How Renewable Energy Can Be Used in Crypto Mining
- Crypto mining renewable energy trends 2022
- Solar Energy in Crypto Mining
- Hydro Electric Power in Crypto Mining
- Wind Power in Crypto Mining
- Wave Power in Crypto Mining
- Geothermal Power Geothermal Power
The world is changing gradually, making people’s lives easier than ever due to the advancements in technology and innovation. Within the paradigm of this advancement, we see the emergence of crypto currency and data mining that has taken the world by surprise. Crypto mining is a new encrypted method of generating crypto coins. This new technology, crypto mining, is highly energy intensive and thus could have grave effects on the environment. The energy utilized in mining a single crypto currency is more than what most countries utilize annually. Thus, this indicates the sensitivity and extent of crypto mining’s dependence on energy. To minimize the negative effects on the environment, now-a-days we observe a shift from traditional means of energy generation to the usage of renewable energy resources. in the energy industry. With the help of these sustainable and green energy resources, nations worldwide can help preserve the environment for the generations to come. In this article we will observe the recent trends and developments that the renewable energy resources have made in terms of crypto mining and further understand how these resources can help make the process of crypto mining environment friendly and sustainable in the long run.
What is Crypto Mining?
The word that has been and will be used countless number of times in this paper is “Crypto Meaning”, but the question here is, what really is crypto mining? Crypto Mining is basically a system that makes use of mathematical tools and equations to generate virtual currency/coins. These coins serve as investments for a buyer and result in generating profit. It is a very time-consuming process. Experts believe that a single bitcoin requires 5 years to be mined by a solar miner. In order to understand the process of crypto mining, we need to understand the concept of block chains and encryptions. Crypto mining is such a process that connects the buyer and seller directly with each other without the involvement of a third-party vendor such as a bank. Primarily, a bitcoin is a virtual asset and in order to keep it protected, investors make use of the block chain technology. BlockChain Technology in simple terms records the virtual asset, also known as the bitcoin, in a distributed and decentralized ledger, that is protected by an encrypted code that is only accessible by the parties that are involved in the investment. This technology allows for our information to be completely safe on the internet. The information that is once entered into a block chain cannot be hacked into, it cannot be edited, and neither can it be transferred away. Block chain technology, or more particularly crypto mining is the future of innovation and information in the world. It gives a new meaning to having an existence over the internet. In our current conditions, the element of trust is pivotal in keeping our information safe. We have to trust establishments, institutions such as banks and even the sellers that are present in the open market. There is no guarantee that our information, our money. our personal data, is truly safe in their hands. With the help of crypto mining however, this entire process has been made secure and safe. This kind of optimal system comes with its own cost of high energy consumption. To counter that, we need to focus on generating and spreading the idea of renewable crypto mining.
Relation Between Crypto Mining and the Use of Energy: How Crypto Mining is an Energy Intensive Process?
As stated above as well that crypto mining is an energy intensive system and the major cost that it has is the fact that it consumes insane level of energy just to mine a single coin. The question that arises here is why is crypto mining so energy intensive? Why does it require so much energy just to generate a single element of currency?
The answer to that is simple. Since, data mining for crypto currency requires intense mathematical codes, that too of the encrypted kind, thus, in order to make these codes and encryptions work, we require powerful computers that are able to generate billions of hashes per second. In order to generate such high level of h/s, a large amount of electricity is required, thus the vicious cycle of usage of high levels of energy begins where in order to generate a block chain, intense level of energy is utilized. This energy utilization, therefore, then, has negative spillover effects on the environment. In the current market, the value of bitcoin is on an all-time rise, thus it is attracting more and more investors and individuals to start becoming miners of cryptocurrency. More miners in the market means more usage of highly powered computers which means an even higher level of energy consumption is taking place. According to New York Times, Bitcoin mining consumes approximately 0.5% electricity out of the total global electricity utilized. If considered in rough terms, this 0.5% consumption of electricity is 7 times higher than the total usage of Google annually. Along these lines. Interestingly, according to the University of Cambridge, there is a Bitcoin Electricity Index which demonstrates that the global bitcoin network currently consumes electricity equivalent to the annual output of 23 coal-fired power plants. They further specified that this annual consumption amounts to around 80 terawatt-hours of electricity.
