Bitcoin’s surge in popularity has sent the network’s electricity consumption soaring. And while great electricity consumption may be a necessary cost in securing the most significant distributed ledger to date, it is important to know where that power comes from and how we can make it more sustainable.
It is estimated that bitcoin mining uses up to 22.5 TWh of energy annually, or 13,239,916 barrels of oil equivalent every year. Like other forms of mining, however profitable it may be, it has severe implications for the environment. As the bitcoin boom continues, the burden on miners to embrace other sources of power will only increase.
China is the largest bitcoin mining nation, by far, accounting for about 70 percent of the world’s bitcoin processing power. And in recent years, the country has begun to embrace the renewable revolution perhaps more than any other country, offering the cheapest mining power and possibly even some of the greenest.
While much of the mining takes place in the sparsely populated and less developed Xinjiang province of China, these locations primarily generate power from coal-fired plants. Though electricity is cheap, the price on the environment is far more costly.
The vast Sichuan mountains, however, offer miners even cheaper electricity from hydroelectric dams. This poses a separate challenge in the winter when dams freeze up, forcing the operations to halt or draw power from the alternative coal-powered plants. Additionally, Sichuan’s cheap power-used-for-mining has come under fire by the Chinese government.
In a report from Chinese media giant Tencent Finance, state-owned Sichuan Electric Power Company issued a statement ordering miners on grids connected to hydropower stations to halt operations. This order, however, appears to only target smaller mining operations as larger data centers have agreements with local governments. A move reminiscent of China’s independent teapot oil refineries.
Though China’s bitcoin mining ambitions remain strong, others are looking to carve their own path, as well.
Russia offers some of the cheapest electricity in the world and focuses on less environmentally challenging power generation such as natural gas, nuclear, and hydroelectric. Coal only makes up 18% of the country’s electricity generation.
Additionally, the Kremlin has suggested that miners are to receive subsidized “leftover” power.
The country’s largest energy provider, Gazprom, recently announced a partnership with EuroSibEnergo set to provide excess power to a number of miners within the Siberian, Urals, and European sections of Russia. The companies have even created an interactive map showing the locations which could benefit from these subsidies.
This further complicates Russia’s love-hate relationship with the cryptocurrency, in which the country has labeled bitcoin investments as illegal, followed by an announcement of a $100-billion ICO to create a mining sector to rival China’s.
Another country planning to utilize cheap energy for mining is Iceland. The country is ideal for mining, as its cold climate and 100 percent renewable power generation offers a tremendous opportunity for miners looking to increase their profits and who are considerate of the environmental consequences of their power-hungry data centers.
Alex Karis, CEO of DigitalBTC – the world’s first cryptocurrency company to be listed on a major stock exchange – noted: "We can reduce our energy costs and maintain a low cost advantage as we grow our mining operations. We have just launched a new product platform and mining is an area we expect to see continued growth."
DigitalBTC has since exited the mining race, but others are quickly jumping on board the Iceland bandwagon.
Another listed company, HIVE Blockchain Technologies, backed by billionaire Frank Giustra, in a partnership with Genesis Mining, is taking advantage of the country’s cheap electricity and cold temperatures, as well. Additionally, HIVE is looking to expands its operations to Sweden, another cold country with vast renewable capacity.
While certain countries offer special opportunities for ambitious crypto-mining companies, smaller scale projects seem to be popping up worldwide.
HydroMiner, which recently completed its ICO, is looking to harness hydroelectricity in Austria. Focusing on an environmentally sound and cost-effective means of producing electricity, HydroMiner has partnered with local small-scale hydro operations to pursue create sustainable and profitable data centers.
Established in 2012, NastyMining, the brainchild of OgNasty, is a project based in Arizona focusing on sustainable mining through solar and wind power generation. Focusing primarily on solar, OgNasty estimates that only 5 percent of the output will come from wind turbines.
“A big part of that is due to our area being more advantageous for solar energy production. However, I do like the cool factor of taking advantage of multiple technologies to produce green energy in different scenarios,” OgNasty stated.
Another group, HARVEST, is taking a non-profit approach to cryptocurrency mining. With “critical engineering and computational climate” pieces of art, Julian Oliver is mining the cryptocurrency ZDash, with all proceeds going directly to funding climate change research.
Beyond a simple piece of media-art, the idea is that these HARVEST nodes could be places all over the world to generate supplemental funding for climate research.
As cryptocurrencies garner mainstream adoption, it is worth taking note of some of these endeavors. Though bitcoin mining uses less than a fraction of the energy used by the traditional banking system, going green is always going to be an important investment.