Bitcoin’s Hunger for Power Attracts State Clampdowns and Affects the Climate: is Renewable Energy the Answer?
Major oppositions to cryptocurrency mining by skeptics are hinged on two issues: its relevance to a physical world that is used to paper and coin backed by gold reserves in banks; the humongous amount of electricity the operations of proof of work cryptocurrencies such as Bitcoin and Ethereum (at the moment) consume. The former is more controversial.
Ethereum is in the final stage of upgrade to proof of stake, a consensus system believed to reduce the electricity consumption of cryptocurrency mining. Bitcoin, however, gets the biggest bashing from people, many of whom believe that for what is not money in the form they are familiar with, which is made up of computer codes and whose core structure is based in cyberspace and is not a legal tender in most countries to consume lots of electricity is incomprehensible.
With heating-generating and electric power consuming supercomputers in different locations around the world competing to create new blocks or validating transactions by solving complex mathematical problems, Bitcoin mining consumes large amounts of electricity by default. Bitcoin farms seek cheap electricity to power hundreds and thousands of their supercomputers. Bitcoin’s security and sustenance are anchored on machines with high computing power and electricity.
Indeed, data on how much electricity Bitcoin mining consumes is controversial just as how much of the consumed power attributed to it is from a renewable source. A Bitcoin transaction, according to Digiconomist’s Bitcoin Energy Consumption Index, takes 2200.25kilowatt-hour or 75.41 days of power for the average U.S. householder. An analysis by the New York Times shows that global Bitcoin mining consumes about 91 terawatt-hours of electricity yearly comparable to Finland’s electricity use and a 10 times increase from five years ago. The Cambridge Centre for Alternative Finance, in February 2021 estimated Bitcoin mining electricity consumption at 121.36 terawatt-hours.
“The popularity of Bitcoin continues to grow, which means that more power is being employed to service more users in the market,” Kamshad Mohsin, assistant professor at the Maharishi University of Information Technology in India told Arweave News.
Governments including China, Iran, Kazakhstan and Kosovo are grimacing at the huge electricity consumption of cryptocurrency mining and electricity theft by some miners. Some countries are experiencing electricity outages, causing rationing of power. A November 2021 report by the Global Legal Research Directorate (GLRD) of the Law Library of Congress found that a total of 51 countries across the world have banned cryptocurrency. While nine countries slammed absolute ban, 42 imposed implicit ban on cryptocurrency. Absolute bans makes all forms of cryptocurrency operations illegal. Implicit bans refer to those that prohibit banks or other financial institutions from dealing in cryptocurrencies or offering services to people or businesses that involve crypto and cryptocurrency exchanges are also banned from operating in such countries.
Stirring up more criticism against Bitcoin mining is the source of the electricity. Coal, a polluting power source, is still being used by electricity generating plants in many countries including the United States. For instance, in China and Kazakhstan, about 70 percent of the countries’ energy needs are supplied by coal.
For many cryptocurrency mining farms trying to avoid disruptions to their operations by government shutdowns and power outages, the United States is one of the best destinations where they are sure of cheap electricity and freedom from the unpredictability of governments. Environmentalists say inability or at least difficulty in meeting its climate pledges could be the cost of being Bitcoin miners’ haven for the United States.
“I think they’re willing to damage the planet to make a little more money,” Bill McKibben Schumann distinguished scholar, Middlebury College, told Arweave News. “We have enough trouble trying to control carbon emissions without adding a new (and particularly pointless) source of trouble.”
Already, Bitcoin’s annual global carbon footprint is estimated to be 97.14Mt CO2. This is likely to increase if the price of Bitcoin increases and more miners join the venture. For a world striving to reduce greenhouse gas by half in 2030 and achieve net-zero emission by 2050 so as to keep global warming by 2 degrees Celsius while aiming for 1.5 degrees Celsius, Bitcoin could, indeed, add to the multidimensional obstacles to reaching this goal.
Supporters of cryptocurrency mining, many of whom do not align with the opinion that Bitcoin could compound the climate crisis, point at human activities that degrade the environment. For critics, Bitcoin mining and other proof of work cryptocurrencies are not essential to gulp as much electricity as they do and may be shunned to protect the climate.
“Using fossil fuel energy to generate private profit may have little effect on the public electricity supply, yet it is still destructive to the environment. It is unclear if Bitcoin mining will be worth the environmental cost in the long run,” Mohsin said.
Energy consumption is sometimes used as a parameter to measure human advancement and economic growth. Creating infrastructures that enable businesses to thrive is regarded as the responsibility of governments in many countries, making the shutdown of lawful and tax paying Bitcoin mining operations over enormous electricity usage to be regarded as unfair by some cryptocurrency proponents.
Alternative power from renewable sources including the sun and wind has been suggested as a potential solution. However, even this suggestion has some pitfalls.
Miner’s supercomputers run multiple Graphics Processing Units (GPU) 24 hours and they are only switched off if they are replaced when they break down. One super computer with three GPUs could consume 1000watts or more, equal to a moderate size clothes smoothing iron. Depending on its size, the number of supercomputers in mining centres could range from a dozen to hundreds and thousands.
Experts say the unsteady nature of energy from renewable sources pose a challenge to Bitcoin mining operations. Depending on the size of the mining plant, solar or other renewable energy may not be solely able to supply the required energy. It is a huge energy demand that may require external systems such as air conditioning to keep the heat generating computers cool in addition to powering the supercomputers.
“For big farms that mine Bitcoin, the capital to install solar power plants may not be a problem, other issues to consider would be landmass and the capacity to store power for use when there is no sun,” said Oluwaseyi Oladipupo, a solar mini-grid installer and chief technology officer of Vision Power Solutions. “For example, if it took about two plots of land to install solar panels with 50kilowatt capacity, imagine the landmass it will take to accommodate a 25megawatt solar plant if one mining rig consumes about 1000watt,”
Solar power plants take up lots of space due to solar panels’ varying inefficiencies in converting irradiation to usable electricity.
“So it is not all the photons of light that fall on the solar panel that it is able to convert to energy,” Oladipupo told Arweave News.
Other renewable energy sources have their challenges. Low water pressure and even changing climate could affect the capability of hydropower to produce steady electricity. Wind turbines require high wind pressure to generate energy.
Common to renewable energy is the mammoth problem of power storage for use when the primary source of energy supply is unavailable. This is a problem that batteries are struggling to solve. And for the power-guzzling machines in cryptocurrency mining farms, batteries are not reliable.
Perhaps, a possible option that could take many years to manifest is for innovators to consider the energy sustainability factor just as they aim at improving the computing strength of supercomputers.
“Failure to examine the environmental implications of this technology and to regulate digital currency enterprises may not only harm the environment, but may also deter future digital currencies from taking efforts to minimize their energy usage and carbon emissions. The environmental effect of digital currencies should not be disregarded as their popularity grows,” Moshin said.
Bitcoin’s rising price and increasing acceptance by countries and big firms, means that shutdown of mining operations may no longer work as miners would go underground to mine cryptocurrency as it is happening in China.
“Given the inherent difficulties in combining Bitcoin mining with renewable energy, as well as the fact that energy usage is not the only way Bitcoin affects the environment, we should infer that renewable energy is not the solution to Bitcoin’s sustainability dilemma,” Moshin said