The Current Domination Of Non-Renewable Energy Resources In Crypto Mining
Scholars are widely divided on the usage of non-renewable and renewable energy resource usage in crypto mining. According to studies at Harvard, majority of the energy consumption, particularly around 75%, is renewable. They think that the energy consumption by crypto mining is largely carbon neutral. This is due to the fact that major mining hubs have abundance of hydropower, such as in China. At the same time, CCAF estimates that the energy consumption that is carbon neutral and environment friendly by crypto mining is hardly around 39%.
As crypto mining is a highly efficient mechanism, thus the coins can be mined anywhere. For other energy generating systems like hydro and wind, there is a necessity for the end user to be nearby in order to generate the byproduct but in the case of crypto mining, we don’t have to worry about that. Since it can be mined anywhere by anyone, thus reservations regarding usage of energy are justified. The figure below indicates the rise in the emergence of block chains all over the world up until the year 2021. This steep rise indicates that countries that have access to large amount of fossil fuels are the ones that are leading the crypto mining industry. Rightfully so, China, that has around 65% of its energy generated through coal has been in the lead of crypto mining up until early 2020. Shortly after which, USA came on top with its fast-paced mining.
Figure 1: Blockchain size in Gigabytes ( 2009 - 2021) Source: Statistica
If we consider the country wise trend, we refer to the following figure.:
The monthly average hash rate on a global scale has had major shifts since October 2019 till 2021. We see USA emerging higher than China in crypto mining. The reason why China’s share of total Bitcoin mining power has declined from 75.5% in September 2019 to 46% in April 2021 is due to the restrictions imposed by the Chinese government on crypto mining. This served advantageous for USA as it gave it a window to rise higher. The share of total bitcoin hash rate of USA has increased from 4.1% to 16.8% in just a year.
Figure 2 Share of Global Hash rate (2019-21). Source: University of Cambridge CCAF
Specifics of The Current Energy Usage in Crypto Mining
In order to understand the current energy usage in crypto mining, we will first try to understand the role of Coal/oil and Natural gases in the energy production that takes place worldwide.
Coal/ Oil and Natural Gas: Non-Renewable Energy
As mentioned earlier as well that countries like China that generate their energy from coal are the ones leading the market for crypto mining. The process of crypto mining through coal involves burning of waste of coal to generate energy. It is a very time consuming and highly energy intensive work thus is not considered sustainable. Similarly, other fossil fuels as well like Natural gas and oil although can be used to generate energy and help in crypto mining, but the cost of their usage is so high that it is not durable for miners to make use of these non-renewable energy resources. Considering the usage of coal waste to mine crypto currency, we need to see what counts as coal waste. Coal waste is basically the coal refuse that is the material left over after coal has been mined. This includes coal tailings, waste, spoil tips and piles.
China is one of the leading countries that generates energy through coal resources. A “sustainable” bitcoin firm has raised money to mine crypto by burning waste coal in London as well. Mining cryptocurrency is notoriously power-thirsty. Every year, the bitcoin network generates emissions equivalent to the London metropolitan area, and at least 38% of bitcoin miners around the world use coal as their source of power.
If a country like China produces mass level waste through the use of fossil fuels, then the effects on the environment are drastically awful. The climate change would take a huge hit as coal burning has direct tangible consequences. Similarly, Kazakhstan has also recently seen a rise in the demand of crypto currency. Due to this increased demand, their coal-power grids are facing a lot of strain and pressure.
Since crypto mining requires large computers thus, they would require mass level energy through fossil fuels. Even though, crypto currency can be mined anywhere, fossil fuels require their end user to be nearby, thus presenting limitations in the face of the miners to meet the demands of the market.
Although fossil fuel-based energy generation is cheap and widely acceptable, but, due to its incapability of meeting the demands of the crypto market and positing huge costs in the generation of crypto currencies, non-renewable energy resources are not exactly an optimal choice for crypto mining.
In the next section, we show how the demand for bitcoins and its usage is increasing over time. In order to cater for these marginalizing demands, the source of electricity needs to be sustainable thus the
Firstly, we see how the price for bitcoin has increased over the past couple of years in the figure below:
Figure 1 Price of Bitcoin in US Dollars
The reason why we see such a huge rise in prices of cryptocurrency is due to the increase in the demand of bitcoins worldwide. Following figure shows the number of users in millions since 2016 till 2019. The trend indicates a linear increase in the net usage.
