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Crypto Mining, Featured, News

Energy-Efficient Digital Asset: Crypto Mining Enters the Green League

Climate change is the issue of our generation where each individual must contribute their bit to ensure that sustainability and green practices are implemented in our society. Governments across the world, are increasingly adopting a proactive stance on climate change. With COP26, the recent 2021 United Nations Climate Change Conference, served as a driving move toward the goals of the Paris Agreement in inspiring climate action.

Financial Institutions into Digital Assets

Corporations across the globe are stepping forward, assuming greater responsibility. Many investors no longer consider financial performance alone a sufficient metric to be ticked off as a success. ESG measures, i.e., negative externalities, are progressively taken into account to determine the true value of business activity for society.

In the same context, the road to revitalizing our financial infrastructure is increasingly under the scanner. How well do the digital assets, Bitcoin included meet ESG criteria? The question has become ever so critical as crypto adoption scales greeted heights. A number of Bitcoin futures ETFs have now been cleared and allowed to trade in the U.S., while institutional adoption is also achieving newer highs. Many of the world’s largest financial institutions, the likes of  Standard Chartered, State Street, and Citibank are quietly expanding capabilities in the space.  

Also Read: City In Canada To Use Bitcoin Mining To Supply Residents’ Heat

Crypto Mining going Green

After facing considerable criticism from world leaders and environmentalists, the crypto mining industry has sought ways to rebrand its effort. The alternatives challenge the general opinion that its energy-exhaustive computers are harmful to the climate. Five of the largest publicly traded crypto mining companies have to say that they are in process or already operating plants powered by renewable energy. Industry leads have put forth the argument that demand from crypto miners will create opportunities for wind and solar companies to start facilities of their own.

The initiative which is a cross between a public-relations exercise and a genuine attempt at making the industry more sustainable has strengthened since March. This began with China’s crackdown on crypto mining, forcing some mining farms to shift their base to the United States. An organization called the Bitcoin Mining Council was also formed last year, to address climate issues, among other things. This effort sprang into action after Elon Musk criticized the industry for its heavy carbon footprints.

During Bitcoin’s earliest years, a crypto enthusiast would mine by simply running software on a laptop. However, as digital assets gained popularity, the amount of power required to generate Bitcoin has shot up. A single Bitcoin transaction now consumes over 2,000 kilowatt-hours of electricity or sufficient energy to power the average American household for 73 days, as per researchers. 

Also Read: Crypto Mining Might Be Legalized In Russia Amidst The Government’s Difference Of Opinion 

The Trouble

To fund that amount of energy some miners resort to reviving broken-down coal plants or using low-cost natural gas to power their mining rigs. A study by the journal Joule found that Bitcoin mining worldwide is responsible for about 65 megatons of carbon dioxide a year. The figure is comparable to the emissions of entire Greece.

As per the same research, the Bitcoin network’s use of green energy sources also dropped to an average of 25 percent in August 2021 from 42 percent in 2020. This is partly owed to the result of China’s crackdown on Bitcoin mining. The event cut off a source of cheap hydropower. However, it points to fundamental economic incentives, according to the study. Renewable energy is only an intermittent power source. The sun shines only some hours of the day, and wind speeds fluctuate considerably. What a miner looks for is a continuous, uninterrupted power supply throughout the day. 

The Green Way

Instances of crypto mining ventures have surfaced nonetheless. Illinois has the cryptocurrency mining company Sangha Systems to repurpose an old steel mill in the town of Hennepin. Sangha is operated by a former lawyer, Spencer Marr, who claims to have established the company to promote clean energy. However nearly half the Hennepin operation’s power draws from fossil fuels.

Lately, Texas has turned into a hot spot for crypto mining, accomodating more than two dozen companies. The state offers an unusual incentive package that suits well for the budding industry: the Texas grid operator offers substantial discounts to companies that can promptly unplug when the demand for electricity spikes statewide. Thus, directing energy flow to residences. A number of crypto mines are able to switch on or off in seconds. This allows them to make most of the incentive structure offered to them with minimal inconvenience.

Where it stands, now

The larger cryptocurrency community is polarized over the issue of cleaning up the mining sector. Whether or not it is the best path to environmental sustainability, looms large. The energy-expensive authentication process that Bitcoin works on is known as “proof of work”. The industry is now pushing for new cryptocurrencies that can be validated on a different consensus model called “proof of stake”. The Proof of Stake uses as little as 0.01 percent of the energy consumed in the Proof-of-Work mining process.

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