Bitcoin is the world’s first and leading cryptocurrency. However, even with its huge fan base, the currency has been under scrutiny for its intrusive use of energy in Bitcoin mining.
Since its inception in 2008, the Bitcoin network has never been compromised. Although energy is intrusive, Bitcoin’s PoW (Proof-of-work) mechanism relies on complex cryptographic algorithms and offers tight security. The only problem is it takes a huge amount of computational energy.
With the growing popularity of bitcoin, the network consumes 147.61 tera-watt hours per year. Moreover, according to Cambridge University, bitcoin energy consumption is close to the average energy consumption of Ukraine, Poland, and Malaysia. While the PoW mechanism offers a security guarantee, critics find it as an environmental threat.
Bitcoin Uses ‘Too Much Water’? An Attempt to Tarnish its Reputation
In the debate ‘Bitcoin uses fossil fuel’, new data from Bloomberg Intelligence shows that the network is the most sustainable energy-save industry with 53% of energy consumption from sustainable sources. However, in response to the data, a new study emerged that shows Bitcoin uses too much water for crypto mining.
There seems to be a paradox when it comes to Bitcoin’s energy consumption. Experts criticize Bitcoin for using fossil fuels. But when it uses hydro as an energy source, it’s still bad for the environment. It’s similar to the double-bind theory during the 17th-century witch hunts pushing women into water to determine whether they were witches. If they drowned, they were deemed innocent, but if they could swim, they were considered witches and executed.
The argument that Bitcoin uses too much water for mining is baseless. It’s an attempt to malign the cryptocurrency. Moreover, Cambridge already debunked the author’s method to measure water consumption per transaction as “not a meaningful metric”. Similarly, measuring any resource usage on a per-transaction basis is not a reliable way to assess the environmental impact of the cryptocurrency.
Despite the debunking of a recent study that attempted to tarnish Bitcoin’s reputation over its water consumption, many journalists have picked up the story and created a cacophony of misleading information. This has piqued my curiosity and led me to wonder, what is the true story regarding Bitcoin’s relationship with water?
Global Water Footprint Of Bitcoin
Nederlandsche Bank found that Bitcoin mining uses a lot of water and could harm the environment. As more people mine Bitcoin, the machines they use get very hot and need water to cool down. This water indirectly helps to make electricity.
The study shows that Bitcoin’s water use increased a lot in 2021 compared to 2020, by about 166%. De Vries estimates that U.S. Bitcoin miners might use as much water as 300,000 households in a year.
A big Bitcoin mining company called Riot Platforms is building a new facility in Texas that will use even more water, according to De Vries. He says that each Bitcoin transaction uses enough water to fill a backyard swimming pool. In 2020, each transaction used about 5,231 liters of water, and in 2021, it went up to 16,279 liters.
But, Is Bitcoin’s Cost Per Transaction Accurate?
According to de Vries, each Bitcoin transaction consumes 6 million times more water than a typical credit card swipe. He suggests changing Bitcoin’s validation protocol from PoW to PoS as a solution to reduce its resource consumption. However, this change may come at the cost of centralization, which goes against Bitcoin’s core value of remaining decentralized and independent.
But, is the cost per transaction of Bitcoin accurate?
Daniel Batton, a ClimateTech investor argues the study is biased. He argues, that the energy usage of Bitcoin has the potential to bring about positive environmental impacts. It’s because it mainly relies on sustainable energy sources, provides incentives for the development of renewable energy, and uses energy that others can’t use. Additionally, it helps to stabilize the intermittency of renewable power on grids. Moreover, it has the potential to reduce methane emissions. On the other hand, PoS-based blockchains lack these potential use cases. This information has been backed by research and quantified.
He also stated that there were no considerations of recent studies on Bitcoin’s use of renewable energy sources or other positive aspects of Bitcoin mining.
On the contrary, Bitcoin mining can help countries facing water scarcity issues.
