Bitcoin mining hasn’t been able to shake its dirty reputation.
Producing the original cryptocurrency and keeping its proof-of-work network secure is an energy-intensive process – we all know that – and bitcoin’s carbon footprint is big. Very big. The stats are easy to find and used frequently in news stories: The biggest digital asset’s network consumes as much or more electricity in a year than many countries.
Most recently, evidence has shown that since China’s crackdown last year, mining bitcoin has become a less green business. This is because when most bitcoin mining took place in China, miners could take advantage of excess hydropower in the country’s Sichuan and Yunnan provinces during the rainy season – despite coal's abundance.
So, what can be done, then? Is bitcoin doomed to have a bad reputation in environmental, social and governance (ESG) circles forever?
Well, no, not exactly.
Zach Bradford is the CEO of CleanSpark, a Nasdaq-listed U.S. company that uses renewable sources to mine bitcoin. This article is part of CoinDesk’s Mining Week series.
For a start, bitcoin is in vogue, but so is ESG. Big investors are more interested in BTC than ever before. They also want to put their money in sustainable investments.
Not only are miners taking note – many want to be greener regardless to attract the right type of investors.
Shift to renewable energy
In order for new bitcoins to be minted, energy needs to come from somewhere. Lots of operations use energy from “dirty” sources, like coal, gas and petroleum. The latest data from the Bitcoin Mining Council shows that the majority of the bitcoin mining industry uses a sustainable electricity mix – a trend that has already increased.
An increasing number of mining companies now use renewable sources, such as geothermal energy or solar power, to power their operations. Sustainable bitcoin mining is growing: Every operation in North America is at least offsetting some carbon emissions or actively trying to use more clean energy. Operations, such as my company’s, that use mainly carbon-free sources are becoming more common.
This trend is going to continue, we think, because it simply makes sense from a business perspective: Bitcoin miners will want the cheapest sources of energy available. And as clean energy gradually gets cheaper, mining operations will help subsidize green projects.
Non-renewable power is also becoming less attractive. In Kazakhstan, for example, the government welcomed bitcoin miners with open arms – and subsidized fossil fuels. The government then quickly changed course when the energy grid became overloaded, forcing miners out of the country. The situation is similar in Iran, where a combination of U.S. sanctions and illegal, unregulated mining has led the government to do a U-turn on welcoming the industry.
But renewables can solve a lot of these problems: Bitcoin mining will allow for a faster payback on solar or wind energy projects, and they will spring up in regions where before they were not economically feasible.
The bitcoin mining industry is not only on its way to a low-carbon future, but it also already produces less carbon than equally energy-intensive industries – such as aluminum production, which spews out up to 1.1 billion tons of carbon dioxide emissions per year.
Strengthening the power grid
Bitcoin’s other ESG selling point is that it gives back, too, with energy solutions – a little known fact is that bitcoin mining can actually strengthen a power grid. Not to mention the job creation and investments in regions with limited opportunities for economic development.
For a start, operations in North America have already found solutions to the kind of problems that troubled Kazakhstan and Iran. On a chilly weekend back in January, New York-based miner Greenidge curtailed its mining operations to supply all of its electrical generation capacity to the New York Independent System Operator to help heat homes. It was able to do this in minutes. Prior to the commencement of its mining operations, the facility’s time from start-up to maximum generation capacity was approximately 14 hours.
And last month Texas-based bitcoin miners helped the state by powering down operations so the grid could function more efficiently ahead of icy weather.
Then there is the economic growth mining brings with it. Our company, for example, in September announced a five-year $145 million investment in Norcross, Georgia, the city where we have our latest data center. We will create over 20 skilled and highly skilled jobs with a yearly wage of approximately $50,000, and our investment in a $2 million power expansion along with local utility Georgia Power is expected to benefit power customers and community members living near the data center.
We got our start as an energy technology company; we were focused on sustainability before we started mining bitcoin. We see how other operations can therefore make the most of how they mine to provide energy solutions. Mining companies, we believe, will only continue to incorporate sustainability into their everyday operations.
Bitcoin has already started to disrupt the landscapes of tech and finance as it becomes more mainstream. And just as ESG investing becomes the norm, bitcoin’s move to help people around the world achieve financial freedom will be a green and socially responsible one.
Further Reading from CoinDesk’s Mining Week
Our reporters visited crypto mining farms around the world, interviewed key players and crunched network data to shed light on a little-understood industry.
Even with the surge in popularity, home bitcoin mining only accounts for a small slice of the industry’s overall pie.
Despite favorable business conditions, a country’s political environment can deter international capital.