Bitcoin On Its Way To A Sustainable Future
The Bitcoin mining industry is increasingly sustainable in 2021, as per the latest report by the Bitcoin Mining Council (BMC). According to the report, bitcoin miners currently use electricity with a sustainable energy mix of 67%. The report further indicates that the sustainable power mix of the global mining industry went up to 56% in the second quarter of 2021.
The Bitcoin Mining Council is an association of miners formed in the wake of increased backlash on BTC’s energy consumption. This survey was conducted on voluntary participants involved in bitcoin mining and examined energy consumption and sustainable power mix of 32% of the world’s bitcoin network.
The BMC report indicates that the bitcoin mining industry has increased its uptake of clean green energy, a trend that has raised its sustainable energy consumption index. As a result, the report classifies the mining industry as one of the most sustainable industries in the world.
Bitcoin mining involves completing complex mathematical problems to complete transactions on the blockchain. The mathematical problems have a 64-digit hexadecimal solution known as a hash. The miner that arrives at the solution first gets to mine the bitcoin and add a block on the chain.
Initially, individual bitcoin miners could mine BTC in their homes using ordinary computers. However, the cryptocurrency mining difficulty has grown in complexity in the last decade. For this reason, commercial entities that can afford high price tag mining rigs have taken over the industry. These massive mining computers and servers require large amounts of energy to power up and cool down when the mining hardware overheats.
Due to the increase in the mining competition, the hashrate has gone up, and miners now need robust computing elements to beat competitors in complex equation solving. The miner that solves the computations earns the juicy Bitcoin blockchain block reward.
Consequently, the hashrate keeps rising as the competition between miners heats and more of them join the network. The increase in hashrate implies that miners expend more energy to mine the same amount of bitcoin as in the past.
How Much Energy Does Bitcoin Mining Consume?
As of March 2021, the global Bitcoin network had an energy consumption of around 129 terawatt-hours (TWh). Miners source this energy from multiple sources, including renewable and non-renewable. According to Digiconomist’s Bitcoin Energy Consumption Index, it takes around 1,544 kWh to mine one bitcoin. This is enough electricity to power an average US household for 53 days.
As per a University of Cambridge report, 76% of bitcoin miners use varying levels of renewable energy to power their mining activities. The report further indicates that renewable energy accounts for 39% of the total energy used for crypto mining.
Hydroelectric energy is the most prevalent source of energy, and around 60% of cryptocurrency miners use it. Another common energy source for crypto miners is coal, which is mainly used in the Asia-Pacific region.
Embracing Sustainable Energy Sources
With the rise of cryptocurrencies and the increase in the usage of blockchain, there has been a sharp increase in the amount of energy requirement for network and hardware power. This sharp rise in energy use increases public scrutiny on mining activities and their impact on climate change.
Tesla CEO Elon Musk, who for a large part of 2021 has influenced events in the crypto space through his Twitter handle, recently announced that his company would suspend vehicle purchase using bitcoin until mining activities shifts to sustainable energy sources.
“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel… Tesla will not be selling any Bitcoin, and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” said Elon Musk.
Tesla gave a major boost to bitcoin when it announced a $1.5 billion investment in the digital currency. According to the company’s financial filings in April, profits from the bitcoin sale allowed the company to reach a $101 million “positive impact” toward profitability.
The Movement Towards Green Energy Usage
The BTC mining industry has embraced a significant amount of renewable energy in mining activities. The Cambridge report notes that around 39% of all mining activities are powered by renewable energy.
In addition to turning to sustainable energy sources, the crypto industry is also using newer consensus mechanisms that eliminate the need for mining. For example, Ethereum intends to shift from PoW to PoS, reducing energy consumption by nearly 99%.
Cryptocurrencies have thrived in regions with enough supply of renewable energy. The industry has, for instance, thrived in Sichuan Province thanks to the abundance of cheap hydroelectric power. As a result, Sichuan Province has the second largest number of cryptocurrency miners in China.
Cryptocurrencies and the blockchain industry are here to stay. However, growth in this nascent industry needs to account for the impact of mining activities on the environment. Therefore, besides embracing clean energy sources, the industry is also working on improving its hardware use, leaning more towards energy-efficient mining and network support machines.