While Bitcoin opponents cite the Bitcoin network’s high energy consumption as one of their main arguments against the digital currency, Bitcoin miners are increasingly adopting green energy solutions to power their facilities, causing the Bitcoin mining sector to move towards becoming a pioneer in sustainable energy.
Read on to learn about the environmental concerns around Bitcoin mining and what Bitcoin mining companies are doing to address these issues.
Bitcoin Mining and the Environment: What’s the (Perceived) Problem?
Bitcoin mining has been debated among environmentalists, policymakers, and tech enthusiasts. Some argue it’s a significant contributor to global warming, while others believe it’s not as big of a problem as it’s made out to be.
So, what’s the issue with Bitcoin mining and the environment?
First, let’s understand how bitcoin mining works. Bitcoin is a decentralized digital currency, meaning no government or financial institution controls it. Instead, transactions made with bitcoin are verified and recorded on a public ledger called the Bitcoin Blockchain. For this to happen, Bitcoin miners solve mathematical problems to verify transactions using specialized computers. They earn newly minted bitcoin and transaction fees as rewards for their effort.
The perceived problem with bitcoin mining is that it consumes large amounts of electricity. According to some (arguably questionable) estimates, the electricity consumed by bitcoin mining is equivalent to the annual energy consumption of small countries. This has led to the claim that bitcoin mining significantly contributes to global warming.
Is Bitcoin Really an Environmental Villain?
The Cambridge Bitcoin Electricity Consumption Index reports that Bitcoin consumes 122.74 TWh annually, which is only 0.6% of the world’s electricity as of March 2023. Critics argue that Bitcoin consumes more electricity than countries like Argentina but fail to consider that Bitcoin has more users than Argentina has citizens.
As for carbon emissions, Bitcoin is not even among the top polluters. You would have to replace gold mining, air conditioners, the military-industrial complex, and aviation before even considering Bitcoin’s carbon footprint.
Moreover, while Bitcoin’s carbon output has increased since 2018 due to its increased adoption, alternatives are already in development.
The reality is that most of the power used to mine bitcoin comes from renewable sources such as wind, solar, water, and geothermal energy. In fact, a recent report by CoinShares estimated that 74.1% of bitcoin mining is powered by renewable energy.
Why? Because bitcoin miners, especially in recent years, tend to set up their operations in areas where electricity is cheap and abundant, often in regions with access to clean, renewable energy sources.
So, while there are valid concerns about the environmental impact of bitcoin mining, the perceived problem may be smaller, some experts claim.
Most of the power used to mine bitcoin comes from clean, renewable sources, and many miners are taking steps to reduce their carbon footprint even further.
And since miners are looking to maximize Bitcoin mining profits, they are always looking to find cheaper energy sources to power their mining machines, leading to innovation in sustainable energy solutions.
The Reality of Bitcoin Mining’s Move Towards Sustainable Energy
As Bitcoin’s popularity has grown, so has its mining demand. And with that demand comes a need for energy to power the mining process.
In the past, this energy was often generated by non-renewable sources such as coal and natural gas in China, leading to concerns about the environmental impact of Bitcoin mining.
However, Bitcoin mining is moving towards sustainable energy, and it’s happening fast. Mining farms are now actively seeking ways to reduce their carbon footprint and transition to sustainable energy sources like hydropower, wind power, and solar power.
One of the main drivers behind this shift towards sustainable energy is the growing awareness of the environmental impact of traditional energy sources. Using fossil fuels for energy production has contributed significantly to climate change, and the Bitcoin mining industry is taking steps to mitigate its contribution to the problem.
Another development is the emergence of innovative technologies that make Bitcoin mining more energy-efficient. For example, using liquid immersion cooling technology can reduce energy consumption by up to 90% compared to traditional air-cooling methods.
The move towards sustainable energy is not only beneficial for the environment, but it also makes economic sense for mining companies.
Renewable energy sources such as solar and wind power are becoming increasingly cheaper and more accessible, making them an attractive option for Bitcoin miners. In fact, many mining companies are now located in areas with an abundance of renewable energy, such as Iceland, where geothermal power is readily available.
Lastly, the shift towards sustainable energy can potentially change the perception of Bitcoin mining. The industry has been criticized for its high energy consumption and carbon footprint, but by embracing sustainable energy sources, Bitcoin mining can become a part of the solution rather than a problem.
With the increasing adoption of renewable energy sources, innovative, energy-efficient technologies, and global initiatives to promote sustainability, Bitcoin mining is poised to become more eco-friendly and cost-effective in the years to come.
5 Companies Making Bitcoin Mining More Sustainable
Let’s look at some of the companies making Bitcoin mining more sustainable.
Hive Blockchain Technologies
Hive Blockchain Technologies is a fast-growing and sustainable Bitcoin mining company. In March 2022, Hive Blockchain Technologies announced a partnership with Intel Corporation to purchase high-performing ASIC chips to be incorporated into custom-built mining equipment for HIVE. They also plan to host 100 MW of mining capacity by the end of 2023 in a new Texas renewable energy data center facility.
