Is it possible to mine Bitcoin (BTC) using only 100% renewable energy sources and deliver the same economic returns as those using carbon-based sources? The answer is yes, according to Square’s recent analysis on the cost of renewables and their impact on Bitcoin mining.
Unfortunately for our industry, the number of headlines and headline-making tweets about Bitcoin’s energy use and potential environmental impact has followed its rise in value in recent months. The increased media scrutiny has led to increased calls for regulatory action and even a proposed bill in the New York State Senate that would place a three-year moratorium on non-renewable Bitcoin mining in the state.
This is one debate where both sides have a point. Critics are correct: Bitcoin mining does use a lot of electricity. The Cambridge Center for Alternative Finance estimates that the total electricity used worldwide by Bitcoin miners is an average of 113 terawatt-hours per year. This would place Bitcoin’s energy use somewhere between the United Arab Emirates and the Netherlands, two countries with a combined population of approximately 170 million people, which is admittedly a lot. However, the Cambridge Center for Alternative Finance’s recent “3rd Global Cryptoasset Benchmarking Study” shows that 76% of miners are using at least some renewable energy in their operations and that 39% of all energy consumption used in proof-of-work mining, such as mining Bitcoin, is from renewable sources.
Now that we have discussed Bitcoin mining’s energy consumption and carbon footprint, let’s try to put those figures in context. By looking at three directly relevant comparisons: the United States electricity grid, the traditional finance system and gold mining.
The electricity grid, traditional finance and gold mining
Let’s start with comparing Bitcoin mining to the…