix of sustainable energy than any major country or industry in the world.”
BMC collected the data from over 46% of the global Bitcoin network. BMC members and survey participants were at the time using “electricity with a 66.1% sustainable power mix.”
As indicated on the chart above, the global BTC mining sustainable electricity mix was 58.5% in Q4/2021, showing a 1% growth from Q3/2021. Therefore, green Bitcoin mining is on the rise and this could continue into 2022.
The BMC report also states that Bitcoin mining’s energy consumption is only 0.142% compared to the world’s total energy, making it an almost negligible amount.
Bitcoin’s energy consumption is also making positive strides by using up the energy that the world wastes. As BMC reports, global Bitcoin mining is consuming 0.44% of the world’s wasted energy.
In Texas, for example, Bitcoin miners are purchasing excess energy when it’s not on-demand, then closing down their rigs when demand soars.
The primary sources of green power for Bitcoin mining are solar, water, and wind.
What’s more, Bitcoin mining also reduces waste from non-renewable sources like coal.
For example, according to a story in Forbes, a resident of western Pennsylvania is turning hazardous material into good use through Bitcoin mining. Bill Spence is turning garbage of bituminous (gob) into Bitcoin, saving groundwater from potential pollution while supporting the Bitcoin Network.
Bitcoin Green Energy Mining Initiatives
Stakeholders in the Bitcoin industry are keen to make Bitcoin mining as green as possible.
To support this goal, the BMC plays a crucial role in educating the world about the advantages of Bitcoin mining and the current state of green Bitcoin mining through quarterly reports.
Moreover, Square’s Bitcoin Clean Energy Initiative (BCEI) supports Bitcoin mining companies in adopting green solutions. For instance, Square and Bitcoin infrastructure company, Blockstream, have partnered to build a solar-powered mining rig for BTC. In the partnership, Square will invest $5 million while Blockstream will provide the infrastructure.
Furthermore, BCEI published a memo that demonstrates Bitcoin mining could speed up the world’s energy transition to renewables. The paper argues that integrated Bitcoin mining could transform intermittent power resources like solar into baseload-capable generation.
Another initiative, the Crypto Climate Accord, is working towards creating a 100% carbon neutral crypto industry by 2030. The partners of the Crypto Climate Accord are Energy Web, Rocky Mountain Institute, and Alliance for Innovative Regulation.
Energy Web has also partnered with Ripple to build EW Zero, “an open-source tool that will enable any blockchain to decarbonize through the purchase of renewable energy in local markets worldwide.”
What’s more, Binance has partnered with the International Rec Standard to establish the Green Bitcoin Project. The project offers “a fully transparent purchasing of renewable energy certificates (REC) to manage and track energy consumed from renewable power sources, as RECs are legal proof that energy has been generated from renewable electricity sources like solar or wind power.”
That means that you can make your BTC greener by buying RECs. Each REC represents 1MWh of green energy generation. RECs can then be used to track electricity from the point of production to consumption.
More and More Miners Are Going Green
Bitfarms, one of the largest publicly-traded Bitcoin mining companies, is already using renewable energy. The Canadian company also announced plans to secure 10 MW of green hydropower through a power purchase agreement with Paraguay.
Other Bitcoin mining companies that have “gone green” include Argo Blockchain and Marathon. Argo secured a $25 million loan to finance a Bitcoin mining rig in Texas that will only use renewable energy. Marathon plans to become 70% carbon neutral in 2022, with the goal of eventually becoming 100% carbon neutral.
Companies already in the power industry are also contributing to green Bitcoin mining. For example, an old hydroelectric plant in upstate New York got new life when its owners started using its power to mine Bitcoin.
Finally, in October 2021, El Salvador started volcano-powered Bitcoin mining weeks after declaring Bitcoin as legal tender. The Central American country is known as the land of volcanoes thanks to regular volcanic activity and earthquakes. Once fully implemented, this project will contribute towards global efforts of making Bitcoin mining 100% green.
Green Bitcoin Mining Will Likely Become the Norm
Based on the growing number of Bitcoin green energy mining initiatives, it’s clear that the stakeholders in the Bitcoin industry are keen on making Bitcoin mining green.
Going forward, green Bitcoin mining will likely become the norm as mining companies rush to take advantage of affordable renewable energy sources.
In turn, this could result in the development of more efficient renewable energy solutions. The free market will incentivize miners to find the cheapest energy sources to maximize Bitcoin mining profits.
We will see more green Bitcoin mining projects emerge, eventually resulting in 100% green Bitcoin mining. Sooner or later, even the most outspoken Bitcoin critics will have to change their tune on Bitcoin’s environmental impact.
To learn more about Bitcoin and how it could turn into the ultimate ESG investment, click here.
Iconic’s Carbon Offsetting Initiative
Investors have also the chance to invest in Bitcoin in a more climate-friendly way: we have offset the carbon footprint of our flagship Bitcoin ETP, the Iconic Funds Physical Bitcoin ETP, with project-based carbon credits.
Using the transaction-based methodology that has been developed by the Frankfurt School Blockchain Center, our Physical Bitcoin ETP generated a carbon footprint of approximately 37 tonnes of carbon dioxide equivalent (tCO2eq) over the analyzed period from April 15 to June 30, 2021 (Q2 2021).
To have these emissions offset in the long term, we have purchased and redeemed (i.e. permanently removed from circulation) CO2 certificates to support impact-oriented projects that have been tested and certified by renowned climate and nature conservation groups.
Carbon Emissions of Bitcoin from an Investor Perspective
The Frankfurt School Blockchain Center and intas.tech published a study outlining a new approach on how to offset the CO2 emissions caused by the Bitcoin network.
They address one of the most impactful criticisms of Bitcoin — its electricity consumption. This study analyzes the current global CO2 footprint caused by the Bitcoin network and outlines a new approach to offset the CO2 emissions.
Iconic’s Research Reports
- Cryptocurrencies and the Sharpe Ratio of Traditional Investment Models
- Analyzing the Primary Value Drivers of Leading Cryptocurrencies
- How Effective are Common Investment Strategies with Bitcoin?
- Investigating the Myth of Zero Correlation Between Crypto Currencies and Market Indices
For further information, please visit funds.iconicholding.com
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