Bitcoin mining energy consumption: is renewable energy the total solution?
Cryptocurrency mining requires profuse amounts of computing power. As more and more people are beginning to mine, the vast quantity of electricity that mining demands is ever-increasing. The power used by miners worldwide could thus now serve the energy needs of a nation like Austria, or 22.1% of the UK’s consumption. This is the foundation of growing concerns over bitcoin’s carbon footprint. It puts into perspective the need for the industry to adopt renewable energy decisively if it wants to achieve sustainability.
Bitcoin miners have already begun using renewables, but on what scale?
We know that renewables already play a noteworthy role in the industry. However, the enigmatic nature of the cryptocurrency mining space means it is impossible to determine even the industry’s exact electricity consumption, let alone the makeup of the primary energy sources. Therefore, much debate naturally exists over how much of the industry is actually powered by renewables.
Some believe the answer is not much. These arguments are based largely on the assumption that China’s bitcoin mines, an estimated 60% of the global total, rely heavily on coal. This is because statistics show that coal makes up around 60% of China’s energy mix.
However, one study claims that the industry is far greener than universally recognised. There is a high concentration of large scale mines powered by cheap hydropower located in the southern Chinese provinces of Yunnan and Sichuan, the ‘capital of Bitcoin mining’. The concentration of facilities here suggests a significant proportion of Chinese mining is in fact fuelled by renewables. Perhaps a more conservative assessment of Chinese mining lies in a 2017 report that assumed 30% is powered by renewables. This would still mean at least 20% of global mining is green. And this figure rises when acknowledging the contributions of renewables to mining amongst other leading nations in the cryptocurrency mining world. Georgia, home to around 15% of mining operations, produces 75% of its electricity from hydropower. Iceland, whilst hosting a slightly lower proportion of global operations, meanwhile relies entirely on renewables.
The future of mining is likely to entail an even wider use of green energy. As the prices of fossil fuels and renewables rise and fall respectively, the latter will increasingly become a competitive source of fuel. The International Renewable Energy Agency (IRENA) asserted in 2017 that some renewables could be as cheap as fossil fuels by 2020. Furthermore, the required energy for mining will likely increase as more miners leads to a rising difficulty rate. It is possible that soon it will be environmentally and economically viable to mine only if renewables are used.
But are renewables alone the total solution?
In short, no. The over-exploitation of cheap resources, renewable or not, can drain the surplus electricity from suppliers and cause price surges for local communities. It is possible, if not probable, that miners supplied by the grid will increasingly face government tariffs and bans as a backlash based on concerns over grid capacity. Such has already been the case in New York state and, more recently, Québec, Canada. Additionally, with the Chinese government having made no secret in the past of its plans to limit power use for mining, it is clear there is a growing global concern over the socioeconomic impact of the industry’s excessive use of grid power. This threatens to translate into strict regulation of miners’ access to cheap renewable electricity.
Renewable off-grid mining — a step closer to the total solution?
Whilst using renewables to mine is a better solution than using fossil fuels, it is now apparent that there are socioeconomic stumbling blocks. One way of overcoming these obstacles to provide a more complete solution is to use a closed-loop system for mining. A mining operation that relies solely on electricity produced privately on-site avoids putting itself at the mercy of the public grid supply it is unable to control. This separation of the electricity supplies for local communities and miners will benefit both parties, by boosting investment in local renewable plants and preventing regulatory pressure. As long as the off-grid electricity produced by miners is fuelled by a renewable source, environmental sustainability will be reached alongside socioeconomic sustainability.
So, the threat of potential regulation that miners face could be overcome whilst also helping facilitate the transition to an even more sustainable future beyond just using renewables. Whilst problems surrounding the industry’s huge carbon footprint and the over-consumption of grid electricity currently threaten to undermine miners worldwide, a facility that both independently produces renewable electricity off-grid and uses only this to mine can tick all the boxes. It will eliminate carbon emissions and remove the risk of being faced with crippling regulation. All things considered, renewable off-grid mining is the only truly sustainable future of bitcoin mining.
FutureFuel Technology is building the largest off-grid renewable energy cryptocurrency mine in the UK. This was part of a wider research project looking into the developments of the renewable cryptocurrency mining space.