Figure 2 Number of bitcoin users in millions (2016-2019)
Problems with the Use of Non-Renewable Energy Resources in Crypto Mining
There are multiple problems with the usage of non-renewable energy resources in crypto mining. Some of which are enlisted below.
The use of fossil fuels promotes environmental pollution. As stated earlier as well, when coal mining is involved, in order to use coal in the crypto mining process, the waste of coal mining is used. Although from afar, it seems sustainable that wastage from coal mining is being utilized in another mining process. Unfortunately, that is not the case. Further burning of coal wastage generates even more waste and releases harmful gases in the environment. All of this cause immense level of environmental pollution. Coal and other fossil fuels are currently a major source of electricity worldwide, both for cryptocurrency mining operations and other industries. However, burning coal is a significant contributor to climate change as a result of the carbon dioxide that the process produces. According to a report by CNBC, bitcoin mining accounts for about 35.95 million tons of carbon dioxide emissions each year which is almost about the same amount as New Zealand’s carbon dioxide emissions.
Not to mention the production of e-pollution due to the use of high voltage computers to generate the encrypted codes for crypto mining. According to Digiconomist, the bitcoin network generates between eight and 12 thousand tons of electronic waste every year.
In addition to energy consumption, cryptocurrency mining also generates a significant amount of electronic waste as hardware becomes obsolete after its excessive usage.
Non-renewable Resources are Depleting
While fossil fuels were formed millions of years ago, we've only been using them for fuel for just over 200 years which is considered a fairly short period of time. If we keep burning fossil fuels at our current rate, it is generally estimated that all our fossil fuels will be depleted by 2060.
Although not all fossil fuels will run out at the same time. Different fossil fuels have different depletion dates. In 2018, the demand for oil rose by 1.3% - which is almost double the average annual rate seen over the 10 years prior. With demand predominately driven by the transport sector, our oil reserves are running out faster than our other fossil fuels. In fact, if we don’t find any additional oil reserves, it’s estimated that our known oil deposits will be gone by 2052.
On the other hand, the Coal and natural gas resources are expected to last a little longer. If we continue to use these fossil fuels at the current rate without finding additional reserves, it is expected that coal and natural gas will last until 2060. However, the consumption of natural gas has grown considerably last year, so there might be a possibility for it to deplete sooner than predicted.
There is very high likelihood that the cryptocurrency market size will grow from USD 1.6 billion in 2021 to USD 2.2 billion by 2026, at a CAGR of 7.1%. The reason behind this massive growth is the ability for crypto mining to take place anywhere and anytime. The Transparency and the distributed ledger technology accompanied with the growth in venture capital investments. All of these factors will cause the crypto mining industry to grow significantly in the next coming decades.
What started as an underground experiment by a handful of programmers is now a trillion-dollar ecosystem. Bitcoin, valued at 1.2 trillion dollars, exceeds the market cap of Tesla and Facebook, and is significantly bigger than payment giants Mastercard, PayPal and Visa put together. In a recent rally, the combined cryptocurrencies universe reached a value of 2.2 trillion dollars, even outpacing the tech behemoth, Apple! There is now a multitude of cryptocurrencies, an entire constellation — a price-tracking website lists over 6,000 entries. While most of these, such as Litecoin and Dogecoin, are little more than Bitcoin copycats, there are also some truly dazzling innovative offerings. For instance, Ethereum goes beyond mere currency and provides a platform to create complex decentralized contracts and applications. Ripple is an efficient medium to send remittances and settle payments. Cardano tops the list of ‘green’ cryptocurrencies, with an energy footprint less than 0.001 percent of Bitcoin. Zcash and Monero incorporate privacy-enhancing technologies.
Such a massive market cannot be sustained with the limited production capabilities of non-renewable resources. This is why majority crypto mining industry has shifted to sustainable renewable energy sources such as the solar power.
How Renewables can Improve Crypto Mining
Given that nonrenewable energy resources are not the optimal choice in cyrpto mining thus making renewable energy resources the attractive choice. There is no doubt that the environmentally friendly nature and cost effectiveness of renewable energy resources would make them the optimal choice as the primary source of energy generation in crypto mining.
