Can Bitcoin Incentivize Renewable Energy?
We’ve heard of renewable energies for decades yet earth’s limited natural resources such as coal, fossil fuel and natural gas remain the primary source of energy consumption worldwide contributing to 84.3% of the total energy used based on the 2020 Statistics Review by BP. Despite treaties signed and environmentalist voicing concerns, the conversion to renewable energies is so slow, that non-renewable energies have continuously increased in supply and demand over the years.
On April 22, 2021, Jack Dorsey, CEO of Twitter and Square tweeted “Bitcoin incentivizes renewable energy”.
I asked myself, can there be a drive so great that countries around the world would want to boost clean energy? Is Bitcoin’s demand so huge that it can change the world environmentally for the better? It seems like a pretty bold statement to make.
For those who are new to Bitcoin, it is a decentralised and distributed finance network using open source code, which means anybody can have access to a bank account that is censorship-resistant and permissionless. El Salvador is an example of an underdeveloped country where 70% of the population who did not have bank accounts, can have it overnight with Bitcoin. There are 21 million Bitcoins with 18.5 million Bitcoins mined. Miners are rewarded in Bitcoins and once every Bitcoin is mined, miners will be able to maintain the network with transaction fees as rewards.
In 2 months from Jack Dorsey’s tweet, the reactions world wide were positive and remarkable, whereby country leaders and startups started tapping into innovative non-renewable energies, renewable sources and underutilised clean non-renewable energies.
1. INNOVATIVE NON-RENEWABLE ENERGIES
A startup called Stronghold Digital Mining from Pennsylvania uses waste coal from coal mining together with hydropower to mine bitcoin. It also raised $105M recently to accelerate this innovation. Denver-based Crusoe Energy Systems uses waste gas from oil drillings. Flare does not always burn all the methane it contains hence this way makes it carbon negative. Both of these innovations can be expanded worldwide.
2. UNDER-UTILISED CLEAN NON-RENEWABLE ENERGY
China’s recent ban on Bitcoin mining required quick migration of Bitcoin farms. Nuclear is a source of non-renewable energy that is cheap and clean energy. The mayor of Miami, Francis Suarez recognised and used it as a pull factor in attracting bitcoin mining to Miami. Texas power grid also uses 10.9% of nuclear energy to power its state.
El Salvador is expanding geothermal mining. Bitcoin mining provides that demand padded with revenue, and in a recent interview with the President of El Salvador by Peter McCormack, he shared the residual benefits which not only attracts investors and intelligent resources to the country but the profits generated from the mining can be used to build social infrastructures in the country such as schools and healthcare clinics.
3. EXPANDING RENEWABLE ENERGIES
Lord Fusitu’a, a member of the Parliament of the Kingdom of Tonga is tapping onto the ocean waves through the kinetic energy it produces. Support of countries attracts entrepreneurs and investors and in return creates job opportunities and better infrastructure. Ocean energy is also tested by Tara Ocean as a combination project of Paris and Los Angeles, indicating successful mining efforts.
The governor of Texas, Greg Abbott has signed a law recently in creating a master plan for expanding the blockchain industry in Texas. While natural gas and coal still power more than half of Texas power grids, renewable energies such as wind power, solar and hydro contribute to about 25% of it.
Hydroelectric energy is one of the oldest renewable energies inexistent yet not tapped into as much due to the costly infrastructures involved. Carlos Antonio Rejala Helman, the Deputy of Paraguay has started working on Bitcoin projects while attracting investments to capitalise on hydroelectric energy which will be net positive in general for the country.
Jack Dorsey’s financial payments company Square will also be investing $5 million alongside infrastructure firm Blockstream to build a solar-powered bitcoin mining facility.
4. POTENTIALS IN UNDER-DEVELOPED COUNTRIES
Alex Gladstein, in his article “The Humanitarian and Environmental Case for Bitcoin”, wrote that a lot of countries in Africa do not have access to basic amenities such as electricity and clean water despite having solar and hydroelectric resources which remains untapped. Countries such as Congo, South Sudan, Somalia, Libera, Sierra Leone, Chad, Niger, Malawi and the Central African Republic have less than 10% access to electricity. Having a demand such as Bitcoin mining can potentially attract investors to develop infrastructure in the long run.
So the big question is, can Bitcoin mining incentivise renewable energy?
From what is seen happening in the past 2 months alone, bitcoin mining not only incentivises renewable energies but also creates innovations of various non-renewable energies and builds infrastructure for impoverished and under-developed countries.