Green Bitcoin Mining: How BTC Mining Is Becoming Environmentally-Friendly
February 20, 2024
Green Bitcoin mining integrates emerging technologies and sustainable practices to solve the environmental impact of energy-dependent cryptocurrency mining activities.
Read on to discover how sustainable Bitcoin mining is paving the way towards Bitcoin becoming an environmentally-friendly asset.
What is Bitcoin Mining & How Does It Work?
Bitcoin mining is a process through which transactions are verified, bringing new bitcoin into circulation. The process involves generating a solution to a cryptographic puzzle to validate the information in a block.
The miner who finds the solution to the math puzzle receives a reward in the form of new units of BTC. In addition to transaction fees, the predetermined block reward incentivizes miners to process transactions on the Bitcoin network and ensure their validity.
Bitcoin miners use specialized computers that require high amounts of electricity to solve the cryptographic puzzles. Miners use their computers (nodes) to collect and bundle all transactions from the last ten minutes into blocks on the Bitcoin blockchain. These mining nodes contribute energy and computing power to the network to guess the answer, known as the hash target.
Mining is part of Bitcoin’s Proof-of-Work (PoW) consensus mechanism, where the computers must “put in the work,” in the form of energy output, to confirm the transactions’ validity.
The miners randomly make guesses of the target hash as fast as possible to become the first ones to validate a new block for the blockchain. This process demands enormous computing power. When enough transactions are collected, a new block is formed, and miners compete to validate it by solving the cryptographic puzzle. A hash number is then created that includes encrypted transaction details.
Once the other miners verify the correct answer, the miner is rewarded with 6.25 BTC, and a new block is added to the blockchain.
Bitcoin Mining's High Energy Consumption Explained
A significant concern is whether Bitcoin mining is sustainable, considering the vast computational energy required to solve the complex puzzle.
While using an ordinary computer for mining BTC is possible, such setups are unlikely to solve the puzzle first and receive the reward. For this reason, miners use purpose-built Bitcoin mining rigs to beat the competition.
A typical mining rig with three graphics cards consumes over 1,000 watts of electric power when it's running. Mining businesses can have thousands of these cards - a mining business in Kazakhstan has more than 50,000 graphics cards in one location.
In addition to the power needed to run them, rigs generate enormous amounts of heat and need cooling. Although most rigs are equipped with built-in fans, a facility housing thousands requires additional external cooling systems. Mining centers require more cooling, which translates to even more power consumption.
According to the Digiconomist’s Bitcoin Energy Consumption Index, it’s estimated that a single Bitcoin transaction can require up to 1,449 kWh to complete, which is equivalent to the power consumption of an average American household over approximately 50 days. If the cost per kWh of electricity is at least 12 cents, the energy bill for a single Bitcoin transaction would be $173.
The Bitcoin Energy Consumption Index also estimates that Bitcoin mining consumes as much energy as the whole of Argentina. The network’s annual consumption level of 131.26 terawatt hours puts the industry among the top 30 countries in energy consumption.
While these figures have been hotly debated and questioned by many in the Bitcoin industry, the reality remains that Bitcoin mining requires a high amount of energy.
As a result, Bitcoin miners are incentivized to find the cheapest energy sources available, creating a strong economic incentive for miners to innovate in sustainable mining practices.
Bitcoin Mining Is Already More Sustainable Than You May Think
For a long time, Bitcoin mining has been plagued by negative headlines regarding its energy use and potential environmental impact. However, sustainable Bitcoin mining is already a large part of this growing industry.
After long being accused by critics of polluting the planet, data from Cambridge University from as early as 2021 showed a drastic change in the geography of mining towards an improved Bitcoin carbon footprint.
Heightened media scrutiny led to a chorus of calls for regulation, with the New York State Senate proposing a bill to establish a moratorium on crypto mining centers and ban their activity for three years within the state. However, China's big crypto crackdown in the spring of 2021 triggered a chain reaction within mining circles as over half of miners went offline overnight. With new crypto rules in China and doors shut for miners, the time was ripe for going beyond getting cheaper energy sources to renewable Bitcoin mining green energy.
