Will Bitcoin Mining Ever Be Eco-Friendly?

Bitcoin mining takes a lot of electricity, which is why it is even banned in some parts of the world. In fact, very recently, the Abu Dhabi Agriculture and Food Safety Authority announced that it will impose fines of up to AED 10,000 on anyone found mining crypto on agricultural farms.

“At Gryphon Digital Mining, we are focused on offline mining solutions that significantly reduce the environmental impact of Bitcoin mining,” says Rob Chang, CEO and co-founder at Gryphon Digital Mining.

Chang says one compelling approach is to use nuclear power. He sees it as a sustainable and powerful energy source with a lower carbon footprint compared to conventional energy sources.

Another sustainable method he is looking at is hydroelectricity. Chang believes that hydroelectric power mining is particularly suitable in regions with abundant water resources. These sites provide a reliable and renewable energy supply that can be used for continuous mining activity.

Utilization of waste

Chang also suggests capturing excess natural gas from oil drilling sites that would otherwise explode. He believes this can also provide an efficient and environmentally friendly solution to mining operations.

Read | Bitcoin Mining: What It Is and How It Works

Phil Harvey, CEO at Bitcoin mining consultancy firm Sabre56, is also on board with excess gas recovery.

“An important advance in this area is the use of flared gas recovery, where energy otherwise lost from flaring is captured and then used for mining – reducing environmental impact and increasing efficiency,” says Harvey.

He strongly believes that off-grid mining mechanisms, especially those that use trapped gas, can help increase the environmental sustainability of Bitcoin mining. “These mechanisms involve using energy resources that are either underutilized or have excess capacity that is not being utilized by the grid,” says Harvey.

Stuart Connolly, chief investment officer at crypto investment firm Deus X Capital, agrees. He points to companies such as Crusoe and Giga, which are actively developing off-grid mining projects to use flared gas.

However, he adds that these off-grid sites face challenges such as low uptime and high operational maintenance costs. This leads to lower income compared to the largest sites on the network, which is why there are not many such installations.

Endurance Facilitator

Contrary to popular belief, our experts argue that Bitcoin mining helps facilitate the growth of clean energy.

Environmental groups commonly blame Bitcoin’s proof-of-work (PoW) consensus mechanism for making it an energy guzzler.

Nathaniel Harmon, co-founder at OceanBit, explains that PoW is purposefully useless as a means of securing the network from attack.

“Intentional waste from PoW disproportionately favors renewables due to their inherently lower marginal cost, with each progressive halving cycle driving more and more of a shift toward renewables,” Harmon reasons.

That resonates with Michael Ashley Schulman, founding partner and chief investment officer at Running Point Capital Advisors. He argues that Bitcoin mining can help make renewable energy sources more economically sustainable.

“Renewable energy sources such as wind, solar and hydro often generate excess ‘stranded energy’ when consumer demand is low,” says Schulman. “Bitcoin mining provides a constant demand for this trapped renewable energy.”

Additionally, as a flexible and permanent buyer of excess renewable electricity, Bitcoin mining increases the revenue potential for green energy providers. Schulman believes this spurs further investment and the building of green infrastructure to take advantage of the steady demand of the Bitcoin economy.

“In this way, Bitcoin facilitates the growth of clean energy production,” argues Schulman.

Harmon adds another dimension to this. He argues that all forms of renewable energy are location dependent and often do not coincide with large population centers. This is why in conjunction with the construction of generation, these projects also need new transmission networks.

Read: Green finance is financing sustainable progress in MENA

That’s exactly where you need the high energy density and building capacity of modular Bitcoin mining containers, Harmon says. A Bitcoin mine could quickly be deployed in these locations to “provide an income stop for these stranded generating assets.”

But the mine is already green

According to environmental, social and governance (ESG) analyst Daniel Batten, most Bitcoin mining is done using renewable resources. In a primer Batten counters Common But Incorrect Bitcoin Mining Claims with refutations based on evidence.

In the paper he points out that most studies on Bitcoin’s carbon footprint are outdated. Batten also argues that the dynamics of Bitcoin mining have changed significantly since leaving China.

It shows Bitcoin analyst Willy Woo’s charts that are based on contemporary data.

Contrary to common perception, these tables show this 55.8 percent of energy for Bitcoin mining comes from stable sources.

Connolly wholeheartedly agrees. He believes that energy use in the Bitcoin network is not inherently negative.

“Because Bitcoin is quite transparent with its energy usage, it’s easy to point to a single number,” Connolly argues. “However, other systems (banking, gold mining and such) don’t offer the same kind of transparency.”

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