Solar Energy in Crypto Mining
How can solar energy be used in crypto mining?
Solar energy is the optimal choice for crypto mining. If we are able to establish a solar farm where multiple solar panels are attached next to each other, we can easily power the strong hefty computers required to run the encrypted codes for renewable crypto currency mining. According to DIY Solar Shack, approximately 6000 watts of solar panels are required to run a Bitcoin mining rig with multiple GPUs during the day, while also charging batteries in order to mine Bitcoin during the night. This is the equivalent of 20 x 300-watt solar panels.
Benefits of using solar energy in crypto mining.
Solar energy has multiple benefits when it comes to crypto mining. As crypto mining requires a power source that has ease of access, is durable and reliable with no area limitations, thus the optimal choice for its power source is solar energy. Solar power can be generated from anywhere. It has no land limitations and can even be installed on individual projects depending on the requirement of the miner. With the new peer-to-peer trading technology, the block chain technology of crypto mining would have a strong backing support of transparency and optimization
Disadvantages Of Using Solar Energy In Crypto Mining.
Although along with benefits there are multiple disadvantages of solar power as well. The solar panels cannot function in cold areas as there would be limitation of sun there. Thus, regions in Russia particularly would not be ideal for establishing crypto mines. In addition to this, even though the photovoltaic solar panels have become cost friendly, yet still making the shift from fossil fuels like coal towards an entirely new and different mechanism of solar panels would be highly risky and demanding. The technology with respect to solar power is still advancing and would require some time to establish itself so if there are any loopholes, they can be taken care of and thus fossil fuels can be efficiently replaced with solar power as the principle source of energy generation.
Hydro Electric Power in Crypto Mining
Just like solar power, we can also make use of hydroelectric power mechanisms where water is the primary body of energy generation.
How can hydroelectricity be used in crypto mining?
Hydroelectricity based powerplants have been used for decades to generate electricity. With the help of these power plants, energy can be generated to power the strong computers required for crypto mining. There are different plants in New York where hydroelectricity is used for crypto mining of bitcoin. Energy from a historically preserved hydroelectric power plant in Mechanicville, New York, will now be used to power Bitcoin. Although experts have advised that it is not durable for long run.
Benefits of using hydroelectricity in crypto mining.
Hydroelectricity is used by more than 160 countries worldwide to generate electricity. Most of these countries are on the developing side that is they include countries from Asia and Africa. Developed nations such as US, UK, Canada, and China also make use of this technology but due to their accessibility for other resources, they tend to rely more on them instead of hydroelectricity. The prime reason why so many countries rely on this technology is due to its low costs. It is very cost friendly to maintain a hydroelectric power plant and its investments are not that hefty either thus it is a very attractive investment option in the energy and crypto mining industries.
Disadvantages of using hydroelectricity in crypto mining.
While hydropower is renewable, there are limited places in the world that are suitable for plant construction. On top of this, some of these places are not close to major cities that could fully benefit from the energy. In addition to this, even though no power plant is easy to build, hydro plants do require you to build a dam to stop running water. As a result, they cost more than similarly sized fossil fuel plants. Additionally, even if the actual electricity generation in the plant does not produce emissions, there are emissions from the reservoirs that they create. Plants that are at the bottom of a reservoir begin to decompose. And when plants die, they release large quantities of carbon and methane. This makes hydroelectricity an environmental hazard and thus adds on to the damage that crypto mining causes making it a non-renewable mechanism of crypto mining.
Other Renewable Methods
Besides solar power there are numerous other methods that are both green, reliable and environment friendly. Some of these are enlisted below:
List of Other methods That can Be Used?
Geothermal Power in crypto mining
Geothermal power generation is a mechanism used to generate electricity in high temperatures. It is an extremely critical procedure but is highly optimal. Enlisted below are some of the advantages of using Geothermal Power as an energy source:
- Geothermal energy is more environmentally friendly than conventional fuel sources such as coal and other fossil fuels. In addition, the carbon footprint of a geothermal power plant is low. While there is some pollution associated with geothermal energy, this is relatively minimal when compared to fossil fuels.
- Geothermal energy is a source of renewable energy that will last until the Earth is destroyed by the sun in around 5 billion years. The hot reservoirs within the Earth are naturally replenished, making it both renewable and sustainable.
