That Bitcoin consumes high amounts of electricity is not exactly news.
This fact has been in the public domain through the dozen years that Bitcoin has existed. Miners have grappled with rising power costs for years. The electricity consumption is two-fold. Bitcoin mining rigs are power guzzlers and also need constant cooling for the heat they produce.
A report by Cambridge University estimates that global Bitcoin mining consumes more electricity than the whole of Argentina!
This study puts into context the scale of the issue. Mining Bitcoin consumes just over 121 TWh. This figure places it ahead of Argentina (121 TWh), the Netherlands (108.8 TWh), and the United Arab Emirates (113.20 TWh).
Why Does Bitcoin Mining Take Up This Much Electricity?
Bitcoin mining is power-intensive by design. When mining, computer hardware has to do work (Proof-of-Work). Bitcoin is a decentralized network. The Proof-of-Work ensures that computers put in a feasible amount of effort in order to deter frivolous or malicious uses of computing power.
Accordingly, the consensus algorithm plays a beneficial security role, essentially eliminating the need of an intermediary. In recent years, the more efficient Proof-of-Stake has become the standard for new platforms due its energy-efficiency and contribution to environmental conservation efforts. Regardless, Bitcoin is head and shoulders the most valuable crypto, and the effect of its mining is readily apparent.
Millions of computers simultaneously solve mathematical equations in the process. The goal is to bundle transactions and add the next block to the blockchain. This process is laborious and uses up plenty of computing power. Computers with higher processing power have a decisive advantage in POW systems.
Modern mining rigs seek to have the most hashes in a second. The latest equipment like the s19 and s19 Pro from Bitmain has an output greater than 100 TH/s. This level of performance has the output in mind. The consequence is a power-hungry mining rig that requires constant cooling.
High Electricity Consumption Has Environmental Ramifications
Consuming more electricity than entire countries is significant. This consumption will remain high provided the prevailing prices hold. By all accounts, Bitcoin prices seem to be going even higher.
Accordingly, Bitcoin miners are purchasing mining rigs in record numbers. Bitmain and leading equipment manufacturers have their equipment sold out for most of 2021. VBit DC has also ordered over 4,000 Antminer S19 and S19 Pro miners – the most efficient and latest generation of ASIC mining hardware from Bitmain. Their arrival and “plug-in” started in batches from December 2020 to September 2021.
All that electricity has to come from somewhere. The world is already choking under the pollution from fossil fuels and coal. Climate change politics are always controversial, but everyone agrees that the environment should be as clean as possible.
So far, most countries are yet to crack down on mining for power reasons. China is a notable exception, with some regions considering restricting Bitcoin mining. The Inner Mongolia region recently decided to ban new cryptocurrency mining projects and shut down existing activity in a bid to cut down on the energy-consuming operation.
Some environmentalists are also beginning to raise sustainability concerns. Bitcoin mining is, unfortunately, the antithesis of energy efficiency. Tesla is a notable manufacturer of electric vehicles. Its decision to purchase $1.5 billion in Bitcoin attracted some criticism. The energy inefficiency of Bitcoin is inconsistent with Tesla’s ideals to these critics.
Green Energy to the Rescue
There is no possible way to reduce Bitcoin mining electricity consumption by manufacturing more efficient equipment. More equipment is joining the market provided high prices continue. It will simply be efficient equipment competing against other efficient equipment.
Renewable energy is the next best solution. In fact, it is the only solution.
Bitcoin’s carbon footprint can reduce significantly with the embrace of renewable energy. Besides, renewable energy can cut power costs where it is cheaply generated. There are many locations globally that can produce renewable energy at a fraction of the cost.
Investments in wind, hydroelectricity, and solar in the past few decades are beginning to pay off. Chinese miners were able to get such a foothold because of the access to cheap hydroelectricity in certain regions of China.
Miners in other countries are also taking notice. Ultimately, renewable energy could help offset Bitcoin’s current carbon footprint. Bitcoin consumes over one percent of global electricity. Any effort to this effect will be incredibly beneficial.
Globally, there are locations yet to be harnessed for renewable energy. More wind farms could come up, more geothermal plants and hydroelectric dams can also add value.
Bitcoin miners should look at these sources of energy, especially when the power is affordable. If it means going to remote locations, then, by all means, do it.
VBit DC: A Leader in Renewable Energy Bitcoin Mining
From the onset, our team recognized the need for cheaper and sustainable energy sourcing. The strategic location of our data centers in North America is cognisant of the possibilities.
Now, VBit is making yet another move with such foresight in mind. We are delighted to announce that our new mining data center will be located in the state of Montana. This location is great for a number of reasons.
Chief among them is the fact that Montana has inexpensive hydroelectric power and large vacant facilities that have their own substations. These are optimum conditions for Bitcoin mining. Besides, Montana is one of the cooler regions of the United States and will offset some cooling costs.
This data center fits into the theme of environmental sustainability. Finding ways to harness cheap renewable power and utilize natural cooling is a win-win. Hydroelectric power is renewable and does not have the Carbon footprint of Coal. It is eco-friendly and also helps to reduce the power consumption.
With rising Bitcoin prices, the quest to shift to more environmental-friendly sources combine to benefit miners but also investors. Rising Bitcoin prices and high hash rate, notwithstanding, has seen the Montana datacenter project mining $3.8 million of BTC by September 2021 is the current market conditions prevail.
At 3 cents per KWH, energy costs could only reach $300k during this period meaning VBit Mining can make over 89 percent from the total revenue as profits. If BTC prices remain at over $50k, the Montana data center, from the 800 mining gear received, has the potential of earning holders $3.3 million of BTC in profits per month.
This is hopefully the first of many. Mining from a facility that is 100 percent hydroelectric with no carbon footprint is the way to go. At a time when Bitcoin critics are pointing out its power inefficiency, it is an effective remedy.
Shifting to renewable power is the responsible thing to do. VBit DC will seek to replicate this trend in its future data centers. Our exploration of renewable energy solutions is far and wide. VBit is researching new liquid immersion cooling technology to find more efficient ways to utilize electricity.
Renewable Energy Mining Is the Way to Go
Mining Bitcoin is an integral part of the asset. It will be here for the entire existence of this innovation, which at this point appears infinite.
The responsible way to transform mining power consumption is from the inside. This transformation entails the migration to renewable energy and similar green solutions.
VBit DC is a trailblazer in this regard. We are not only lowering our power costs but are also eliminating the carbon footprint for our Bitcoin mining operation.
Bitcoin is too important to be ignored, analysts from Deutsche Bank say. This means Bitcoin mining will be an integral part of the most valuable store-of-value asset for the unforeseeable future. Consequently, mining should be done in an environmentally friendly manner without sacrificing the best interests of investors and everyone who makes this possible.
VBit DC has this laid out, actively planning and zoning out areas in the United States and North America where mining can be efficiently, cheaply, profitably, evening out risks to meet the objective of every shareholder.