Where Will Bitcoin Mining Be After the Halving?
Bitcoin mining is not a secret. Its energy use has been criticized for its potential environmental impact. No one in the industry disputes that Bitcoin wasn’t the first investment made with environmental, social, and governance in mind.
Since then, however, the mining industry has become one of the most assertive industries when it comes to its energy consumption, creating several potential avenues to green solutions that could benefit industries and geographies beyond Bitcoin.
Rena Shah is Director of Strategy and Operations at Trust Machines, a startup building the largest Bitcoin ecosystem.
The most promising methods, which are gaining increasing importance, include flare gas solutions and exploration nuclear energy.
Flare gas, also known as associated gas, is a by-product of oil production. Traditionally, it is burned or flared into the air, contributing to the creation of greenhouse gases and wasting valuable resources.
Forward looking bitcoin mining operations have recognized the benefits of using flare gas to power their operations. But how?
Bitcoin miners use special devices to divert flare gas instead of releasing it into the air. Flare gas recovery systems capture the gas and convert it to electricity. This is used to perform the energy-intensive calculations required for bitcoin mining.
Flare gas is a resource that would otherwise be wasted in the oil and natural gas industry.
This type of bitcoin mining, using recovered energy, is critical for demand response, especially in Texas. Bitcoin miners dynamically adjust their load sharing to balance power grids. These adjustments are made in real time to reduce power consumption to keep the grid adequately powered during natural disasters.
In a further step, this principle could also be applied to a microgrid (an electricity generation and storage network distributed over localized areas). When bitcoin miners are then connected to these microgrids, they can lead to self-sovereignty.
A lack of financing and infrastructure has left many developing countries without central networks. Instead, communities could set up microgrids, generate energy locally and mine bitcoins to create a revenue stream.
This innovative solution is gaining popularity alongside a newer, environmentally friendly alternative: nuclear energy.
Nuclear power is not only a trend because of “Oppenheimer” with Christopher Nolan. Recent announcements by mining companies call for the use of nuclear power to double their computing power in the future.
The steady and constant energy production of nuclear energy is vital for the uninterrupted continuation of bitcoin mining operations.
Nuclear energy is considered a zero-carbon baseload energy source as it does not cause direct carbon dioxide emissions. It is not a green renewable energy source like hydroelectric or geothermal. This creates an incentive for miners, who can scale more efficiently as the computational burden increases due to the Bitcoin halving.
Nuclear power can reduce Bitcoin’s environmental impact if safety protocols are in place. In the current regulatory environment of the crypto industry, legislation specifically dealing with nuclear power and Bitcoin is unlikely to be passed quickly.
The United States will have removed 475 million tons of greenhouse gas carbon dioxide from the nuclear power industry by 2021. The amount of CO2 that 100 million fossil fuel cars produce in a year is equal to the number of vehicles on the road. The average car emits 4.6 tons of CO2 every year.
After the halving, Bitcoin miners will be heavily focused on their trades. They will also look for ways to improve performance and efficiency. There are two distinct solutions pursued in bitcoin mining: integrating flare gas solutions and exploring nuclear energy.
The mining industry is also making efforts to improve the efficiency of its equipment and to use alternative energy sources such as solar, wind and hydroelectric power.
To understand how bitcoin can become a well-functioning system, one must first understand the efficiency and viability of the bitcoin miner.
Bitcoin miners must adopt these green and diverse solutions. They will also look for new incentives to use the blockchain. Layer 2 solutions and Bitcoin DeFi [decentralized finance] projects have been hard at work developing use cases for the Bitcoin blockchain.
This usage will encourage miners to keep developing ESG friendly solutions. Bitcoin mining can reduce its carbon footprint by taking advantage of the development of the Bitcoin blockchain and the wide range of eco-friendly options.
