Study: Bitcoin can ensure more efficient use of renewable energies
Elon Musk and Jack Dorsey agree to a new study that explains why bitcoin mining can be good for the environment.
Just in time for Earth Day, some of the major advocates of Bitcoin are emphasizing the Environmental sustainability the market leading cryptocurrency. To support this argument, researchers from the large American financial services provider Square and the investment company Ark Invest are now presenting a joint thesis paper.
The “Bitcoin Clean Energy Initiative” (BCEI) published paper has the stated purpose of refuting the thesis that “the computing power required to mine Bitcoin is harmful to the environment and destroys the planet”. On the contrary, mining Bitcoin would rather “promote the use of renewable, low-carbon energies”.
The study then received approval from several important figures in the crypto industry, including Tesla boss Elon Musk, Ark Invest CEO Cathie Wood and Square boss and Twitter boss Jack Dorsey.
– Elon Musk (@elonmusk) April 22, 2021
In an associated Twitter discussion On April 22, payment service provider Square argued that while wind and solar energy are cheaper than generating energy from fossil fuels, the former can usually not be used efficiently because the supply is simply higher than the corresponding demand at certain times. When demand is again high, renewable energies again have problems in providing sufficient supply.
According to the study’s authors, this inefficiency could be optimized by creating an ecosystem of “solar, wind, batteries and bitcoin mining that is based almost entirely on renewable energies.”
“This is not only feasible, but also feasible without jeopardizing the profitability of the mining industry.”
The Bitcoin miners could therefore act as “electricity consumers in the last resort”, which are available anywhere in the world, and buy up excess capacity.
The geographical location is a factor that should not be disregarded, because although renewable energies are cheaper, their production facilities make them highly location-bound and dependent on the weather, which means that the available supply is usually only “either in excess or not at all” is.
“As a result, more electricity is available for a few hours per day than can be used, while at times of high demand, not enough energy can be provided. This problem also shows up over the different seasons. “
The researchers see a possibility for increasing efficiency in energy storage and Bitcoin mining more to combine. Excess renewable energy that is stored in batteries and is in danger of being lost could be passed on to mining centers. The BCEI estimates that just 20% of the wind and solar energy that is temporarily stored in American power grids would triple mining capacities.
But this would not only be advantageous for the mining industry, because it would also increase the profitability of producers of renewable energies.
“The miners’ irrepressible needs would mean that they could use up any excess energy. We therefore believe that it would make sense for the manufacturers of electricity storage systems to adapt their systems in such a way that they are tailored to the needs of the Bitcoin miners. “
In addition, the thesis paper is confident that the costs of generating renewable energies could be reduced more and more in the long term through this synergy.
“The Bitcoin market and the electricity market complement each other, which is why today’s owners of energy capacities will very likely be tomorrow’s miners,” as the researchers suspect.
– Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) April 22, 2021
However, not all heads of the crypto industry are enthusiastic about this argument without exception, says the well-known analyst Mati Greenspan, that the study rather “justifies the massive energy consumption of Bitcoin”.
Instead of offering a proposed solution for the increasing power consumption of the market-leading cryptocurrency, the thesis paper would rather provide the blueprint for “an energy-guzzling feedback loop”.
“The main focus of the study is apparently not to offer a solution to the massive electricity consumption of Bitcoin, but to provide a justification for it and paint a pink picture of how this can make a positive contribution to renewable energies,” said Greenspan counteracts.
Researchers from the prestigious University of Cambridge had earlier this year calculatedthat Bitcoin consumes 121.36 terawatt hours per year, making the blockchain network the 30 largest consumers of electricity in the world. This means that the crypto market leader eats even more electricity than the country of Argentina.