- Worldwide energy consumption is currently around 15 terawatts, which is far from the total potential energy available from geothermal sources. While we can’t currently use most reservoirs there is a hope that the number of exploitable geothermal resources will increase with ongoing research and development in the industry. It is currently estimated that geothermal power plants could provide between 0.0035 and 2 terawatts of power.
- Geothermal provides a reliable source of energy as compared to other renewable resources such as wind and solar power. This is because the resource is always available to be tapped into, unlike with wind or solar energy. Energy generated from this resource is easy to calculate since it does not fluctuate in the same way as other energy sources, such as solar and wind. This means we can predict the power output from a geothermal plant with a high degree of accuracy.
Along with the benefits, it also has numerous costs. Enlisted below are few of the disadvantages of using Geothermal power:
- The largest single disadvantage of geothermal energy is that it is location specific. Geothermal plants need to be built in places where the energy is accessible, which means that some areas are not able to exploit this resource. Of course, this is not a problem if you live in a place where geothermal energy is readily accessible, such as Iceland.
- Although geothermal energy does not typically release greenhouse gases, there are many of these gases stored under the Earth’s surface which are released into the atmosphere during digging. While these gases are also released into the atmosphere naturally, the rate increases near geothermal plants. However, these gas emissions are still far lower than those associated with fossil fuels.
- Geothermal energy also runs the risk of triggering earthquakes. This is due to alterations in the Earth’s structure as a result of digging. This problem is more prevalent with enhanced geothermal power plants, which force water into the Earth’s crust to open up fissures to greater exploitation of the resource. However, since most geothermal plants are away from population centers, the implications of these earthquakes are relatively minor.
- Geothermal energy is an expensive resource to tap into, with price tags ranging from around $2-$7 million for a plant with a 1-megawatt capacity. However, where the upfront costs are high, the outlay can be recouped as part of a long-term in
Wave Power in crypto mining
Wave power makes use of the power of water and wind to generate electricity. Following are its pros and cons to understand the limitation and potential of wave power as a source of energy generation:
- Inherently, wave energy does not emit greenhouse gasses when generated, like fossil fuels do. Turbines generate electricity through the power of waves, making it a completely pollution-free, renewable energy source. If we can get the technology right, tidal power can be a huge part of the green energy mix, complementing solar power, wind turbines, geothermal, and hydropower.
- Like all alternative energy sources, wave power is renewable. Waves are created by wind, and wind is caused by uneven heat on the planet's surface driven mostly by the sun warming different locations at different rates. Wind moves heat energy from one part of the planet to another, which causes waves to form. Because wind will always exist, waves will always be available at the surface of the water to generate electricity, making this a renewable source.
- The amount of kinetic energy that is exerted in a wave is huge - that energy then gets captured by wave energy converters to produce electricity. There is also a lot of potential because many countries have access to an ocean that can help power their electric grids.
- Waves are hardly interrupted and almost always in motion. This makes electricity generation from wave energy a more reliable energy source compared to wind power, since wind is not constantly blowing.
Meanwhile the disadvantages are as under:
- Because wave energy is still in its infancy, mostly in research, there is no measure of the environmental effects of large-scale power stations on the shore. Building plants or electrical wires directly on the beach might prove challenging because they would be unsightly and can cause damage to marine life and the surrounding ecosystems.
- Local fishing zones could be affected, or the plants could lead to more coastal corrosion. However, more research is needed to determine the true environmental impacts that wave energy plants could cause.
- Wave power is an emerging energy technology in the early stages of development, making speculating on costs difficult. Wave energy systems have the potential to be as cheap as $1.09 per kWh to build but will depend on location and maintenance costs. However, at the moment, the costs of wave power are generally very high because they are in the research phase of development and generally paid for by government grants or research grants. There are no energy companies utilizing wave energy at scale - something which would bring the cost down.
- Perhaps the biggest con at the moment is that no utility has the ability to install wave farms because they are not yet large enough to provide a significant amount of electricity.
Wind Power in crypto mining
Wind power is the most common alternative and has been in use for many years. In this system, windmills are used to generate power and electricity. Just like geothermal power and wave power, it also has its own set of pros and cons. The pros are as under:
- Since wind turbines themselves run strictly on the power of wind generated, there is no need for fuel. Once the turbine is complete and installed, it doesn’t need to be fueled or connected to power to continue working. This also reduces the overall cost to continue to run large-scale wind farms in comparison to other forms renewable energies, which require may require some energy investment.
