- The Bitcoin Mining Council is a “community of 36 mining companies, representing about half of the network…the whole focus of that council is to track energy consumption, its sources, and how much of it is green.”
- A large portion of the network utilizes renewable energy sources, and that number is set to rise once Soluna joins the Bitcoin Mining Council.
Bitcoin and crypto still have yet to find a positive place in society. Much of the public either hasn’t heard of crypto or regards it as some kind of fringe asset class used by criminals and geeks. That’s not to mention the bad reputation that mining has earned with regard to its environmental impact.
But what if these problems could be tackled in tandem? Could associating a surge in renewable energy usage among miners help to bring crypto into the mainstream while cleaning up its image at the same time?
The team at Soluna believes that not only is the answer a resounding yes, but that this could be the ideal strategy for mass adoption of crypto.
The Efficiency of Mining
We spoke with John Belizaire, CEO of Soluna, to get his thoughts on the subject.
First, when asked the question “is Bitcoin an efficient use of energy?”, John replied:
“The answer is yes, it is, based on its use case. And the use case is protecting trillions of dollars of value, potentially for a new form of digital asset that holds the wealth of hundreds of millions of people around the world.”
He also mentioned that the Bitcoin network uses a sort of autonomous feedback loop that perpetuates its security. As it “senses the amount of computing power available to attack the network,” the mining difficulty then adjusts upward, making it “harder and harder for the [proof-of-work] problem to be solved,” creating an ever-stronger barrier of security. This process requires an increasing amount of energy, adding to the network’s security by making it more expensive for attackers to strike.
Rather than seeing this as a negative, transitioning to clean energy makes the increasing need for energy a positive attribute of the Bitcoin network.
Mining Energy Relative to Other Energy-Intensive Practices
Perhaps the most compelling part of the conversation occurred when Belizaire cited a document put out by the Bitcoin Mining Council.
First, he noted that in the early days of Bitcoin mining, the majority of hash rate may have been coming from fossil fuel-based sources. But over time, particularly over “the last two years, just about everything has shifted over to more of a green energy transition.”
He then explained that the Bitcoin Mining Council is a “community of 36 mining companies, representing about half of the network…the whole focus of that council is to track energy consumption, its sources, and how much of it is green.”
Looking at the slide deck provided by the Bitcoin Mining Council, it shows that 66%, or two-thirds of the entire network currently comes from renewable energy sources. “When we get added that will probably bump up because we’re very green,” he said, referring to Soluna’s plans to join the council in the near future.
The slide deck also showed that industries like gold mining, the military-industrial complex, construction and others each dwarf the totality of Bitcoin mining’s energy usage.
In terms of total energy used, Bitcoin mining only uses about 10% more energy per year than holiday lights. That’s right – Christmas lights use almost as much energy as Bitcoin does to secure nearly a trillion dollars’ worth of value, according to the Bitcoin Mining Council.
Renewable Energy on the Rise
Overall, the reality of Bitcoin’s energy usage depends on the frame of reference being used.
It may be true that a single transaction requires more energy than an entire household uses in 24 hours, for example. But it’s also true that in a given year, the entire network uses little more energy than holiday lights. Depending on how things are framed, anyone can argue that mining is either the most ridiculous waste of energy or the most efficient and green use of energy.
The fact of the matter, however, is that a large portion of the network utilizes renewable energy sources, and that number is set to rise once Soluna joins the Bitcoin Mining Council. This could help lead to mass adoption of Bitcoin by fostering a greater understanding of Bitcoin’s potential positive impact on electrical grids.
Making Things Mainstream
Bitcoin miners are considered to be a “flexible load.” That means their energy usage can be turned on or off at a moment’s notice with ease. Doing so doesn’t disrupt the process of mining at all.
This makes miners quite desirable to grid operators, who have to deal with an increasingly unpredictable supply of energy due to increasing amounts of power coming from wind and solar, which can be unreliable at times. When power from renewables decreases, grid operators can simply ask miners to cease operations for a while, reducing strain on the grid.
At the same time, local grids sometimes find themselves overloaded with an abundance of power produced by renewables. This energy goes to waste when there’s no demand for it. Fortunately, Bitcoin miners can step in and make use of that energy.
In this manner, the Bitcoin network could become an integral part of the electric grid – a very green one, in fact. Pockets of stranded energy that would otherwise go to waste can be utilized by Bitcoin miners, who can also shut down operations when grids become strained.
This makes Bitcoin not just a store of value or medium of exchange, but also an energy conservation tool. Once this concept has been fully grasped by the public, they will embrace Bitcoin mining and its proliferation. That acceptance will fuel faster adoption of Bitcoin by creating a virtuous cycle of greater usage followed by broader understanding, which leads to yet more adoption, and so on.
In the end, Bitcoin’s total energy usage is a bit of a red herring. It overlooks where that energy comes from as well as how miners can play a vital role in stabilizing power grids. When factoring in the role of renewables, stranded energy usage, and grid flexibility, it becomes clear that Bitcoin can be a net benefit to the way the world uses energy. Once a greater understanding of this becomes widespread, so too will acceptance of Bitcoin, and that acceptance will fuel yet more adoption and further awareness.
This content is sponsored by Soluna Computing. To read more about Soluna, explore articles like Industry Execs Make Case For Crypto Mining Before Congress.