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In recent months, a number of major mining companies have begun to transition to clean renewable energy.
Tesla CEO Elon Musk dropped a bombshell on the crypto community earlier in May, backtracking the company’s decision to start accepting Bitcoin (BTC) as a form of payment for various automotive sales after being hailed as a champion of sorts by many within the global digital asset market. The reason given was that Bitcoin mining processes were too resource-intensive and, in the long run, unsustainable.
Musk, as expected, became a thorn in the side, particularly among Bitcoin maximalists, who labelled him a sell-out and a market manipulator. Regardless of the slurs, the episode appeared to shine a bright light on the energy consumption aspect of the cryptocurrency mining industry. This is best demonstrated by the fact that a growing number of cryptocurrency companies have recently publicly announced their plans to use greener energy alternatives.
Bitfarms, a publicly traded Bitcoin mining firm, announced earlier this month that it had been successful in its efforts to power nearly 1.5 percent of the Bitcoin network with 99 percent clean energy. Not only that, but the concept of carbon-neutral exchange-traded funds (ETFs) is rapidly gaining traction around the world, with many major investment management firms, including Toronto-based Ninepoint Partners LP, already taking steps to ensure this.
Finally, BitMEX, a crypto derivatives trading platform, recently announced its decision to become carbon neutral, while Marathon Digital Holdings, a Bitcoin mining firm based in the United States, hopes to achieve its target of 70% carbon neutrality in the near future.
Is green the only way out?
Cointelegraph reached out to Sam V. Tabar, chief strategy officer for Nasdaq-listed Bitcoin miner Bit Digital and former head of capital strategy at Bank of America Merrill Lynch, to get a better sense of whether the mining industry is actually moving in a greener direction. According to him, the “switch to green” is already occuring rapidly across the global mining landscape, and he adds:
“Many miners have been actively striving for sustainable energy practices, especially publicly listed miners who wish to maximize their returns for shareholders and stakeholders. We believe this is an integral approach to improving our sustainable practices and mitigating our environmental impact.”
When asked about Bit Digital’s sustainability efforts, Tabar pointed out that, despite powering nearly 2% of the global Bitcoin network, the vast majority of Bit Digital’s energy comes from carbon-neutral sources such as hydroelectricity, solar energy, and other wind-based technologies.
Furthermore, he emphasised that as the industry moves towards a more digitised future, an increasing number of firms will enlist the services of well-known independent Environmental, Social, and Governance (ESG) consultants to self-monitor, set targets, provide transparency, and assist in increasing their percentage of green electricity and other sustainability initiatives.
“We are currently working with independent ESG consultant APEX,” he added. We are able to develop targets for continuous improvement by measuring our sustainability and mining footprints as we continue to shift towards 100 percent clean energy.”
Could renewable energy actually be less expensive?
Matt Hawkins, CEO of multi-algorithm CPU and GPU miner Cudo, told Cointelegraph that, behind the scenes, several major players operating in this space have already begun to transition to the use of renewable energy, which he believes is a positive step forwards for the crypto industry as a whole. He went on to say:
“The reality is, in many cases, that renewable energy is cheaper and therefore more attractive to mining farms, provided that there is stability to this power source that is unaffected by seasonal fluctuations, such as the dry season in China, where mining farms previously moved operations to fossil fuel-powered facilities during the dry season.”
Staying on the subject of China, Hawkins believes that the ongoing migration of hashing power out of the country should be viewed positively, particularly in terms of the Bitcoin network’s decentralisation. Tabar also believes that the prohibition on cryptocurrency-related activities has been a blessing in disguise for US miners who have been looking for innovative ways to find clean energy in the US.
Is nuclear energy an option worth considering?
While much of the discussion about renewable energy continues to centre on solar and wind, North American mining and hosting firm Compass Mining announced that it had signed a 20-year agreement with nuclear fission startup Oklo, which will provide the mining farm with 150 megawatts of energy once its mini-reactors are deployed within the next two to three years.
Furthermore, according to data released by the US Energy Information Administration, nuclear reactors do not emit any type of air pollution while in operation. In this regard, Compass CEO Whit Gibbs believes that once his company switches to nuclear power, the cost of mining for his firm will drop “considerably.” Not only that, but Compass is also discussing with the crypto-friendly city of Miami about getting power from the Florida-based Turkey Point Nuclear Plant.
Concerning the possibility of more mining farms pursuing nuclear energy in the future, Hawkins reiterated his belief that it “all comes down to cost efficiency,” adding that when the market is buoyant and bullish, Bitcoin mining is profitable across most regions, regardless of power costs incurred. He continued, saying:
“Mining is a very intensive process and consumes an enormous amount of energy. Thus, the more clean and green sources of energy that can be consumed by mining farms, the better for the industry and our planet. The caveat here is making sure you are not simply pulling renewable energy away from towns and cities to power Bitcoin operations.”
Miners of the future
Following China’s decision to impose a blanket ban on its mining industry earlier this month, Bitcoin experienced its largest difficulty drop in its decade-long history. Following this decision, BTC’s difficulty ratio dropped dramatically to 45 percent, allowing many mining farms to produce more BTC at a lower cost per unit.
Since the ban, the crypto industry has made rapid progress towards long-term sustainability, with Musk recently hinting that the crypto industry may be on its way to a greener future despite Tesla’s decision to begin accepting Bitcoin payments. Not only that, but recent data from the Cambridge Centre for Alternative Finance indicates that the amount of energy used to mine BTC has decreased.
As a result, the future of the Bitcoin mining industry will be determined by time, especially as more miners begin to migrate to various crypto-friendly nations, such as those located in the Nordic countries or Central Asia, where there is a relative abundance of renewable energy.