Is it possible to mine Bitcoin (Bitcoin) Use only 100% renewable energy and get the same economic return as using carbon-based energy? According to Square’s latest answer, the answer is yes. analysis Regarding the cost of renewable energy and its impact on Bitcoin mining.
For our industry, unfortunately digital of headline News with Headline tweets In recent months, discussions about Bitcoin’s energy use and potential environmental impact have also followed. Increasing media censorship has led to an increase in calls for regulatory action, and even a proposed bill was introduced in the New York State Senate. Will be suspended for three years Non-renewable Bitcoin mining in the state.
This is a debate in which both sides have opinions. The critics are correct: Bitcoin mining does consume a lot of electricity.Cambridge Centre for Alternative Finance estimate Bitcoin miners use an average of 113 terawatt-hours of electricity per year on a global scale. This will put Bitcoin’s energy use between the United Arab Emirates and the Netherlands. The total population of these two countries is approximately 170 million, which is undoubtedly a lot. However, the recent “third global crypto asset benchmark study” conducted by the Cambridge Center for Alternative Finance Performance 76% of miners use at least some renewable energy in their operations, and 39% of all energy consumption used in proof-of-work mining (such as mining Bitcoin) comes from renewable energy.
Now that we have discussed the energy consumption and carbon footprint of Bitcoin mining, let’s try to put these numbers in context. By looking at three directly related comparisons: the US power grid, the traditional financial system, and gold mining.
Power grid, traditional finance and gold mining
Let us first compare Bitcoin mining with the entire power grid.Data from the U.S. Energy Information Administration Performance By 2020, about 20% of the electricity in the United States will come from renewable energy sources. This means that 40% of the energy consumption of the Bitcoin mining industry comes from renewable energy sources, and its environmental protection level is twice that of the entire national grid, reflecting the industry’s conscious decision-making to minimize its carbon footprint.
Turning to traditional finance, there are two key perspectives to evaluate the industry in the following ways: 1) the financing of fossil fuel projects; 2) the carbon footprint of the industry. The former was a key part of the discussion, because transferring deposits from traditional financial institutions to other places would reduce their ability to fund environmentally damaging activities.
According to the Rainforest Action Network’s “Banks to Deal with Climate Disturbance-Fossil Fuel Financing Report 2021” released in March, the 60 largest commercial and investment banks in the world own if Since the signing of the Paris Climate Agreement in 2015, fossil fuel financing worth US$3.8 billion (yes, US$3.8 trillion). Paris Agreement It is a decisive step in the global response to climate change. However, since the signing, the world’s largest bank has provided fossil fuels with financing equivalent to Germany’s GDP (the fourth largest economy in the world).
For all the outdated and exaggerated criticism of money laundering, terrorist financing and many other methods, the amount of money raised by the traditional financial industry is incredible in terms of the funds used for destructive activities.
Looking at the carbon footprint of traditional finance, Galaxy Digital released in May “About Bitcoin’s energy consumption: a quantitative approach to subjective issues”, it is a breakdown of the energy consumption of Bitcoin mining and two industries that are often compared with Bitcoin: traditional banking and gold mining.Traditional banking system analysis Focusing on the energy consumption of the world’s top 100 banks, the energy consumption is divided into four main categories: data centers, branches, ATMs and card network data centers. According to public data from industry leaders, Galaxy estimates that its annual energy consumption is about 260 TWh. This is more than twice the energy consumption of Bitcoin mining, and due to the lack of reliable data sources, the main pillars of the system, including the central bank and clearing house, are specifically excluded, which indicates that the multiple may be higher.
Like the analysis of traditional banking systems, Galaxy’s analysis of gold mining only covers a part of the industry’s total energy consumption.Use World Gold Council’s own analysis contain In the 2019 report entitled “Gold and Climate Change: Current and Future Impacts”, the scope of the analysis was limited to direct greenhouse gas emissions, greenhouse gas emissions from electricity purchases by gold miners, and those related to refining and recycling. GHG emissions Galaxy estimates that, measured in gold, electricity consumption by industries related to greenhouse gases is 240 TWh per year. At a basic level, this means that gold consumes about 85% more energy than Bitcoin mining each year. However, given the Cambridge Alternative Finance Center estimates that about 40% of the energy consumption of the Bitcoin mining industry comes from renewable energy, this means that the non-renewable energy consumption of gold mining is three times that of the Bitcoin mining industry.
Bitcoin’s green potential
It is not enough to be better than the worst. In order for the Bitcoin and Bitcoin mining industry to reach its full potential, we absolutely must make a better industry. We believe that the two key levers for doing this are thoughtful regulation and industry action, but including the former may surprise you. Shouldn’t Bitcoin be full of people who reject regulations?
The fact is that regulation itself is neither a good thing nor a bad thing, but depends on the way it is formulated. Thoughtful, specific regulations can add glory to the entire industry by supporting innovation, motivating good actors while weakening the behavior of the poor and giving the public confidence. Wyoming is one of them. Since 2017, lawmakers have been working with blockchain industry leaders to pass 22 laws that provide a clear and encouraging regulatory environment that has since brought tens of billions of dollars in business to the state.
At the same time, overly broad and straightforward regulations, such as the anti-mining law proposed by the New York State Senate, may kill an industry. We look forward to cooperating with regulatory agencies to help develop a regulatory system that will solve very reasonable public interest issues while oxygenating the industry.
Finally, we come to the stakeholders, who bear the greatest burden, but also have the ability to play the most in changing the decarbonization capabilities of the Bitcoin mining industry: the industry itself. It is estimated that 40% of the energy in the industry comes from renewable resources, which is twice the size of the entire US grid, and we should be proud of the progress we have made.
However, we clearly stated that more must be done.we Believe The cryptocurrency climate agreement is a glorious first step. We encourage everyone in the industry not only to sign the agreement and achieve its goals, that is, to achieve net zero emissions from electricity consumption by 2030, but also to exceed these goals as soon as possible. We believe this will happen, not only because it is right, but also because industry players who adopt a 100% renewable energy strategy will be rewarded.
The market is the ultimate arbiter of success. We believe that the era of responsible capitalism has arrived-investors and consumers vote with their wallets to support responsible actors, while avoiding those whose actions cause negative external influences.
This article does not contain investment advice or recommendations. Every investment and trading action involves risks, and readers should conduct their own research when making a decision.
The views, thoughts and opinions expressed in this article are only the personal views of the author, and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Dan Tolhurst In 2020, he co-founded Gryphon Digital Mining. Its vision is to create Bitcoin miners driven by ESG and look forward to all the days when using renewable energy for Bitcoin mining. Since working at Netflix, Walt Disney Company and Booz & Co., he has deep expertise in strategic careers, and his career spans five continents. He holds HBA and MBA degrees from Western University’s Ivey School of Business, and a JD from York University’s Osgoode Hall School of Law. He spends his free time exploring London parks, traveling and cheering in his beloved Toronto Raptors.