Crypto Mining: Is Renewable Energy the Answer?
Between overnight millionaires and threatening to overhaul the financial system, cryptocurrencies are all the rage at the moment— and rightfully so, but are we negating one very inconvenient truth? Crypto mining uses up a lot of energy.
Is it possible to reconcile the discrepancies between crypto’s astronomical energy requirements with the world’s climate-friendly objectives? As the 2021 United Nations’ COP26 comes to an end, this is the ultimate question. We sat down with John Belizaire, the CEO of Soluna Computing to discuss the role of renewables in the future of crypto mining.
The Bad News
When put in context with other uses of energy, crypto mining doesn’t come off too well.
A 2021 report found that the mining of Bitcoin alone used more energy than the whole of Argentina and that the coin would be the 29th highest energy user if it were a country.
Bankless Times compared a single Bitcoin transaction to our common appliances and the results were telling: the energy used in one transaction could power an average person’s laptop for 8 hours a day for a staggering 15 years; or make 1.2 million visa transactions. Ouch.
High energy use is a fundamental part of how cryptocurrencies are exchanged.
Making a transaction through the blockchain involves a host of computers running complex problems which are used to verify asset movements.
Crypto mining often sees huge warehouses full of computers solving these problems near-constantly, with miners incentivized by rewards of cryptocurrencies.
And it’s unlikely to change: as David Gerard, author of Attack of the 50 Foot Blockchain, told the BBC: “Bitcoin is literally anti-efficient. More efficient mining hardware won’t help – it’ll just be competing against other efficient mining hardware.”
The Good News
Soluna Computing is a firm that connects power plants with customers who want to buy the excess energy they produce. Chief executive John Belizaire says that while there’s no denying the high energy usage of crypto, there is a different framework through which to view it.
“The energy use of the system is actually a feature, not a bug,” Belizaire argued in a recent talk, pointing to the fact that the energy used in crypto mining goes towards securing the records of transitions in a network, protecting them from outside interference without relying on any central party like a bank or government.
“We know that other technologies we rely on daily, such as data centers, use an exorbitantly greater amount of energy and even subsidize fossil fuels,” Belizaire told Bankless Times.
Belizaire believes the worth of energy use is relative to what we view as important – and that crypto can provide a “source of freedom for hundreds of millions of people where trust in financial systems isn’t a primary thing and not something that can be relied on.”
Then there is the fact that crypto mining uses electricity, which of course can theoretically be produced through renewable sources– though it is very difficult to tell what proportion of energy for crypto mining is currently produced in this way.
Belizaire says crypto’s energy needs are the “perfect flexible load for power plants”.
“At Soluna, we’re buying otherwise unused renewable energy from power plant owners to cleanly fuel energy-intensive computing like crypto mining. This absorbs waste energy on-demand, brings profits and scale to power plant owners, and adds more green computing power to the crypto ecosystem,” he said.
“This increases the economic incentive for other miners to innovate and increase their energy efficiency, too.”
David Khalif, Co-Founder and Head of Operations at ethical investment advisor Viridi Funds, says sources of crypto energy are changing.
“The environmental impact of crypto mining is in a much better state than it was at the beginning of the year. Following the Chinese ban on crypto mining, most of the network hashrate was forced to relocate to different regions,” Khalif told Bankless Times.
“Some of this mining power found its way into countries with excess traditional electric capacity, such as Kazakhstan. Others migrated to North America, where we believe there is a higher likelihood that they are tapping into green energy sources to power their heavy consumption.
“Most public mining companies choose to situate their operations around green energy sources in order to avoid excess emissions and strain on the traditional grid. Some operators who are not able to tap into zero-emission sources still make a concerted effort to minimize their impact with carbon credits.”
Khalif – and many others – also believe crypto mining will head in a more sustainable direction in the future.
“In addition to public pressure, we are seeing many mining operators push for sustainability on their own accord,” he said.
“Crypto miners want a future where they can comfortably continue their operations, so they are taking steps now to ensure that their operations are sustainable, instead of cutting corners.” In some cases, renewable projects that would have otherwise not been feasible, have been pushed forward through the subsidies.
“The future of crypto mining continues to look greener as many operators realize the benefits of having strong, consistent, and renewable sources to power their operations.”