Bitcoin miners are flocking to places like Iceland, Oregon, Washington State and Canada to take advantage of cheap power (that happens to be green).
If you’ve been following the cryptocurrency space for a while, chances are you’ve heard this one: “Bitcoin uses more energy than <insert country here>.” The story will hit the top of Google News every few months or so, helping the perma-bears pat themselves on the back while striking fear in the hearts of the true believers. But what if I were to tell you that it’s not that big of a deal?
Hear me out. Yes, Bitcoin does use a lot of electricity. Enough to power hundreds of thousands of homes in the United States, in fact. It’s just as they say. But this problem is not new. With every significant technological development comes a price. In Bitcoin’s case, it’s electricity.
It’s important to understand that Bitcoin miners aren’t simply pouring gasoline into a fire. These miners using energy to maintain a network, store data and process transactions.
This energy usage is often at the core of the debate over consensus mechanisms. While many praise the benefits of proof-of-stake protocols which use significantly less energy to achieve a similar outcome, it can be argued that proof-of-work protocols are still safer and more suited to a decentralized end-game.
Contrary to proof-of-stake protocols, proof-of-work requires miners to expend electricity to create new blocks. Simply put, miners are trading electricity for currency.
And increasingly, they’re doing it with relatively green energy.
Bitcoin’s green energy revolution
The how’s and why’s of consensus algorithms aside, Bitcoin miners want to remain profitable. It’s their business, after all.
And though much of the focus in the “Bitcoin energy consumption scandal” falls on how much energy is being used, there’s very little emphasis on where the energy comes from.
This is actually the most important factor in the debate.
Global energy consumption is on the rise, and so are fossil fuel prices. Political squabbles and market uncertainties have made this fact very clear. At the same time, however, green energy is becoming much cheaper and significantly more accessible. In fact, in some areas, there is so much excess power that producers are practically giving it away.
Bitcoin miners have been quick to identify this trend, and they are flocking to places like Iceland, Oregon, Washington State and Canada to take advantage of cheap power (that happens to be green). And for producers, this piqued interest is music to their ears.
Take the small town of East Wenatchee, Washington, for example. With the help of the Columbia River streaming straight from the Rockies, the region boasts five massive hydropower dams, providing some of the cheapest electricity on the planet.
Previously, most of the energy was exported to markets like Seattle or Los Angeles, but bitcoin miners have since seized the opportunity, building huge operations in the area.
“By the end of 2018, according to some estimates, miners here could account for anywhere from 15 to 30 percent of all bitcoin mining in the world,” Paul Roberts writes in a segment for Politico.
How bitcoin can subsidize green energy projects
As energy storage technology struggles to keep up with the growing demand for green energy, there are an increasing number of renewable power projects that lack the means to properly store or distribute energy. In turn, solar and wind farms may be losing important revenue that could make or break the endeavor.
Andreas Antonopoulos explains that, instead of renewable energy producers curbing their output or wasting their energy, bitcoin miners could pay for and utilize that energy allowing producers to earn more revenue on their efforts and become profitable in a shorter amount of time, effectively subsidizing the project.
Antonopoulos argues that “the decentralization of bitcoin is driving the decentralization of energy production.”
And he may be on to something.
While blockchain technology has been hailed as a beacon of hope for the decentralization of energy distribution and the utilities sector, the idea that green energy projects could use bitcoin mining to subsidize their power plants is somewhat of a revelation. And that’s just the beginning. There is another piece of the energy sector that could blossom with the help of bitcoin miners.
Can we turn waste into bitcoin?
Ede Ijjasz-Vasquez, senior director for the World Bank’s social, urban, rural, and resilience global practice, predicts that the world’s waste could soar from 1.3 billion tons to 4 billion by 2100, an issue which, if not addressed, could have dire consequences for public health and environmental sustainability.
Typically, waste is dealt with in outdated and uneconomical means. It is burned, dumped or stored and the process is costly and inefficient. But this trend is beginning to change course, with more efforts being placed into bio-fuel research and waste-to-energy technology.
This presents another opportunity for bitcoin miners to take advantage of new developments in energy technology, and it’s not going unnoticed.
In November 2017, PRTI and Standard American Mining set out to turn trash into crypto, and they succeeded. PRTI explains “The business of turning tires into oil, steel, and carbon is lucrative, but the true value lies in monetizing the power in a new way.”
Though PRTI and Standard American Mining may be the first ever waste-to-bitcoin producers, they certainly won’t be the last.
Moving forward, it’s clear that bitcoin miners have the power to drive innovation in the green energy sector, but the challenge will be convincing the two industries to work together. Though bitcoin is relatively new, it presents an excellent opportunity for energy producers to add a new source of revenue to their projects or even fund new technologies that could pay off down the line.
Bitcoin certainly isn’t the evil “ocean boiling” tech that it is made out to be, in fact, it may end up being just the opposite.