‘Bitcoin incentivizes renewable energy’ agree Elon Musk and Jack Dorsey
Some of bitcoin’s most prominent proponents have tried to prove that bitcoin is environmentally friendly. A joint paper by researchers at financial services firm Square and investment manager Ark Invest argues that bitcoin mining can help improve the efficiency of renewable energy production.
The article, written by the Bitcoin Clean Energy Initiative, or BCEI, attempts to refute the claim that the computing power needed to support bitcoin … is damaging to the environment and destroying the planet by arguing that bitcoin mining encourages renewable, carbon-free electricity generation.
The paper has received support from crypto luminaries such as Jack Dorsey of Square, Elon Musk of Tesla and Cake Invest of Kathy Wood.
– Elon Musk (@elonmusk) April 22, 2021
In a tweet from 22. April Square argues that while solar and wind power can be produced more cheaply than fossil fuels, these renewable sources tend to be oversupplied when demand is low and, conversely, struggle to meet the needs of consumers and industry when demand is high.
According to the researchers, the discrepancy between renewable energy generation and electricity demand can be reduced by creating an ecosystem that combines solar, wind, batteries and bitcoin mining into a green grid powered almost exclusively by renewables.
Not only is this feasible, but it also has no impact on the profitability of the sector.
The article describes bitcoin mining as an energy consumer of last resort, which can be located anywhere in the world.
Although solar and wind power cost about half to one-third of fossil fuels per kilowatt hour, the paper argues that the geographic limitations of renewable energy plans usually result in either abundant or non-existent energy supplies.
The end result is far more energy than society normally needs for a few hours a day, and not nearly enough energy when demand explodes. This challenge also manifests itself seasonally.
By combining bitcoin mining with renewable energy storage, the paper says, battery limitations and energy losses can be offset by diverting excess electricity to mining companies. If mining companies could capture even 20% of the wind and solar energy locked into the US power grid, global mining capacity could triple, according to CBIE.
Enlisting miners as buyers of electricity would also, in the extreme, increase the profitability of the renewable energy sector by allowing producers to arbitrage between electricity prices and bitcoin prices.
In a way, the miners’ boundless appetite allows them to eat what’s left of the duck’s stomach. Given these advantages, we think it makes sense for enterprise-scale storage developers to add bitcoin miners to their current battery offerings.
The paper also argues that the costs associated with the increased use of renewable energy are falling at an accelerating rate.
The bitcoin and energy markets are growing together, and we believe today’s energy owners will be tomorrow’s miners, she said.
Okay, I’m just gonna say it. Bitcoin mining is bad for the environment. #bitcoin #EarthDay2021
– Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) April 22, 2021.
However, not everyone is convinced by CBIE’s claims. Noted analyst Mati Greenspan describes the report as a vindication of bitcoin’s massive energy consumption.
Instead of offering a solution to bitcoin’s ever-increasing energy consumption, Greenspan describes the CBIE document as a plan for an energy-intensive feedback loop.
The article seems to be less about finding solutions and more about justifying bitcoin’s massive energy consumption and how it could have a positive impact on the clean energy sector, Greenspan said.
Earlier this year, researchers at Cambridge University calculated that bitcoin consumes 121.36 terawatt hours per year. This makes it one of the 30 largest energy consumers in the world, more than Argentina.
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