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- 1 The hardware to mine BTC has evolved given that the mining difficulty has increased today.
- 2 Available data shows that one Bitcoin transaction can consume 703 kWh of energy.
Amid the environmental debate in correlation with Bitcoin (BTC), a new working paper emphasizes that the largest cryptocurrency by market capitalization may be a contributor “to the sustainable global energy transformation.”
The paper is co-authored by Nic Carter, Island Ventures partner; Shaun Connel, Lancium VP of power; the late Brad Jones, former ERCOT CEO; Dennis Porter; Satoshi Action Fund CEO, and a science advisor Murray Rudd.
Impact of Bitcoin on Global Energy Remains Complex
The study dubbed, “Leveraging Bitcoin miners as flexible load resources for power system stability and efficiency” sheds light on common challenges in assessing energy usage like data availability, hardware mix, carbon intensity assumptions, and more.
Bitcoin’s energy consumption estimates vary due to different factors. Data is aggregated via indices like the Cambridge Bitcoin Energy Consumption Index (CBECI) and disclosures from industry groups like the Bitcoin Mining Council. Some private companies sometimes make the data available through their studies.
With time, hardware to mine BTC has evolved given that the mining difficulty has increased today. The global Bitcoin hash rate reached a record high recently, which indicates rising computational efforts from miners. Initially, the virtual currency did not require advanced computers to mine. Additionally, adding a block would reward an individual with 50 BTC.
However, times have changed and crypto miners need large banks of computers to mine Bitcoin today. The paper finds it crucial to “acknowledge the diversification in miners’ energy procurement practices, often diverging from generic country-level energy compositions.”
It notes that miners strategically try to use underutilized energy sources like hydropower which provides emissionless power for their operations. Moreover, methane emitted from flaring during oil extraction could be used for energy production while mitigating atmospheric damage from the gas.
Earlier this month, a leading Bitcoin miner, Marathon Digital, announced a 280 kW project that will draw energy from landfills in Utah. According to the international financial institution World Bank, 44 Million tons of Methane is generated annually across the globe annually. The study writes, “Miners are increasingly installing generators at oil fields, turning a one-time waste asset into a valuable resource.”
Furthermore, Bitcoin mining may be uniquely adaptable to load or demand flexibility. The concept refers to adjusting energy supply to sync it with demand. The paper stipulates that “The emergence of Bitcoin miners as a distinctive type of flexible load resource introduces a potentially transformative dimension to grid flexibility.”
The paper concludes, “The comprehensive impact of Bitcoin on global energy demand and climate change remains complex, with emerging data suggesting its effects might be more nuanced than conventionally believed. As the narrative around Bitcoin mining evolves, in-depth analyses will be critical for discerning its future role in our energy transition.”
Available data shows that one Bitcoin transaction can consume 703 kWh of energy. Nearly 500K Visa transactions can be processed using this amount of energy. Fossil fuels still power over half the global BTC mining. In 2021,150 crypto-related organizations signed the Crypto Climate Accord, agreeing to go carbon neutral by 2030.
Anurag is working as a fundamental writer for The Coin Republic since 2021. He likes to exercise his curious muscles and research deep into a topic. Though he covers various aspects of the crypto industry, he is quite passionate about the Web3, NFTs, Gaming, and Metaverse, and envisions them as the future of the (digital) economy. A reader & writer at heart, he calls himself an “average guitar player” and a fun footballer.
