Bitcoin’s energy use is not inherently dirty or wasteful…
While Bitcoin uses a lot of energy, it can be mined with clean, renewable energy just as easily as with coal, nuclear, or natural gas.
Indeed, just like electric vehicle owners rely on a mix of energy sources, Bitcoin mining facilities are agnostic as to where the energy comes from – except that it must be low cost.
Shift to Renewables
Renewable energy is becoming the lowest cost provider for crypto-mining facilities.
Also the decentralized nature of Bitcoin’s network means that mining facilities may be located anywhere – even in hard to reach, off grid locations.
As a corollary, renewable energy project developers may be able to consider and monetize a wider range of surplus or otherwise stranded renewable energy resources than would be possible without Bitcoin mining.
Distributed energy projects that do not have to be connected to the central grid, such as microgrids, may also be developed to mine bitcoin.
To make the process easier, crypto mining as a service companies and crypto mining/energy consulting firms, such as these below, are working to help owners capture value from otherwise stranded or wasted energy assets:
UK based Argo and Canadian DMG Blockchain Solutions recently announced Terrapool, a 100% renewable energy powered bitcoin mining operation.
Sangha Systems is partnering with AEP OnSite to develop a fully renewable, 5MW behind the meter solar system to power crypto mining and help transition bitcoin to clean energy.
Calculating the return on investment (ROI) from capturing stranded renewable energy is based on many factors including the cost of hardware, electricity and/or energy and other resources needed for bitcoin mining.
These factors must be considered along with the timelines for crypto mining PPAs which are likely structured over shorter terms of three to five years… The shorter PPA terms reflect the expected life of the mining hardware, compared to the 25-30 year life expectancy of solar equipment with conventional renewable energy offtakers.
The good news is that Bitoin’s energy use is increasingly generated from renewables because they are becoming the cheapest option.
The Global Cryptoasset Benchmarking Study (3rd Edition) estimates that 39% of Proof of Work mining power consumption comes from renewables, primarily hydro-electric power, and the portion from renewables is increasing. However, some estimates of renewable energy used in bitcoin mining are as high as 76%.