Much has been said lately about the environmental impact of Bitcoin. The mainstream media were particularly interested in declaring the BTC (proof-of-work) consensus mechanism as a potential threat to the future of the planet.
A white paper published by Square and ARK Invest as part of the “Bitcoin Clean Energy Initiative” argues the opposite, arguing that Bitcoin is indeed a “key factor for the future of renewable energies”. The research paper claims that Bitcoin will be mined along with renewable energies to enable an “energy transition”.
In this way, owners of energy systems could become the “Bitcoin miners of tomorrow” who operate a resilient power grid. BTC miners have certain characteristics that can aid this new energy model. First, miners are geographically agnostic with a “flexible and easily interruptible load,” as the White Paper claims.
As such, they are “unique energy buyers” able to meet the main challenges of the clean energy sector: low production with increasing demand and disruption. Research claims the following:
Bitcoin miners, on the other hand, are an ideal complementary technology for renewable energies and storage. The combination of generation with storage and miners offers an overall better value proposition than the generation and storage of buildings alone.
Bitcoin uses the cleanest and cheapest form of energy
The levelized cost of energy (LCOE) used to measure the cost of generating one type of energy for sun and wind has declined over the past decade. According to the White Paper, the cost of solar energy has decreased by 90% and that of wind by 71%. Therefore, the costs without external factors (such as subsidies) are around 3 to 4 cents per kWh or 2 to 5 cents per kWh.
In contrast, the same metric (LCOE) for fossil fuels is 5 to 7 cents per kWh for coal and natural gas. The research adds:
(…) Sun and wind are now the lowest cost and most scalable. Additionally, we believe that over time they will only get more affordable.
Bitcoin mining can be a “complementary” technology that uses these cleaner and cheapest sources of energy. Combining the above methods with methods of storing energy can, according to the White Paper, lead to a migration of clean energy projects to a “profitable area” with advantages for investors.
More flexibility in the construction of solar and wind projects. With BTC mining sustainable, they can investigate their integration into the main power grid when “interconnection studies are completed”. Such energy sources can be resilient at “Black Swan Events” and supply the energy network with “readily available surplus”.
The miners can absorb this “excess” energy due to their “unlimited appetite”, while a lithium-ion-based storage system, for example, can retain its capacity to meet the consumer’s needs during the day. In the long term, the White Paper predicts a scenario in which there will be a greater need for electrical supply as the use of electric vehicles increases.
The model presented by Square and ARK Invest could encourage the use of solar and wind energy sources. At the same time, the BTC mining industry is becoming a much larger and greener sector. Without the miners, research estimates only 40% of grid power before prices need to be increased to meet demand. The opposite is more profitable and sustainable:
With Bitcoin mining integrated into a solar system, however, energy providers – whether energy suppliers or independent companies – would have the opportunity to play the arbitrage between electricity prices and Bitcoin prices, potentially selling the “excess” solar electricity and supplying almost all of the grid electricity without claims reduce profitability.
BTC is trading at $ 55,394.97, down 1.8% on the daily chart. In the weekly and monthly charts, BTC shows a loss of 12.9% and 3.8%, respectively. Its market capitalization is $ 1.3 trillion.