Bitcoin faces considerable scrutiny due to its substantial energy consumption, which adds to environmentally harmful emissions. Nevertheless, The Crypto Times has reported on a climate tech investor who aims to highlight that a significant portion of Bitcoin’s energy comes from an unexpected source: hydroelectric power.
Research conducted by Daniel Batten indicates that the Bitcoin network derives 23.12% of its energy from hydroelectric sources, followed closely by coal and gas, which contribute 22.92% and 21.14%, respectively.
This represents an update to the findings from the Cambridge Centre for Alternative Finance, which previously stated that coal was Bitcoin’s primary energy source. However, the CCAF acknowledged that its estimate was somewhat constrained due to limited real-world data. According to The Crypto Times, Batten’s new figures include off-grid mining operations that utilize renewable energy.
“Daniel’s study demonstrates that the future of Bitcoin mining is indeed tied to hydro power,” The Crypto Times remarked.
Although Bitcoin operations do not emit pollution directly, the massive electricity demands of their computing processes can lead to increased pollution levels when they are linked to power grids that mainly depend on fossil fuels like coal, gas, and oil. This not only elevates local air pollution but also exerts pressure on these energy grids.
However, this issue is gradually being addressed as more Bitcoin mining enterprises secure their own dedicated power sources — as Mara Holdings, which has Daniel Batten on its advisory board, recently did through a partnership with a Texas wind farm — or by utilizing surplus energy from facilities that frequently generate excess power. As the industry looks to the future, it is vital to continue reducing these environmental impacts and lowering the coal and gas energy proportions into the single digits.
The North American Electric Reliability Corporation has reported in late 2024 that electricity demand is rising more rapidly than at any time in the last 20 years, factoring in complications from crypto and AI data centers in demand forecasts. Their ability to expand strains energy grids and may reduce their stability. Additionally, increased demand typically leads to higher electricity costs for consumers.
Fortunately, it is advantageous for crypto miners to seek the lowest electricity rates, as their profit margins depend on cost efficiency. Renewable energy is generally more affordable, and in the long run, it becomes even cheaper once infrastructure is in place, making the shift toward renewables a win-win for both the cryptocurrency sector and the environment.
Innovations in energy are crucial for facilitating this transition. For instance, methane emissions from landfills — the third-largest source of methane pollution related to human activities in the U.S. — can be converted into energy. Vespene Energy has developed technology that transforms landfill gas on-site to power data processing centers, which helps mitigate gas emissions and simultaneously generate revenue. Such inspiring initiatives illustrate how energy-intensive industries can contribute positively to environmental solutions.
Furthermore, Bitcoin mining can encourage the shift toward green energy through financial incentives. A study published in ACS Sustainable Chemistry & Engineering found that 32 planned renewable energy sites could yield $47 million in profits by backing Bitcoin mining before they become commercially operational.
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Some crypto investors are already placing a premium on clean energy for their mining facilities. However, as the leading cryptocurrency, Bitcoin must achieve more significant advancements for the industry to move toward sustainability.
“The operation of Bitcoin relies on miners utilizing substantial computational power to tackle complex problems, which consumes vast amounts of energy. The future of crypto mining hinges on adopting sustainable and ethical practices to ensure that it is not only green but genuinely clean,” stated Tin Pei Ling, co-president of digital asset platform MetaComp, in an interview with Financial News.
“The industry has a vested interest in lowering energy consumption and minimizing environmental impact as it develops,” added David Lenigas, chair of Vinanz, a Bitcoin mining firm listed on the London Stock Exchange.
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