Much has been made about Bitcoin mining’s negative effect on the environment.
A deeper examination of the facts, however, exposes a more nuanced conversation with both positives and negatives. In part two of this article pair, we will explore five beneficial features of Bitcoin mining, including its increasing efficiency, usage of stranded gas and social governance benefits.
Curtailment of energy usage
One of the greatest benefits of Bitcoin mining is its ability to utilize the excess energy found on the grid. Bitcoin miners actually provide the perfect solution, to energy companies, by utilizing the excess energy usage and managing the load on the network.
Understandably, domestic use of the grid is significantly higher in the morning, when the ‘toasters’ get switched on for breakfast, and in the early evening. High usage will also occur when the weather gets extremely cold in winter or conversely hot in the summer, as air conditioning systems get switched on.
Jason Les, CEO of Riot Blockchain (RIOT), told Mining Memo in a recent interview that large miners often work closely with the energy providers, and are able to curtail power as required to meet local domestic demand within a few seconds of notice. For example, Canada suffered one of the coldest winters since 1994 this year. Many Canadian miners curtailed energy to ensure the domestic demand was met.
Is there any other industry, when the grid needs the energy, in a manufacturing process, that is able to switch off 400-500 MW of load, in a matter of minutes, and then 2 hours later are able to switch back on, with no impact? The food processing, oil refining and car industries, to name a few, would not be able to switch off and on again in such a short period.
It’s estimated that 80% of renewable energy is only used when needed at peak load (from 4-9 p.m.), Marathon Digital CEO Fred Thiel recently said at London’s AIM Summit. Therefore, most renewable energy is actually wasted. This wastage totals 8-10 times the amount of energy used by Bitcoin miners every day, he said.
Bitcoin miners have provided a real solution to the large renewable energy providers in managing this excess. It’s a ‘win-win’, because as well as the energy companies getting paid for their surplus energy, the miners are now able to negotiate and ‘lock in’ great rates. Furthermore, some miners are also able to sell their electricity back during high demand as required by the grid.
What is not so obvious when critics consider the energy used in mining, is the environmental benefits it can provide as a use to combat leaking methane, waste coal deposits and flare or vented gas in the oil and gas industry.
Stronghold Mining (SDIG) employs 21st-century crypto mining techniques to remediate the impacts of 19th and 20th century coal mining in some of the most environmentally neglected regions of the United States. Their mining operations are powered through the reclamation of coal refuse sites across Pennsylvania, removing coal refuse from piles and burning it in an emissions-controlled manner at their generation facilities.
Due to coal refuse being classified by Pennsylvania as a Tier II alternative energy resource, they receive both Coal Refuse Energy and Reclamation Tax Credits and Pennsylvania Tier II Alternative Credits to incentivize reclamation. This enables them to not only achieve great net energy prices, but also to restore the land and local waterways once void of life and vegetation and make them safer for families and residents, before donating the land back to local communities, as shown in the images below.
Secondary benefits of mining
Two other benefits of Bitcoin mining are worth mentioning: the use of waste heat for other creative ends and the social governance benefits of Bitcoin mining.
The process of Bitcoin mining provides a number of secondary benefits or uses, due to the heat created during the process. Some of the miners are currently providing heating, locally, to both commercial and residential buildings. A Canadian strawberry farm in Neuville, Quebec has been using the excess heat produced by crypto miners to fight off frost and protect its strawberries from dying since 2018.
In 2020, the Sweden-based large-scale crypto mining company Genesis Mining began a project to recycle the heat generated by crypto mining. For the project, Genesis Mining connected one of its crypto mining storage containers to a greenhouse through a custom-built air duct system. The system carries the heat generated from crypto mining to greenhouses that produce fruit and vegetables.
Many of the Bitcoin miners are able to offer the (re)introduction of local employment and economic activity to regional and remote areas and communities that are often experiencing financial hardship due to declining manufacturing or industrial operations.
These economic benefits are already being felt. For example, Argo Blockchain has recently created dozens of jobs in opening its flagship Helios facility, in Dickens County, Texas, with more than half the posts being filled by local residents. As has Riot Blockchain at its site in Rockdale, Texas. Argo has also made a commitment to refurbish the local public swimming pool, which has been unavailable for many years.
Bitcoin is getting more efficient
Bitcoin’s ability to change to environmental concerns should also bear mention. Namely, that as more capital flows in Bitcoin mining, the industry becomes more efficient and therefore more environmentally friendly.
Chip technology is the best example. As chip technology develops in this space, with more advanced chips constantly being produced, the efficiency of Bitcoin mining increases. In 2017, Bitmain brought the Antminer S9 to the market, which had a maximum hash rate of 13.5 TH/s using 1300 watts of power. The latest Bitmain S19 XP Hydro is expected to be the most powerful mining rig, producing up to 255 TH/s using 5304 watts of power at 20.8 joules per terahash (J/TH).
The table below highlights the development in efficiency over time in Bitcoin mining rigs from the Antminer S9 to the S19 XP HYD, which is expected to be released in the next few months. It’s clear that there has been significant progress in developing more efficient chips, even in this short time frame, and this is expected to continue, as Bitcoin mining still has a further 118 years before the final Bitcoin is mined.
Year-on-year it is estimated that the global Bitcoin Network’s technological efficiency grew by 63%, from 12.6 EH per gigawatt (GW) in Q1 2021 to 20.5 EH per GW in Q1 2022, according to the Bitcoin Mining Council (BMC). This efficiency gain reaffirms the fact that as the Bitcoin network continues to grow, it will become even more efficient over time.