The real game-changer for the company is Intel’s Blockscale ASIC, which was introduced in 2022. Intel Corporation has only made the chip available to a select few customers, and HIVE Blockchain is one of four global customers to receive it. This chip is advancing energy-efficient hashing for proof of work consensus using green energy, which aligns with HIVE’s sustainability goals and ESG focus.
With its ongoing commitment to sustainability, HIVE Blockchain Technologies is a company to watch in the world of Bitcoin mining.
Marathon Digital Holdings
Marathon Digital Holdings is not only one of North America’s largest Bitcoin mining companies but also one of the most sustainable. In 2021, the company announced its plan to relocate its Bitcoin miners from a facility in Montana to locations with more eco-friendly and non-carbon-emitting sources of power.
Their goal was to achieve 100% carbon neutrality by the end of 2022, and to do so, Marathon made a strategic move to transition to more sustainable power sources. CEO Fred Thiel stated that the company is committed to powering its miners sustainably. With the majority of their fleet already scheduled to be deployed at renewable power facilities, it was the perfect time to move away from fossil fuels.
The transition to more sustainable sources of power took place gradually throughout 2022. This is a major step towards Marathon’s mission of building a better future for the environment and the Bitcoin industry.
EZ Blockchain is a Bitcoin mining company established in 2017 to offer hosting solutions for Bitcoin mining data centers. Since then, it has transformed into a vertically integrated mining firm that controls every aspect of the power generation cycle. With offices in Los Angeles, Chicago, Houston, and other cities throughout the US, EZ Blockchain provides mining infrastructure for energy businesses at the most affordable power prices.
The company aims to combat the world’s energy waste problem using cryptocurrency mining. As an energy-focused technology firm, EZ Blockchain connects the digital assets sector with the energy industry to maximize energy efficiency by using Bitcoin mining to tackle wasted energy issues.
In 2018, EZ Blockchain began producing mobile data centers that provide large-scale modular data centers. These data centers are built for crypto mining and are designed to run on cheaper energy sources.
Bitfarms is a sustainable Bitcoin mining company that uses clean hydroelectric power to generate energy for its mining operations. The company’s nine facilities are located in the US, Canada, and Paraguay.
By powering its mining activities with clean energy, Bitfarms reduces its carbon footprint and helps make Bitcoin mining more sustainable.
In 2021, Bitfarms raised CAD 155 million in equity, a testament to its commitment to sustainable Bitcoin mining and its potential for growth in the years to come.
Hut 8 is a veteran in North America’s Bitcoin mining scene, having started operations in 2018. As a firm of tech experts, Hut 8 advocates for decentralized systems that drive financial inclusion and sustainability.
Its commitment to clean energy sets Hut 8 apart, shown by the company’s use of nuclear and hydropower to power all its high-performance data centers across eight Canadian facilities.
With three data mining facilities and five multi-tier data centers, Hut 8 is equipped to handle a wide range of high-performance computing needs. The company serves over 400 commercial Bitcoin mining customers and held 6,115 self-mined Bitcoin as of February 2022.
How Bitcoin Mining Could Become a Driver for Renewable Energy Solutions
Bitcoin mining has been controversial due to its perceived negative environmental impact. However, with recent developments, Bitcoin mining could become a significant driving force for renewable energy solutions.
The use of renewable energy sources, such as solar, wind, hydro, and geothermal power, has been growing in recent years. These sources have become increasingly cost-effective, making them more attractive to businesses and governments seeking to reduce their carbon footprint. Bitcoin mining companies have taken note of this trend and are actively and rapidly shifting toward renewable energy sources.
Bitcoin mining can act as a driver for renewable energy solutions because it creates a demand for renewable energy and encourages investment in developing renewable energy infrastructure. Bitcoin mining is a 24/7 operation, requiring a consistent energy supply to keep the network running. This energy supply can be met by renewable sources, which can provide a steady supply of power over a long period.
As Bitcoin mining continues to grow, it could drive innovation in the renewable energy sector. The need for efficient and cost-effective energy sources to power Bitcoin mining could lead to the development of new technologies and solutions, such as Intel’s Blockscale ASIC chips. These innovations could be applied to other industries, leading to the wider adoption of renewable energy sources.
Furthermore, developing renewable energy solutions for Bitcoin mining can also help bring electricity to remote areas where traditional power sources are unavailable or unreliable. This can have a positive impact on local communities, as it can lead to the creation of jobs and stimulate economic growth.
In the past, sustainable energy has struggled to maintain momentum due to funding constraints. But with the immense capital-raising potential of the Bitcoin market, this could be the final push that sustainable energy needs to really take off. So, not only is Bitcoin mining benefiting from the shift towards greener energy, but it’s also helping to accelerate the development of sustainable energy solutions.