After being hailed as a champion of sorts by many in the global digital asset market, Tesla CEO Elon Musk dropped a bomb on the crypto community earlier in May, reversing the company’s decision to start accepting Bitcoin (BTC) as a means of payment for various auto sales. The reason given was that the Bitcoin mining processes were too resource intensive and unsustainable long-term.
As expected, almost overnight Musk became a heel, especially among Bitcoin maximalists who started calling him a bradeur and a market manipulator. Regardless of the name calling, the episode seemed shine the spotlight on the energy consumption aspect of the crypto mining industry. This is best evidenced by the fact that recently a growing number of crypto companies have publicly announced their intention to use greener energy alternatives.
Earlier this month, North American bitcoin mining company Bitfarms revealed that it had been to success in its efforts to power nearly 1.5% of the Bitcoin network using 99% clean energy. Additionally, even the concept of carbon-neutral exchange-traded funds (ETFs) is rapidly gaining traction globally, with many large investment management firms, including Toronto-based Ninepoint Partners LP, already taking steps to guarantee exactly that.
Finally, BitMEX, a crypto derivatives trading platform, also recently announced its decision to become carbon neutral, while Marathon Digital Holdings, a US-based Bitcoin mining company, hopes achieve its objective of 70% carbon neutrality in the near future.
Is green the only way out?
To get a better idea of whether the mining industry is really moving in a greener direction, Cointelegraph reached out to Sam V. Tabar, chief strategy officer for the Nasdaq-listed Bitcoin miner Bit Digital and former head of capital strategy for Bank of America Merrill Lynch. In his view, the “going green” is already happening rapidly in the global mining landscape, adding:
“Many miners have actively sought to adopt sustainable energy practices, especially publicly traded miners who wish to maximize their returns to shareholders and stakeholders. We believe this is an integral approach to improving our sustainable practices and mitigating our environmental impact.
When asked about his own company’s sustainability efforts, Tabar pointed out that despite powering nearly 2% of the global Bitcoin network, a large majority of Bit Digital’s energy comes from carbon-neutral sources such as hydropower, solar power and other wind technologies.
In addition, he also pointed out that as the industry moves towards an increasingly digital future, more and more companies will use the services of well-known independent consultants in environmental, social and environmental matters. and governance (ESG) to self-monitor, set goals, ensure transparency and help improve their percentage of green electricity and other sustainability initiatives.
He added: “We are currently working with independent ESG consultant APEX. By measuring our sustainability and mining footprint, we are able to develop continuous improvement goals while continuously switching to 100% clean energy.
Could renewable energies really be cheaper?
Providing his take on the renewable vs. fossil fuel debate, Matt Hawkins, CEO of Cudo, a multi-algorithm processor and GPU miner, told Cointelegraph that behind the scenes several major players operating in this space have already started to switch to the use of renewable energies. , something which he believes is a positive step forward for the crypto industry as a whole. He further added:
“The reality is, in many cases, that renewables are cheaper and therefore more attractive to mining operations, provided that this energy source is stable and unaffected by seasonal fluctuations, such as the dry season in China. , where mining operations previously shifted operations to fossil fuel-powered facilities during the dry season.
Staying on the subject of China, Hawkins felt that the ongoing migration of hashing power out of the country should be seen as a big benefit, especially when it comes to decentralizing the Bitcoin network. Tabar further believes that the ban on cryptocurrency-related activities has been a blessing in disguise for American miners who have looked for innovative ways to find clean energy in the United States.
Is nuclear energy an option to consider?
As much talk of renewable energy continues to revolve around solar and wind power primarily, North American mining and hosting company Compass Mining has announced that it has signed a 20-year contract with nuclear fission start-up Oklo, supplying the mining farm with 150 megawatts of power once its mini-reactors are deployed in the next two to three years.
In addition, according to data released by the United States Energy Information Administration, nuclear reactors do not contribute to any type of air pollution while in operation. In this regard, Compass CEO Whit Gibbs believes that once his business switches to nuclear power, the cost of mining to his business will drop “dramatically.” Not only that, but Compass is also discuss with the crypto-friendly city of Miami to obtain electricity from the Florida-based Turkey Point nuclear power plant.
Regarding nuclear power explored by more mining farms in the future, Hawkins reiterated his belief that “it all comes down to profitability,” adding that when the market is bullish and bullish, Bitcoin mining is cost effective in most areas, regardless of the electricity costs incurred. He added:
“Mining is a very intensive process and consumes a huge amount of energy. So the more clean, green energy sources can be consumed by mining farms, the better for the industry and our planet. The caveat here is to make sure you don’t just pull renewable energy out of cities to power Bitcoin operations. “
Miners of the future
Earlier this month, Bitcoin experienced its biggest drop in difficulties in its ten-year existence after China moved to ban its mining industry altogether. Following this decision, the difficulty ratio of BTC has considerably tumbled at 45%, which allows many mining operations to produce larger amounts of BTC at a lower unit cost.
Since the ban, the move towards long-term sustainability has been extremely rapid, Musk recently hinted that the crypto industry may be on a path to a greener future although it hasn’t. overturned Tesla’s decision to start accepting Bitcoin payments. Not only that, even recent data from the Cambridge Center for Alternative Finance suggests that there has been a decrease in the amount of energy used to mine BTC.
Therefore, time will tell how the future of the Bitcoin mining industry plays out from now on, especially as more and more miners begin to migrate to various crypto-friendly countries – such as those located in the Nordic countries or in Central Asia – where there is a relative abundance of renewable energies.