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- 1 KPMG experts asserted that Bitcoin is ESG-friendly.
- 2 Bitcoin has the potential to stabilize the energy grid and reduce greenhouse emissions.
The narrative around Bitcoin being environmentally unfriendly is slowly changing; experts at KPMG are now saying that Bitocin is ESG-friendly. Since its inception, everyone was blabbering about the adverse impact of Bitcoin, mainly its energy-intensive Proof-of-Work (PoW) consensus mechanism. But recent developments are changing the demography.
Bitcoin is EGS Friendly – KPMG
Analysts at KPMG have now said that Bitcoin offers numerous benefits for the Environmental, Social, and Governance (ESG) framework. The blockchain has the potential to stabilize energy grids; it can also reduce the emission of greenhouse gases and help provide sustainable heat for commercial and residential properties.
ESG has become an important variable in defining a company’s effect on the environment. With rising global temperatures, melting ice caps, extreme seasons, etc., nations and industries are taking steps to reduce their carbon footprint and earn ESG reward points.
Experts at KPMG agreed to the fact that Bitcoin is energy-intensive, but it does not contribute directly to carbon emissions. The whole network runs on electricity, and rising energy cost is a significant cause of concern for miners worldwide. Hence, miners are now actively shifting towards alternate energy sources like hydropower, solar, wind, and even gas flares, to name a few.
The Hunger of Power for Bitcoin Mining and Criticism
Many Bitcoin miners are tapping into alternate sources to power their mining rigs. Some are trying to tap into abundant solar power; some are using the waste of oil mining and gas flares. Others are using cattle waste, while Iceland’s miners use geothermal power to mine BTC.
But the critics are not focusing on the energy sources; they only talk about the energy used. Biden Administration plans to levy a 30% tax on Bitcoin miners’ electricity. The community has mixed reactions to the news, but authorities claimed that this step would encourage miners to look for alternate sources, thereby reducing the pressure on the grid.
A Harvard Business Review article stated that Bitcoin uses only 0.55% of the world’s electricity. This number places it next to the energy used by tumble-style laundry dryers. Bitcoin Mining Council claimed in 2022 that Bitcoin’s global share is a mere 0.17% of total energy production.
KPMG experts say that this alternate and renewable energy source used by Bitcoin miners shifts the pressure on the grid. But the sun doesn’t shine at night, and the wind is not a reliable source. Authorities are trying to incentivize the use of renewable energy, pushing them to look for better and more reliable sources.
Iceland produces all of its energy from renewable resources like geothermal stations. Moreover, it produces more energy than required. Hence, they sell this energy to Bitcoin miners in a win-win situation. Also, if the grid is required to shift this access to another location, they ask miners to reduce the usage, and they comply.
How Bitcoin Became ESG Friendly?
In June 2023, a spa in Brooklyn used miners to warm up the pools for the guests. In colder regions, much power is used to heat residential and commercial complexes. Excess heat generated from mining rigs could solve the problem. Moreover, these machines generate nothing besides Bitcoin, gas, or pollutants and use only electricity.
KPMG’s experts claim that this scenario significantly reduces methane pollution, greenhouse gas emissions, and other pollutants entering the atmosphere. Oil rigs generally burn the excess methane in massive gas flares seen blazing atop these rigs. Miners build their stations on the location and use the gas to power the machines.
Another aspect benefiting miners is the growth of artificial intelligence (AI). This technology uses vast data centers to process the query. Miners are delegating their computing power and expertise in managing a data center to them. Both the sectors are benefiting from each other. The strategic energy use and the significant shift to renewable sources have made Bitcoin ESG-friendly.
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
