It is no secret that bitcoin mining has come under fire for its potential impact on the environment due to its energy consumption. Nobody in the industry is shying away from the fact that bitcoin did not start out as the best environmental, social and governance (ESG) investment.
However, the mining industry has since become one of the most self-aware when it comes to its energy consumption, and as a result has created multiple potential pathways to environmentally-friendly solutions that could benefit industries and regions beyond just Bitcoin.
Rena Shah is the head of operations and strategy at Trust Machines, a company building the largest ecosystem of applications on Bitcoin.
Two of the most promising approaches gaining traction are flare gas solutions and exploring nuclear energy.
Flare gas mining turns waste into revenue
Flare gas, also known as associated gas, is a byproduct of oil extraction processes. Traditionally, it has been flared or burned into the atmosphere, contributing to greenhouse gas emissions and wasting valuable energy resources.
Forward-thinking bitcoin mining operations have recognized flare gas and the opportunity to utilize it to power their mining operations. But how?
Instead of releasing the gas into the atmosphere, bitcoin miners redirect the flare gas to power mining facilities using specialized equipment. Flare gas recovery systems are employed to capture and convert the gas into electricity, which is then used to run the energy-intensive computations required by bitcoin mining.
Harnessing flare gas can not only bring us into a carbon-neutral era for bitcoin mining, but it also serves a secondary benefit of providing a secondary purpose for an otherwise wasted resource in the oil and gas industry.
Bitcoin mining in this way, from recaptured energy sources, plays a vital role in the "demand response" of power grids, especially in Texas. Bitcoin miners dynamically adjust their load participation to help balance power grids. These timely adjustments instantly trim power usage so the grid can have an adequate supply during natural disasters.
Taking this a step further, a similar principle could be applied to a microgrid (a power generation and storage grid that distributes it to localized areas), then when bitcoin miners are connected to microgrids, they can lead to self-sovereignty for communities.
Many developing nations lack centralized grids due to a deficiency of infrastructure and funding. Instead, communities could create microgrids and generate energy on-site coupled with bitcoin mining — gaining a potential revenue stream through reliable energy.
This innovative approach is gaining traction alongside another, more recent eco-friendly solution: nuclear power.
Bitcoin explores the nuclear option
The steady and consistent energy output provided by nuclear power is critical for the continuous and uninterrupted operation required by bitcoin mining facilities.
Given that nuclear power is a zero-carbon base-load resource, as it does not produce direct carbon dioxide emissions. This does not make it explicitly a renewable green energy source comparable to hydro or geothermal. Instead, it creates a new incentive for miners to scale more efficiently as the computational needs become larger through the upcoming Bitcoin halving.
With stringent safety protocols in place, the potential benefits of nuclear power in reducing Bitcoin's environmental impact cannot be overlooked. However, in the current regulatory climate across the entire crypto industry, it is not likely that we see swift and specific legislation providing guidance around nuclear power and Bitcoin.
In 2021 alone, the United States removed about 475 million metric tons of carbon dioxide, a greenhouse gas, from nuclear energy production. That is the equivalent of 100 million fossil fuel cars on the road in a year for the amount of Co2 they produce. A typical passenger vehicle emits about 4.6 metric tons of Co2 per year.
Where will bitcoin mining be after the halving?
As mentioned previously, all bitcoin miners will be looking heavily at their operations and how to increase output and efficiency post-halving. The integration of flare gas solutions and the exploration of nuclear power are but two solutions being pursued by the bitcoin mining industry.
Efforts are also being made to enhance the efficiency of mining hardware and to adopt renewable energy sources like solar, wind and hydropower.
As someone who worked in the petroleum industry as a drilling engineer, working offshore on drilling rigs while spinning up bitcoin mining pools, understanding how Bitcoin becomes a well-oiled machine begins with the efficiency and long-term viability of bitcoin mining.
Not only will bitcoin miners need to embrace these diverse and eco-friendly solutions, they will also be looking for new ways to incentivize use of the blockchain. Layer 2 solutions, Ordinals and other Bitcoin DeFi [decentralized finance] projects have been hard at work building use cases that bring activity to the Bitcoin blockchain.
That usage will feed the miners to incentivize further ESG-friendly solutions in perpetuity. By embracing the natural evolution of the Bitcoin blockchain and the diverse range of eco-friendly solutions, bitcoin mining can significantly reduce its carbon footprint and contribute to a more sustainable future.