Cryptocurrencies have firmly entered our lives. Today, you can easily go to WallBTC or BitTeam, and buy the cryptocurrency you are interested in. This has become commonplace. But there are issues that the crypto industry needs to solve. This is a question of the energy of critical assets.
Mining cryptocurrencies, such as Bitcoin and Ethereum, uses a huge amount of energy, and environmentalists do not stop paying attention to this. Cambridge estimates that Bitcoin’s carbon footprint is extensive, and it consumes more electricity than the whole of Argentina.
According to their research, the power used for cryptocurrency mining can power all the kettles used for boiling water in the UK for 18 years. It becomes clear that cryptocurrency mining is not the most environmentally friendly hobby.
What is alternative energy production?
In fact, crypto investors use extensive equipment and software for cryptocurrency mining. Sometimes this equipment works day and night, solving complex mathematical problems.
Crypto-mining includes transaction verification, support and development of the blockchain registry, as well as the prevention of double spending. This is a complex and sophisticated process.
On the other hand, alternative energy crypto mining focuses on the use of renewable energy sources to account for this excessive consumption.
Currently, cryptocurrency mining uses a significant amount of fossil fuels to mine Bitcoins and verify transactions. According to Octopus Energy estimates, the world’s supply of fossil fuels is likely to stop by 2060.
However, green sources, such as wind, solar, geothermal energy or hydropower, will remain as long as the Earth itself exists.
Traditional mining versus alternative energy mining
Due to the nature of the cryptocurrency, there is a debate about whether it is necessary to mine cryptocurrencies on alternative energy sources. Supporters of traditional mining believe that this process still consumes less energy than the current global economy.
At the same time, critics claim that the craze for cryptocurrencies leads to the depletion of natural resources. Although there is a clear separation, using less energy to achieve the same goals rarely has any disadvantages.
There is some uncertainty about the overall energy consumption in traditional cryptocurrency mining. The discrepancies in the studies show that more standard methods are needed when conducting research on this topic.
In addition, it is difficult to determine how much carbon is emitted by the cryptocurrency sector. In other words, the total energy consumption is not directly related to the amount of carbon released. Harvard Business Review draws a useful analogy – one unit of hydroelectric energy has less impact on the environment than one unit of coal-fired energy.
Let’s assume that crypto-miners have switched to using renewable energy sources for their work. In this case, greenhouse gas emissions can be reduced, thereby reducing the effects of climate change and creating a more sustainable world. This is the ultimate goal of crypto-mining on alternative energy sources.
Advantages of green or renewable energy from the point of view of miners
The most significant advantage of green energy is its almost unlimited availability. Solar, wind and hydroelectric sources are excellent examples of renewable energy sources that can help miners in their efforts.
Another huge advantage of green energy is the preservation of the environment.
The most serious criticism regarding Bitcoin mining is environmental problems.
The whole world was stirred up when Elon Musk announced the termination of accepting payments in Bitcoins for Tesla cars, citing the harmful consequences of environmental degradation caused by the mining of military-technical equipment.
CO2e or carbon dioxide equivalent, which is the carbon dioxide emissions for generating electricity per kilowatt-hour, is an excellent indicator for comparing the environmental impact of various energy sources.
Natural gas emits from 250 to 1000 grams of CO2 to produce 1 kWh of electricity. In contrast, CO2e for wind energy is only about 9-18 grams over the entire life cycle.
Thus, the cryptocurrency mining industry can quickly benefit from this factor, as it will cause a significant positive mood.
Tesla CEO Elon Musk mentioned that Tesla can again accept payments in the PTC if the industry demonstrates more than 50% of the use of energy from environmentally friendly sources.
Price stability is another positive aspect in the consumption of green energy, which contributes to the sustainability of production from a financial point of view.
Since the supply of renewable energy sources is not limited, they are not subject to sharp price fluctuations.
What is even more interesting, with the ever-increasing volume of production in the world and wider adoption in various industries, the price of natural energy sources has steadily decreased over time.
As a result, the entire renewable energy industry has achieved greater efficiency, higher production capacity and economies of scale over time.
In addition, the cost of installing equipment for such solutions decreases over time. According to IRENA, with an investment of 1 million US dollars, it was possible to build a photovoltaic power plant with a capacity of 213 kW back in 2010.
However, with the same amount of investment, it is now possible to create a plant with a capacity of 1005 kW, thanks to increased efficiency and technological updates.
This characteristic can be very useful for the Bitcoin mining industry, as it is economically stable and attractive to investors.
In addition, a possible alternative may be to switch to the use of lithium-ion batteries. The automotive industry already accounts for 60% of lithium-ion batteries for electric vehicles (EV). Such more stable methods should be included in the traditional crypto-mining infrastructure.
Some investors believe that mining cryptocurrencies by itself will solve the problem of energy consumption. According to the International Energy Agency (IEA), solar energy is currently considered the cheapest source of energy compared to coal and gas, which many countries still rely on. Whether this problem will be solved naturally depends on many factors.
The current scenario for the sustainable use of energy by Bitcoin
In May 2021, a new committee, known as the Bitcoin Mining Council, was formed to promote and report on the sustainable use of energy by participants in the crypto industry.
One of the goals of the council is to regularly publish statistics on the use of energy by the global mining sector of military-technical equipment. According to a recent report, Bitcoin miners already use 56% of their total electricity from sustainable or renewable sources.
It is encouraging that this combination has been improving very quickly in recent months.
This shows the sincere intention of Bitcoin miners to switch to more and more sustainable energy sources.
China’s role in reducing energy consumption
China already uses fossil fuels and hydroelectric methods to generate the energy needed for its enterprises.
In addition to using these viable alternative energy sources, the Chinese government has taken tough measures against cryptocurrency mining, realizing that they create a carbon footprint. At that time, 65% of cryptocurrency mining took place in China.
When China turned off mining users, naturally fewer people used the machines needed for mining, which significantly reduced energy consumption.
The emergence of a pure cryptocurrency
Crypto companies are attuned to the ever-changing landscape of the cryptocurrency industry, and some startups are now looking to encourage the use of renewable energy sources.
For example, Compass Mining, a hashrate crowdsourcing company, has signed a 20-year deal with Oklo, a nuclear fission company, to supply them with low-cost, carbon-neutral energy. The implementation of the plan to integrate Compass mining machines with clean and affordable energy will soon begin.
Another example of the introduction of pure cryptocurrency into the industry is Candela, a currency that requires solar-powered mining. Candela users can transfer solar energy to other people in their community using a decentralized system and Candela coins as a means of exchange.
Although these are just a few examples of the growth of pure cryptocurrencies, we are likely to see more as the cryptocurrency continues to evolve over the years.
The Future of Alternative Energy Cryptocurrency
For an adequate solution to the problem of energy consumption, it is necessary to unite industry leaders from both sides to develop innovative solutions. The use of renewable energy sources to power advanced computers for mining purposes will change the crypto industry.
There will probably be more opportunities for clean startups, which will help achieve the overall goal of sustainable energy in the world of cryptocurrencies.