- Since wind energy doesn’t rely on fossil fuels to power the turbines, wind energy does not contribute to climate change by emitting greenhouse gases during energy production. The only time that wind energy indirectly releases greenhouse gases is during the manufacturing and transport of the wind turbines, as well as during the installation process. U.S. wind power lights homes and businesses with an infinitely available energy.
- The latest advances in technology have transformed preliminary wind turbine designs into extremely efficient energy harvesters. Turbines are available in a wide range of sizes, increasing the market to many different types businesses and by individuals for use at home on larger lots and plots of land. As technology improves, so do the functionalities of the structure itself, creating designs that will generate even more electricity, require less maintenance, and run more quietly and safely.
The cons of wind power are as under:
- Wind turbines can be quite noisy, which is why they’re mostly found in very rural areas where most people don’t live. Depending on the location of the turbine, such as offshore, noise isn’t an issue. With advancements in technology, newer designs have been shown to reduce the noise complaints and have a much quieter presence.
- If you can imagine, these massive structures are often hundreds of feet tall and require substantial upfront investment. The placement of wind turbines in rural areas requires further investment in underground lines to send power to more populated areas like towns and cities where it’s needed. The majority of the cost is the initial installation and building stage, but after that, wind energy produces an endless supply of energy as long as there is wind.
- Wind energy suffers from what is called intermittency, which is a disruption caused by the inconsistency of the wind itself. Since wind can blow at various speeds, it’s hard to predict the amount of energy it can collect at a given time. This means suppliers and cities need to have an energy reserve or alternative sources of power in case the winds die down for longer lengths of time.
Things to Remember?
It should however be noted that all of every energy resource has its own costs and benefits. When we consider alternatives like Geothermal power, wave power or even wind power, we have to consider and keep in mind their limitations. Some of these alternatives can only be installed in specific areas. For instance, we cannot install windmills in regions where there is no likelihood of strong winds. If these windmills are however installed in such a place, then that would cost the miner a lot of money as these windmills would not generate any energy yet instead would demand more investments for their maintenance and upkeeping.
Similarly in the case of Wave Power, we need to understand that wave energy is, essentially, a condensed form of solar power produced by the wind action blowing across the ocean water surface, which can then be utilized as an energy source. As the wind glides over the ocean surface, a fraction of the kinetic energy from the wind is shifted to the water beneath, resulting in waves. Such kind of a mechanism cannot be generated everywhere. Waver power-based energy generation requires a specific kind of land and equipment. Its maintenance is equally different as well.
Meanwhile in the case of Geothermal energy generation, water, or steam at high temperatures (300° to 700°F) is required. Geothermal power plants are generally built where geothermal reservoirs are located, within a mile or two of the earth's surface. We have already established this earlier that crypto mining can take place anywhere with no limitation of presence of an end user, but these alternative energy generating sources require certain conditions and possess various limitations that make them comparatively a less optimal choice as the primary source of electricity generation for crypto mining.
In conclusion, we can say that indeed the shift from non-renewable energy resources to renewable energy resources is inevitable. Currently if the renewable resources are only limited to the developed nations, then soon enough, they would have been expanded over to the developing side as well. The prime reason why miners would prefer to use renewable and sustainable energy resources such as the solar power and the peer-to-peer technology is due to its cost-efficiency and time efficiency. In this technologically advanced and fast world, efficiency and time management is key for everything. If a system is not efficient or is time consuming, it is taken out of the market as it costs industries hefty amount of money. In this competitive world, staying on top of the trends and maintaining your place can only be done through the tools of efficiency and that is exactly the kind of behavior we observe in the industry of crypto mining. We observed the role of renewable energy resources in crypto mining which helped us to understand the importance of efficiency and technological research and development in maintaining your place in this competitive world.
Please let us know if the article was helpful for you in understanding the role of renewable energy resources, their utility, advantages, and usage in the renewable crypto mining market. We will be publishing more articles focused on understanding and analyzing the trends of bitcoins, and other crypto currencies, their behavior in the market along with their challenges and prospects so Stay Tuned!