With the way Bitcoin (BTC) mining is painted by most politicians and other critics, it’s really hard to equate it with environmental sustainability. While it’s true that it has heavily relied on archaic energy sources in the past few years, the technological leaps of the present and the halving could change the way the operation is implemented and how we see it. This article, thus, tries to explore how the halving will mold Bitcoin mining into an environmentally sustainable effort going forward.
Bitcoin: A Digital Dilemma
BTC’s proof-of-work (PoW) framework, which uses a competitive validation method to verify transactions and generate new blocks to the blockchain, is undeniably an energy-intensive endeavor. Gone were the days when homebrewed rigs were enough for Bitcoin mining.
Sure, they can still be used to this day. However, as rewards are halved every four years, this could prove to be an impractical venture for small players because they will now have to contend with large-scale miners packing expensive Application Specific Integrated Circuit (ASIC) hardware specially tailored for such purpose. Therefore, they’re better off using their home-made devices for altcoins with higher yields.
The real winners in every Bitcoin halving, aside from investors, are large-scale cryptocurrency mining operators. But then again, these big-time players will have to continuously explore ways to be more resourceful to ensure profits as well as to comply with stringent environmental regulations. This is where the environmental benefits come in.
How the Bitcoin Halving Will Usher in an Environmentally Sustainable Mining
Based on the latest data from the University of Cambridge Judge Business School in 2024, Bitcoin mining uses up to 176.06 TWh annually. At face value, these are overwhelming numbers, but they still dwarf in comparison to the global industrial production figures of paper and pulp at 586 TWh, chemicals at 1,349 TWh, iron and steel at 1233 TWh, cement at 384 TWh, data centers at 200 TWh, and data networks at 250 TWh. It is also but a fraction of the 2,199 TWh required in air conditioning homes and businesses worldwide.
One can argue that these points of comparison are essential in our daily lives, but so is Bitcoin in this period wherein people and institutions are searching for better ways to hedge their wealth and are looking for a way to mitigate the cost and time it takes to transmit money across borders.
To arm themselves for the halving, Bitcoin miners are now upgrading their facilities to increase their hashrates. Of course, these would mean higher electricity requirements amid the reduction of rewards for mining a block from 6.25 BTC to 3.125 BTC.
Notwithstanding federal laws, these challenges would force them to constantly find ways to innovate and save on their expenses. In this case, miners with access to cheap and renewable energy sources will have the highest probability of prospering in the highly competitive space. As a result, miners are now reaping the advances in harnessing solar energy to have an infinite amount of power source. Along the way, solar energy producers are incentivized by the rising demand to research and develop more ways to make solar farming and energy distribution more viable.
Others like Bitdeer in its Bhutan arm are sourcing hydroelectric power for their Bitcoin mining activities. This trend will likely carry on as superpowers like the US and China have exhibited a shift to renewable energy going forward which makes up 22.5% and 30.2% of their electricity generation respectively according to Medium.
El Salvador has even suggested harvesting geothermal energy coming from a volcano. While a lot of pundits are calling the idea outrageous, be reminded that California has already been getting a part of its energy supply from the heat produced by geysers near a volcano based on the United States Geological Survey (USGS). So, consider the idea of the Central American nation as an upgrade of that concept.
What’s more, Bitcoin miners are now studying a novel solution for getting power supply from stranded energy like those coming from gas flaring. Gas flaring is the practice of burning natural gas to extract oil.
These are just a few examples of what we have now. For sure, many other methods will be introduced as the Bitcoin mining industry gives energy producers more reasons to revolutionize.
Overall, the future of Bitcoin mining is expected to provide an avenue to convert untapped, excess, or wasted energy into a digital asset that has the potential to uplift people, communities, and nations through its equitable and decentralized design.