Countries Facing Water-Scarcity Issues
While it is true that Bitcoin mining consumes a significant amount of energy, it is worth noting that this industry is not bound to any specific location. As long as there is access to electricity and the internet, Bitcoin miners can operate from anywhere. This means that Bitcoin mining could potentially help countries that are facing water scarcity issues. Especially since it is predicted that nearly 20 countries will experience high or extremely high water scarcity by the year 2040.
Now let’s understand the countries that are facing water scarcity issues. The majority, specifically 12 out of 17, of the world’s most water-stressed nations are located in the Middle East or North Africa.
These countries face serious water scarcity issues. The situation is very serious as 60% of these countries are living under ‘severe water stress’. The scientists warn that the situation is going to be much more serious in the coming years, due to the increasing global warming issues. Moreover, in the last thirty years, the rainfall precipitation has dropped by 16.7%. Today, many of these countries consume more water than they receive in rainfall.
UAE Consumes 78% of Fossil Fuel for Desalination
Rich countries such as the UAE use desalination methods to solve water scarcity issues. However, this procedure is not only expensive, but it also consumes a lot of energy. Since the desalination industry is crucial for the survival of mankind, the UAE has made it an ambition to make these industries work. While there are several environmental issues, 78% of its energy comes from fossil fuels.
If the world needs enough water to drink, desalination plants are mandatory. According to estimates, by 2030, there will be a 40% gap between water supply and demand. Did you know 53% of the desalination worldwide, takes place in the Middle East?
Efforts to Power Desalination Plants with Renewable Energy Sources
As the world grapples with water scarcity, experts observe renewable energy desalination plants as a viable solution. However, the implementation of such projects will take time, as there is a need for new technology. Moreover, new solar capacity needs to be built.
In this regard, Dr Muhammad Wakil Shahzad, a senior lecturer at Northumbria University in the UK, has developed a patented desalination system. One can hybridize it with renewables such as wind, wave, and solar.
The UAE, which faces severe water scarcity issues, is planning to build massive solar farms in its vast, sunny deserts to power desalination plants instead of using natural gas. The country’s biggest solar project is to become one of the world’s largest, generating 5 GW by 2030.
How can Bitcoin Contribute to the Water Problems?
Now that we know all about the water scarcity issues, the question is, how can Bitcoin help? Here are two ways Bitcoin can contribute to the water problems.
Boost Renewable Desalination
Bitcoin mining has the advantage of being location-agnostic and can operate from anywhere, provided there is access to electricity and the internet. This can be beneficial for countries facing water scarcity issues, as Bitcoin miners can set up operations directly at solar farms and utilize the otherwise wasted electricity.
A study from Cornell University has confirmed that Bitcoin mining can make solar operators more profitable, leading to faster scale-up of solar operations. By accelerating the build-out of new solar energy capacity, Bitcoin mining can help countries like the UAE transition to renewably-powered desalination, which can help them meet their water security goals without endangering their emission-reduction goals.
Improve the Potential of Desalination
According to a CNBC report, water desalination is an energy-intensive process that requires continuous improvements in operating costs to increase efficiency. Marathon Digital Holdings and Zero launches a groundbreaking Bitcoin mining project.
Instead of using direct heat for desalination, the project aims to recycle the heat generated by Bitcoin mining rigs. This can be almost 100% of the energy. This recycled heat is then used for water desalination. Furthermore, it enables the facility to produce more water for the same net cost, which is an incredible achievement.
As Marathon CEO Fred Thiel explains, Bitcoin mining allows the facility to run energy generation profitably, enabling them to use the heat by-product to produce desalinated water.
Also Read- The Impact of Blockchain on The Gaming Industry
Conclusion
One region in the world where water scarcity is a growing concern is the Middle East. Desalination has become a popular solution in these countries, with 53% of all desalination taking place in this region. However, desalination is not only energy-intensive but also carbon-intensive. Bitcoin mining can help address both of these problems. Firstly, it can make solar deployments in the Middle East more profitable, as it provides a buyer for energy that would have otherwise gone to waste. Secondly, by utilizing waste heat from ASICs for desalination, it can allow desalination plants to generate bitcoin and profitably desalinate more water.
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