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It's shaken up the financial industry and inspired legions of devotees. But Bitcoin mining is extremely energy intensive, requiring powerful computers to run for days on end, solving complex mathematical problems in order to keep the Bitcoin system running. Researchers at the University of Cambridge have found the electricity consumption of the Bitcoin network is roughly equivalent to that of countries like Sweden, Norway, and Pakistan.
And while Bitcoin bashers have labelled the digital currency a climate villain, one novel strategy being looked at is using crypto mining as a form of energy storage by converting stranded renewable energy into Bitcoin. Wind and solar energy can be unpredictable, with supply often exceeding immediate demand. As a result, grid-connected renewable energy sources often have to pause operations if they're producing too much energy, energy which can't be stored.
Others are not as convinced. Regulators in Sweden said even if Bitcoin could run on renewable energy, the country needs those energy sources for essential services. But Bitcoiners contend wind and solar farms are often located in remote locations, and electricity does not transmit efficiently over long distances. Bitcoin mines, however, can be located close to renewable projects.
Bitcoin mines could also tap into the wind, solar, and battery projects that are ready to produce energy but are still waiting to be connected to power grids. That's 1,300 gigawatts in the United States alone. Bitcoin is already being used to offset excess energy produced by several global fossil-fuel energy producers. US-based ConocoPhillips is selling stranded gas into Bitcoin miners in the Bakken, an oil-abundant region in the United States, while Exxon has agreed to redirect gas that would otherwise be wasted to mobile Bitcoin mines. TEPCO, Japan's biggest electric power company, is the first major player to send excess renewable energy into Bitcoin mining.
Crypto miners also stand to benefit from arrangements like these, as pressure to lower their energy consumption grows. In 2022, New York State imposed a moratorium on fossil fuel-powered Bitcoin mines, and an ongoing regulatory crackdown on digital assets poses fresh challenges to the industry. Last year, President Biden also signed an executive order on digital assets and said the United States must take strong steps to reduce the risks they create when it comes to climate change and pollution. Another reason why major crypto miners are keen to find greener energy sources for their operations and lower their carbon footprint.
