(Bloomberg) – Jack Dorsey, Kathy Wood and Elon Musk have been promoting the idea that bitcoin mining is actually good for the planet. That is not exactly true.
The idea is that cryptocurrency mining uses a lot of energy and can be activated at any time. This allows a developer to mine coins when there is a lot of wind or sun, but little need for electricity. Better use of wind and solar energy, where power generation is uninterrupted, increases efficiency, lowers prices and helps promote green change.
Regardless of the crypto, this theory is based on trends that have already been observed. The price of renewable energy is falling, and the growing portion of energy is supplied by electricity. There are several concessions, and the International Energy Agency expects wind and solar power demand to be 12% by 2030, up from 5% in 2019.
In a document to his ARK Investment Management LLC and Dorsey’s Square Inc., Wood argues that new research ideas dispel the myth that bitcoin can damage the mining environment. On Twitter, Dorsey said Bitcoin “promotes renewable energy”. Kasturi responded with one word: “True.”
But the fact remains that mining uses a lot of energy. Bitcoin mining uses 66 times more electricity than in 2015, according to a recent report by Citigroup Inc. The University of Cambridge Alternative Finance Center estimates that it uses more electricity per year than the Netherlands.
In their research, ARK and Square proposed that in order to streamline the operation of a bitcoin, a renewable energy project could be developed without a grid connection. This speeds up growth, but in the eyes of a bank will make the project risky because the grid connection will never work, which is entirely dependent on a growth mine.
But part of the rapid decline in renewable prices is also due to cheap financing. A bank may want to charge a higher interest rate on a plan that plans to sell energy to bitcoin mining than if the customer is Google.
For now, a lot of bitcoin electricity is produced from the most polluting source. Research by the Center for Alternative Finance shows that China has a dominance in bitcoin mining, which is currently booming in new coal plants. In the second quarter of 2020, the latest data showed that the world’s biggest pollution cut 65% of the coins.
By using coal to generate most of its energy, carbon emissions continue to rise. Pollution from currency mining in China is expected to peak in 2024, according to a study released this month by Nature Communications.
In addition, there may be better applications for renewable energy than for the production of bitcoins, such as decarbonizing existing energy demand that relies on burning fossil fuels. As Tesla and other electric vehicles replace the combustion cars, more electricity will be required. Other large polluting industries such as steelmaking, chemical production and aviation can also use cheap green energy to produce hydrogen.
Nota Original: What Kasturi and Dorsey Missing About Bitcoin and Green Energy
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