23 May 2022 Arjun Agarwal
Could Bitcoin Mining Promote Cheaper Energy Use?
Bitcoin mining – the process of solving algorithmic equations using raw computer power, commonly known as Proof-of-Work (PoW), became a hot topic that divided Bitcoin enthusiasts and eco-activists. The reason – in order for Bitcoin’s network to validate and process transactions, it has to be connected to power-hungry machines, which handle the transactions.
Bitcoin mining and its environmental footprint became notorious after Tesla first added Bitcoin as a payment method for car purchasing, but disabled the functionality due to “environmental concerns”, according to its CEO Elon Musk.
Now, a different perspective is gaining pace – can the power consumption of Bitcoin become greener and, in turn, cheaper?
It turns out that Bitcoin mining can provide a powerful market incentive for energy producers worldwide to increase the production of cheap energy. More cheap energy could also result in a plunge in global energy prices.
Furthermore, a new narrative calls Bitcoin with its Proof-of-Work consensus mechanism, an “energy currency”.
“Today, based on the average American’s daily energy consumption, a single individual has the equivalent of nearly 600 humans working at their behest. For most of human history, each individual’s productivity was limited to what they could achieve with their own two hands. From a humanist perspective, less energy is never the solution.” Drew Armstrong, president of Cathedra Bitcoin - a Bitcoin mining company in Canada, added to the topic, adding that humanity has been limited to human and animal labor for centuries before the discovery and public offering of electricity as a form of energy.
Speaking of electricity, it is almost impossible to store, hence users have to use the purchased amounts or waste it. However, MicroStrategy’s CEO Michael Saylor considers money as a superb way to store energy, stressing that Bitcoin is “the most efficient energy network in the history of the world.”
Putting excess energy into Bitcoin mining?
Meanwhile, the question of finding the best solution for relocating the excess energy, produced by renewable sources, may finally find its answer, as companies like Soluna use this PoW computing to absorb excess renewable energy, which is one of the biggest challenges with renewable energy development and the green transition that is underway today.
Furthermore, companies like Biomining already made the switch to 100% renewable energy, which further incentivizes the use of cleaner, cheaper power to validate transactions. In Biomining’s case, the power for the mining equipment comes from biogas, made from the decomposition of manure.
Will market fluctuations halt the transition?
And while more and more miners are shifting towards using cheaper, or almost free energy to mine Bitcoin, the world’s largest crypto to date is struggling to get a grip above $30,000 in its eighth consecutive week “in the red”.
Apart from Terra (LUNA)’s slump, which drove the entire market down, Bitcoin can be officially put in the bearish market segment, which coincides with the broader financial markets and the ongoing inflation in developed countries.
But what does it mean for the crypto market leader? Bitcoin’s history suggests that when its price drops, so does the number of active Bitcoin miners, as sometimes miners could spend more on electricity than their rewards from mining. So cheaper energy could potentially yield better results in an event of market stagnation.
With fewer miners, Bitcoin is stranded to have a lesser transaction volume, which acts as a bullish indicator. However, it is not all grim in the land of the crypto leader, as it seems the pressure consolidated Bitcoin’s price to around $30,000, with trading happening on a tight margin. Consolidation may be just the event Bitcoin needs to detach itself from the correlation with the stock market and increase its market capitalization.Bitcoin cryptocurrency mining mining Bitcoin mining cryptocurrency news crypto news Crypto Price Energy