Arcane Research has published a report showing by A + B that bitcoin mining is an asset in the fight against global warming. It subsidizes renewable energy and directly reduces methane emissions.
Short-sighted criticisms of bitcoin
Bitcoin mining faces two recurring criticisms. The first is that it would be useless…
Its detractors pretend to ignore that this technological breakthrough offers a store of value to all of humanity. A privilege usually reserved for those whose fortune allows them to buy assets immune to inflation (prestige real estate, works of art, shares of multinationals, etc.).
Others refuse to accept that bitcoin miners are beneficial to energy companies. “The best energy is the one we don’t consume”say some, insisting that bitcoin mining ultimately forces energy companies to produce more energy.
In this report, Arcane destroys all these myths. The authors readily concede that most bitcoin mining does not yet work the way described in the report. But it is obvious that “BTC miners will increasingly move in this direction out of necessity. »
It is also true that the explosion in the price of bitcoin has made mining super-profitable in 2020 and 2021. Many machines have been bought and plugged in anywhere, regardless of the cost of electricity.
But this is an epiphenomenon: “Ignoring the cost of electricity is not a sustainable mode of operation for miners. » Increased competition over time will squeeze margins and force miners to find energy no one wants. Proof of this is that many miners have recently been forced to sell their BTC to weather the storm (falling BTC price and rising carbon energy price).
For a miner, the easiest way to reduce costs (80% electricity) is to cooperate with the energy industry and/or find energy where it is literally wasted. Typically, on hydraulic dams whose electricity production is not yet fully absorbed due to the demand which is not yet there. Or near wind farms.
Arcane highlighted several areas where bitcoin miners can strengthen energy systems and contribute to the fight against global warming.
Strengthening power grids through bitcoin mining
Supply and demand in an electricity network must always be balanced or a blackout will occur. Historically, supply, fueled by gas and coal, made it possible to react very finely to variations in demand. This avoids waste. Indeed, a gas plant can respond very quickly to an unanticipated peak in demand.
But the situation has changed. One of today’s greatest energy challenges is “to manage the loss of reactivity linked to the growing share of wind power, which is an intermittent and uncontrollable source of energy. »
However, in the IEA’s sustainable development scenario, the percentage of wind and solar energy in global electricity production should increase from 11% in 2020 to 42% in 2040! Good or bad idea ? There is no question, the fact is that it is a godsend for bitcoin mining:
“The growth of wind and solar increases the need for flexible electricity demand to adapt to the instability of supply. This flexible demand for electricity is called “demand response”. [réponse à la demande]. Bitcoin mining is the cheapest industry to reduce electricity demand when needed (low cost to shut down operations). The miners also buy electricity 24 hours a day. They absorb the renewable energy that is produced in the absence of demand, which improves the margins of the energy companies. »
In Texas’ ERCOT system, miners provide demand response that bolsters a power grid powered mostly by wind, solar and nuclear. Indeed, nuclear power plants never stop working and wind power often provides electricity when it is not needed.
Here is, to understand it, the pace of electricity consumption over the course of a week:
Admittedly, surplus renewable energy could be stored to be reused during consumption peaks. But while waiting for solutions to be deployed (battery, hydrogen, hydraulics, etc.), the miners are there to buy the lost electricity. It is a subsidy for energy companies whose operating costs are exacerbated by peaks in demand.
Developing renewable energies through bitcoin mining
As we said, the growing share of wind and solar will lead to more energy waste due to the unpredictable nature of renewable energy generation. Hence Arcane’s relentless analysis:
“The location agnosticism and interruptibility of bitcoin mining makes it the perfect buyer of renewable energy. Bitcoin miners can set up in areas with excess wind/solar power and set up a machine park perfectly suited to the excesses. Having bitcoin miners right next to wind/solar power plants avoids energy waste and acts as a renewable energy subsidy. »
Bitcoin mining must be an integral part of the energy transition. The development of renewable energies can only accelerate if the excess energy is purchased.
Mitigating Methane Flaring Through Bitcoin Mining
There is a relatively unknown feature of the oil industry: flaring (which consists of burning gas as soon as it comes out of the ground).
This apparent aberration stems from the fact that natural gas is a by-product of oil extraction and sometimes it is not economically viable to bring it to civilization.
Unfortunately, the flaring process releases large amounts of methane (a greenhouse gas 80 times more potent than CO2). The reason being that the combustion of methane (CH4) into CO2 is not complete when the wind blows too much on the flares.
A solution to avoid these methane leaks into the atmosphere would be to burn it in an electric generator where the combustion reaction is complete:
“Bitcoin mining has emerged as the best technology to reduce natural gas flaring. The geographic agnosticism, modularity and portability of mining machines allow them to be installed directly on oil wells in order to consume this natural gas and neutralize methane leaks. »
Arcane notes a massive growth in the number of BTC miners installed on oil fields in the United States as well as Canada. Projects are also underway in other regions such as Russia and the Middle East.
Here is to end the shock figure of this 60-page report that we invite you to tweet to the deputy @AuroreLalucq…
“Bitcoin is by far the most cost-effective way to reduce greenhouse gas emissions. For an investment of $1,000 [sur une torchère], bitcoin mining reduces emissions by 6.32 tonnes of CO2 equivalent per year, compared to 1.3 tonnes for wind power and 0.98 tonnes for solar power. »
It is time for some to put water in their wine and concede that bitcoin is part of the solution to tackle global warming.
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