Is bitcoin bad for the environment, or is it not?

Remo Zuiderwijk Content specialist

3 January 2023

Duurzame bitcoin

Mining bitcoin requires computing power, so bitcoin consumes energy. Therefore, is bitcoin harmful to the environment? Some argue it is. Is that justified? Even though bitcoin consumes a lot of energy, it is also an exceptional electricity consumer. As a result, previously impossible business models suddenly became possible. In Africa, for example, bitcoin mining is helping to electrify rural areas.

How does that work? We will tell you.

Bitcoin miners as reliable buyers

Bitcoin miners are flexible and mobile. The mining equipment can be turned on and off at any moment and set up anywhere, just so long as power is available.

For rural Africa, this accommodation of bitcoin miners is a godsend. Locals consume too little electricity to justify building stable power facilities. By adding bitcoin miners to the equation, the unfeasible suddenly appears attainable. Small, sustainable hydropower plants now supply remote villages with power and can count on the miners as reliable consumers.

Sustainable economy thanks to bitcoin mining

Further afield in Africa, bitcoin miners are contributing to a sustainable economy. In the Virunga National Park in Congo, there are hydroelectric plants with bitcoin miners as power consumers. The proceeds will be used to build roads, install water pumping stations and pay salaries for park rangers.

And that is necessary, as the national park had less and less money available due to the loss of tourism due to Ebola and corona outbreaks. "Without bitcoin mining, we would have gone bankrupt," says park director Emmanuel de Merode.

What is bitcoin's contribution to the park's sustainable economy? Its role as a flexible and reliable power consumer. Previously, it was not profitable enough to install renewable power plants. With the addition of bitcoin miners to this business model, that is now different.

Criticism of sustainable bitcoin mining

Sustainable bitcoin mining sounds promising but has its critics as well. The energy generated could be put to better use.

There are some things to be said about that. Because of the disparity in power supply and demand, setting up renewable energy sources is often challenging. As a flexible consumer, bitcoin mining offers the solution, as we see happening in rural Africa.

Should the energy generated be diverted anyway? Then the miners move again just as easily and look for another energy source. In any case, what they leave behind is a successfully built local economy.

Renewable energy popular with bitcoin miners

That is according to the latest report from the Bitcoin Mining Council. It states that more than half of all bitcoin miners already derive their power from renewable energy sources. As a miner, you want to keep the cost of running the equipment as cheap as possible, and so do the energy costs.

Many miners, therefore, choose renewable energy. And energy producers are happy about that, too. Miners play a vital role when it comes to controlling energy demand. They take excess power but can also turn off equipment at peak demand. We saw that happen this winter in Texas during the extreme cold.

Bitcoin miners prefer to have power all the time, but turning off the equipment has no significant consequences. While at other large power consumers such as data centers, factories, or hospitals, it does.

If you can better manage the demand for power with flexible consumers, the consumption of fossil fuels during peak times becomes unnecessary. Thus, bitcoin miners can contribute to the complete sustainability of the energy grid.

Bitcoin miners can help with sustainability

Indeed, we all consume quite a bit of energy. As much as we would like to, using less power is not the solution. Making our energy sources more sustainable is. And bitcoin miners, as the missing piece of the puzzle, can play a crucial role in new, sustainable business models.

So, is bitcoin bad for the environment, or is it not?

Remo Zuiderwijk Content specialist

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