After enduring criticism from environmentalists and politicians over the years, there’s now a renewed shift as sustainable Bitcoin mining companies rebrand their activities.
Many miners are abandoning fossil fuels and shifting to renewable energy sources like wind, solar energy, and hydroelectricity.
Bitcoin mining giant Genesis Digital Assets (GDA) of Sweden is a leading green bitcoin mining company that has been using renewable energy since June 2023. The Nordic countries, for example, have become an ideal spot for sustainable Bitcoin mining companies looking for stranded, untapped, and renewable, cost-effective energy for their operations in a regulatory-friendly environment.
On-chain data shared by climate technology investor Daniel Batten showed that by late May 2023, carbon emissions related to Bitcoin mining had decreased by over 50% from 601g/kWh to 299g/kWh within three years.
Why "Going Green" Makes Sense for Bitcoin Miners
While bitcoin mining may not be entirely green, the Cambridge Bitcoin Electricity Consumption Index data shows reasonable progress.
Bitcoin's greenhouse gas emission dropped from 59 metric tons of carbon dioxide in 2021 to the current 48.88 metric tons.
A Bitcoin Mining Council's report from 2023 shows that 59.9% of the global Bitcoin mining energy comes from renewable sources. With Bitcoin's global power consumption standing at 253 TWh or 0.15% of the worldwide consumption, the Bitcoin network has surpassed Germany in achieving the green power mix.
The report further states that the increased mining efficiency and enhanced semiconductor technology have resulted in a 46% increase in efficiency yearly.
Since mining difficulty and energy costs directly impact profitability, transitioning to more affordable green Bitcoin mining can increase miners’ profitability while also ensuring that the industry follows sustainability best practices.
The ongoing transaction towards sustainable mining supports efforts towards combating climate change and paves the way towards more profitability in Bitcoin mining.
Green Mining Initiatives You Should Know About
There's an ongoing shift in perspective, which clearly indicates that Bitcoin mining is already embracing Bitcoin mining green energy, with over 50% of its energy emerging from renewable sources.
A Bloomberg report showed a significant drop in emissions and a growing hash rate as mining gravitates towards Bitcoin mining green energy as the most affordable form of energy.
An excellent example of a green Bitcoin mining company is U.S.-based Crusoe Energy Systems, which uses 45 shipping containers for its green crypto mining computers using natural gas.
Moreover, Canada's Link Global Technologies uses stranded methane to power its bitcoin mining, and El Salvador's Lava Pool uses volcanic energy sourced from the Conchagua volcano for its mining initiatives. What’s more, Austria's HydroMiner uses hydropower and reports energy costs that are 85% lower than the rest of Europe.
FAQs
Can Bitcoin mining be green?
Yes. Recent reports show mining companies can significantly reduce their carbon footprint by using renewable energy sources like wind, solar, and hydroelectricity. Additionally, by becoming an unfailing outlet for excess renewable energy, bitcoin mining improves the viability and profitability of green energy sources.
Can Bitcoin be mined with renewable energy?
Bitcoin can be mined using renewable energy. Miners are already using it for energy from renewable sources like wind, hydro, solar, and geothermal. Using renewable energy to power the Bitcoin mining process significantly reduces gas emissions, supporting the efforts against climate change.
What is the energy source for Bitcoin mining?
A UN scientists report claims that the BTC network has been highly dependent on fossil energy sources, constituting up to 67% of its global energy supply. Coal accounted for 45% of Bitcoin's energy supply, followed by natural gas. However, mining companies are now moving to renewable energy sources after concerns about the process’ environmental impact.
Conversely, the Bitcoin Mining Council estimates that around 60% of the global Bitcoin mining energy comes from renewable energy sources, suggesting that a mix of renewable energy sources is the main energy source for Bitcoin mining.
What are green Bitcoin mining companies?
Green mining companies are miners who use renewable energy sources instead of fossil-based fuel sources to minimize the carbon footprint of crypto mining. Currently, the most preferred energy sources among sustainable Bitcoin mining companies include wind, solar, geothermal, and hydropower.