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Innovation has always had its downsides to deal with, and while Bitcoin is undoubtedly an extraordinary phenomenon, both technically and socially, it is not immune to this fact. Among the countless complexities linked to its development, that of its energy consumption is often highlighted, sometimes in an exaggerated way in my opinion. That's why I would like to offer you a different reflection on it.

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Bitcoin is famous for its large energy appetite. According to the Cambridge Bitcoin Electricity Consumption Index of the University of Cambridge, published in January 2023, Bitcoin has a consumption of 101 terawatt hours per year, equivalent to that of a country like Malaysia. But is it really correct to see it only as a problem? To get a more complete idea, let's compare this energy consumption to that of other products and services.

  • Cash transactions: 130 terawatt hours per year.
  • Netflix: 94 terawatt hours per year.
  • Gold mining: 240 terawatt hours per year.
  • YouTube: 244 terawatt hours per year.
  • Interbank services: 264 terawatt hours per year.
  • Bitcoin, as we said, consumes 101 terawatt hours per year.

These figures show us that the energy issue is not simple. Cash transactions, for example, consume more than Bitcoin, yet we don't often hear criticism about them.

But the situation becomes more interesting when we consider Bitcoin's potential to boost the green energy sector. Relevant data comes from Coinshare, which estimated that approximately 67% of Bitcoin mining is powered by renewable energy. This places the Bitcoin system as one of the most environmentally friendly in the global financial landscape.

This is largely due to the geographic location of Bitcoin miners – who tend to follow the cheapest energy sources available. This often leads to a concentration in areas where renewable energy is more abundant.

The link between Bitcoin and renewable energy is not limited to usage: Bitcoin is helping to solve one of the biggest problems in the renewable energy sector – overproduction. When they produce more than is consumed, renewable energy plants waste a significant amount of energy because there is no cost-effective way to store it.

The International Energy Agency has estimated that between 5% and 20% of renewable energy produced globally is wasted each year. This is where Bitcoin proves valuable: the possibility of being relocatable allows the mining activity to continuously satisfy the overproduction of renewable energy, buying it at a lower price.

In a certain sense, we could say that “fair money energy”, or “fair money energy”. This concept links between energy and money, seen as a representation of human energy. In physical and mental work, people expend energy and receive money in return, to obtain goods and services.

On a technical level, this concept is also applicable to Bitcoin. Its fundamental mechanic, mining, converts energy into network security, creating Bitcoins that represent the value of this computational energy.

Thus, the energy invested in mining makes the Bitcoin network more secure and decentralized, increasing the value of the currency. In this context, limiting the energy used by Bitcoin would mean compromising the very nature of Bitcoin as an energy-based monetary system. Its energy needs are actually vital to sustaining a censorship-proof, secure, and scarce monetary network.

Insights

List of some key companies promoting and supporting green mining:

Mining:

  • Argo Blockchain – UK based mining company focused on clean energy
  • Iris Energy – Australian Bitcoin mining company with data centers powered by renewable energy
  • Compass Mining – Offers mining contracts and green hosting for retail miners
  • CleanSpark – US-based Bitcoin mining company uses energy from sustainable sources

Lobbying:

  • Bitcoin Mining Council – Group of mining companies that promotes the use of renewable energy
  • Blockchain Association – US industry association that supports policies in favor of green mining

Power:

  • Greenidge Generation – Renewable energy company providing electricity for Bitcoin mining
  • Lancium – Texas-based clean energy provider for computing-intensive applications such as mining
  • Crusoe Energy – Specializes in capturing waste gas to fuel mining operations

Advice:

  • CoinShares – Investment and research company focused on digital asset management and sustainable mining
  • Galaxy Digital – Crypto investment bank with mining and ESG advisory division

Resources for further reading:

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