ASIC Jungle explores the evolution of sustainability in Bitcoin mining and how off-grid and on-grid innovations are leading to cleaner mining
Environmental concerns regarding Bitcoin mining have been a focal point in mainstream media for several years now. Over the past three years, the network hash rate has over doubled from below 100 EH/s to in excess of 230 EH/s, representing an energy draw of roughly 11GW distributed globally.
Comparisons such as the amount of energy powering Bitcoin being sufficient to power a small country have been a recurrent topic in the media and have certainly played a role in large mining enterprises exploring and implementing renewable energy sources to fuel their hashrate empires. But implementing renewables has only been one side of the story.
The sustainability of Bitcoin mining has been evolving with sophisticated off-grid and on-grid mining solutions emerging to not only power Bitcoin in a cost-effective and sustainable manner but to provide a valuable integration to existing power systems and grid infrastructures. In this ASIC Jungle overview, we detail how several Bitcoin mining entities are pushing the transition to renewables and we also consider the sophisticated mining solutions which are surfacing.
Argo Blockchain and Hut8 Behind Renewables Transition
Not only are major players in the mining industry pushing toward renewables but an entity has also formed to keep the broader industry accountable. The Bitcoin Mining Council, an organization open to any Bitcoin miner, is working toward improving transparency around energy usage in the Bitcoin mining industry and encourages companies to make a conscious effort toward becoming carbon neutral. In the second quarter of this year, the mining council reported that close to 60% of all Bitcoin is mined using renewable energy, making it one of the most sustainable industries globally.
Long before the formation of the Bitcoin Mining Council, companies were already laying the groundwork to move toward renewable energy sources. Argo Blockchain, an LSE-listed mining company that operates facilities in both Canada and the United States reported a 59% decrease in emissions per dollar revenue and an 89% decrease in emissions per staff member from 2020 to 2021. NASDAQ-listed Hut 8 Mining has also been focusing on transitioning towards wind energy to power some of its facilities and aims to be carbon neutral by 2025.
Sustainable Bitcoin Mining Evolves with New Solutions
The push towards more sustainable mining extends beyond simply sourcing renewable power sources. Participants in the mining industry have been coming up with innovative off-grid and on-grid mining solutions that not only allow them to tap into some of the lowest energy prices globally but also to provide valuable services to grid operators and power plants.
One solution which has emerged is an off-grid behind-the-meter infrastructure where mining acts as a buyer of last resort to help grids manage fluctuations and give individual wind and solar farm owners a ‘sponge’ for their excess energy. Another solution that has emerged is an on-grid solution where miners participate in demand response programs and actively scale down their consumption in order to provide relief to the grid.
The necessity for flexible energy assets is becoming increasingly apparent. The International Energy Agency has stated that if we are to meet our global 2050 net zero goals, global grid systems will need to onboard 500 GW by 2030.
Texas’ grid system ERCOT has become the poster child for this ideology and exhibited a prime example of the benefits this summer when miners turned off to stabilize the state grid. Flexible energy assets will help to stabilize and decarbonize grid systems. The CEO of ERCOT has explicitly said that mining is here to stay and represents a key grid ancillary service.
Finally, the oil and gas sector is also uniquely positioned to drive the change towards more sustainable mining practices. For several years now, miners have been establishing off-grid operations to capture a gas byproduct of oil and gas drilling which would otherwise be flared into the environment. Collaborations between Bitcoin miners and oil and gas companies will not only immediately reduce the carbon footprint of major operations but will also provide a model for which other industries and sectors can reduce their environmental impact.
A New Breed of Bitcoin Miner Emerges
Only a few years ago, Bitcoin was still largely powered by carbon-intensive sources such as coal plants in the Northern Western province of Xinjiang in China. Fast forward to the current day and mining in China has not only been reigned in but a new breed of miner has emerged in the West.
This new breed of miner not only seeks out energy sources that are less carbon-intensive but also provides stability and value to electrical infrastructure in a manner that allows their operations to be cost-effective. This new breed of miner is also being propelled by innovative industries like the oil and gas sector which contrary to popular opinion, have a long history of innovation and environmental stewardship.
Sources in 2021 suggest that nearly 46% of miners were using sustainable power sources. With an increased prevalence of innovative miners and the support of the oil and gas industry, this figure looks likely to rise further over the coming years.