A new study from CoinShares has questioned criticism of Bitcoin mining as harmful to the environment, estimating that three quarters of mining operations are now powered by renewable energy.
The cryptocurrency investment and research firm concludes this makes the blockchain industry “more renewables-driven than almost every other large-scale industry in the world.”
In its report CoinShares estimates that 74.1% of Bitcoin mining operations run on renewable power.
It doesn’t attribute this to miners’ desire to save the planet, instead saying miners are ‘incentivised” to user renewable energy due to its lower cost.
It found mining operations are concentrated in areas where renewable energy is plentiful and cheap.
The report also found that Bitcoin mining was now cheaper, falling from $6800 in November 2018 to around $5600 today due to lower cooling and overhead costs.
“This suggests that, at current prices, the average miner is highly profitable, with even older gear and high-cost producers currently able to make positive ROI.”
Activists have long criticized Bitcoin’s exorbitant power usage – which is caused by miners competing by throwing ever increasing computing power into the equation in order to mine the next block first and get rewarded with Bitcoins.
Which means the energy consumption of the network is likely to continue rising.
It’s currently around 65TWh a year which takes a comparable amount of energy to a country like Chile uses in a year.
Bitcoin proponents argue that Bitcoin mining uses less electricity annually than seasonal Christmas lights.
Proponents also claim the conventional banking system uses three times more energy than Bitcoin, due to the need for physical branches and offices.
However the traditional banking system is exponentially larger than Bitcoin and the whole thing only uses an estimated 100 terrawatts.
In fact, the average Bitcoin transaction used 1200 times more energy than a transaction in the according to banking industry researcher Alex de Vries, from PricewaterhouseCoopers (PwC) in the Netherlands, who looked into Bitcoin’s use of renewable energy in the journal Joule in March.
He said that mining machines generally stayed turned on until they stopped making a profit and that most mining operations were believed to be located in the Sichuan province of China.
The province generates three times as much hydroelectricity in the wet summer months than during the dry winter and he said that coal power is used to balance out the fluctuations.
“Based on these findings, the renewable energy currently going into Bitcoin mining cannot be considered ‘green,’ and this challenge of combining a constant energy requirement with variable renewable production will always exist,” said de Vries.
He said if Bitcoin moved from Proof of Work to Proof of Stake, energy consumption would be cut by 99.99%.
“Ultimately, Bitcoin is just software,” de Vries argued. “The mining mechanism can be replaced. The challenge is that the entire network needs to agree to this change.”
Last year, Cryptosolartech, Spain’s largest Bitcoin miner, announced it would build a 300 MW solar farm to power its mining operations.
In March, Bitmain announced plans to set up 200,000 units of mining equipment in areas of China with lots of hydroelectric power.
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