Is Bitcoin Inherently Bad For The Environment?
woman’s hands holding a sheet of paper with the symbol of bitcoin in the middle of nature with a river … [+] flowing near the forest. concept of digital currency and ecological cryptography.
Bitcoin and other cryptocurrencies have an energy and environmental problem. but if done right, it might be possible to channel all that energy into something good for the planet.
Reading: Why is bitcoin bad for the environment
environmental problems of cryptocurrencies
A fierce debate is growing about the environmental impacts of cryptocurrencies, such as bitcoin. bitcoin consumes a lot of energy. that energy use is growing and annually consumes as much energy as entire nations, such as finland, malaysia or sweden. while bitcoin is not the only industry that consumes as much energy as entire countries, e.g. concrete consumes more energy than india, the energy consumed by both sectors comes with associated pollution, including carbon emissions.
Even bitcoin transactions use a lot of energy, with the average transaction consuming more than 1,700 kWh of electricity, which is almost twice the monthly amount used by the average American. home. however, there were ways to transact bitcoin using much less energy.
To exacerbate this problem, some bitcoin mining operations have partnered with struggling fossil fuel power plants, keeping some power plants online that would otherwise have been retired, increasing overall carbon emissions. some utilities have even gotten right into the bitcoin game.
Large bitcoin mining operations are also shifting locations, as China, the country that previously had the largest bitcoin mining industry, recently banned both cryptocurrency mining and trading. This change has seen bitcoin mining operations relocate to places like Texas and potentially Alberta, Canada.
All things being equal, bitcoin operations that place and use fossil fuels that would have otherwise stayed in the ground will increase emissions.
See also: 5 Ways to Sell Bitcoins Instantly and Securely (2022 Updated)
some are considering the use of stranded natural gas that would otherwise have been flared, which, in the absence of methane flaring and venting regulations, would make the use of natural gas for bitcoin at best cases, was carbon neutral. however, it is an exaggeration, and making natural gas more valuable at the wellhead could further deter the development of pipelines that would have brought the gas to market.
However, co-locating bitcoin mining operations with non-carbon resources such as nuclear, hydro, wind, and solar power could help reduce carbon emissions associated with mining itself. co-location could also give a financial boost to power plants that could sell their electricity at a higher price to miners rather than to the grid when demand and prices are low. this type of hybrid power plant/mine could even make uneconomical projects economical.
Going further, it is also possible that bitcoin mines themselves could deliver benefits directly to the network and, if operated intelligently, even result in lower carbon emissions overall.
A positive impact on the network?
a new report, commissioned by lancium and full disclosure, written by the author of this article, shows how large flexible loads, such as data centers or bitcoin mines, could be useful for the network, if are operated intelligently.
The study simulated the evolution of the electric reliability council of texas (ercot), the grid that serves most of texas, through 2030 under multiple scenarios: 1) a base case with no data center expansion/data mining bitcoin, 2) a case with 5 gw of loose (always-on) data centers/bitcoin mines by 2030, 3) a scenario with 5 gw of slightly soft data centers deployed by 2030, and 4) a scenario with 5 gw of very flexible data centers deployed by 2030.
the inflexible scenario added a significant base load to the ercot system. this growth resulted in the deployment of more power plant capacity than the base case, including more wind, natural gas, and solar power. this increased energy use also resulted in an additional 7.9 million metric tons of carbon emissions over the base case by 2030.
figure showing changes in ercot capacity for each scenario considered in the report.
However, the flexible scenarios were more interesting. Both of the soft scenarios actually see more wind and less natural gas deployed than both the base case and the hard scenarios. this change is because the data centers/mines have been programmed to reduce their energy consumption by certain percentages when electricity prices reach certain levels. in total, in the third scenario, mines/data centers reduced their load about 14% of the year.
See also: Bitcoin Buyer Review [Updated August 2022]: Is It Legit Or A Scam?
figure showing the potential shipment of price-sensitive flexible data centers.
The flexibility of the data centers/mines in the last two scenarios allowed the model to implement different levels of technologies than the base or inflexible case. the model actually generated more renewable energy because it could use the flexibility of data centers/mines to compensate for fluctuations in renewable production. this flexibility also resulted in lower carbon emissions compared to the base case.
figure showing how carbon emissions change in 2030, from the base case level, under the chosen … [+] scenario.
For the additional load to result in a full reduction in carbon emissions, the additional power consumption must be offset by more zero-carbon power. in the flexible mine/data center cases, the amount of power generated from wind and solar power was greater than in the base case and the amount generated from natural gas was less.
In general, the flexibility of data centers/mines moves their load to place more value on energy than electricity, which aligns better with renewables. This is because renewables are great at providing large amounts of power, but are less able to always provide capacity or constant power.
In concept, flex mines/data centers are similar to transport electrification or heating with the ability to control the times that chargers and heaters run. however, mines/data centers are likely to be able to offer large levels of flexible load concentrated in a smaller number of locations, which could make it easier to manage.
grid decarbonization studies often assume high levels of flexible demand, and often much of this flexibility comes from diffuse sources such as smart thermostats and ev charging. While this analysis did not seek to satisfy any carbon policy, it does illustrate the potential carbon benefits of high levels of flexible demand coupled with an electricity market that can incorporate it.
Mining and trading cryptocurrencies, such as bitcoin, present emissions and energy challenges, but new research shows that there are potential avenues to mitigate some of these issues if cryptocurrency miners are willing to operate in a way that complements the deployment of more. low-carbon energy.
The author of this post does not currently own or mine any cryptocurrencies.
See also: New York state denies air permit to bitcoin mining plant on Seneca Lake