elon dorsey argue bitcoin renewable energy

Their traditional surplus of geothermal, hydro and wind power is rapidly shrinking. Iceland’s biggest utility said that no one would build more power capacity just to feed Bitcoin mining.

And by using coal to generate most of its power, harmful carbon emissions keep going up. Pollution from mining coins in China is expected to peak in 2024, releasing as much carbon dioxide as all of Italy, according to a study published in Nature Communications this month.

Plus, there may also be better uses for renewable power than making Bitcoin, like decarbonizing existing energy demand that relies on burning fossil fuels. As Teslas and other electric vehicles replace gas-burning cars, they will need a lot more electricity.


A bank would probably want to charge a higher interest rate on a project that plans to sell power to a Bitcoin miner than it would if the customer were Google.

“I don’t know how you’d assess the risk profile of a Bitcoin mining operation,” said Albert Cheung, head of analysis at BNEF. “You kind of want your offtaker to be around for 20 years, or at least 10.”

For now, lots of Bitcoin is being produced by the most-polluting source of electricity. Research from the Centre for Alternative Finance shows that Bitcoin mining is dominated by China, a country currently driving a boom in new coal plants.
In the second quarter of 2020, the latest data available, the world’s biggest polluter mined as much as 65% of the coins.

By comparison, Iceland and other Nordic nations, once seen as a green haven for Bitcoin, were producing less than 1% of the coins each.

Elon dorsey argue bitcoin renewable energy

Just over two months after Elon Musk’s Tesla shocked crypto investors by suspending Bitcoin (BTC) payments, the billionaire investor has reopened the door. Musk says Tesla will take Bitcoin payments again, as long as there’s evidence that at least 50% of mining is powered by renewable energy.

Speaking at this week’s B Word conference on Bitcoin, the crypto enthusiast said, “There appears to be a positive trend in the energy usage of Bitcoin.” He explained that a lot of the heavy-duty coal plants that were being used for mining, especially in China, had been shut down.

Why did Tesla back out of Bitcoin payments?

When Tesla said in February that it would accept Bitcoin payments and had bought $1.5 billion worth of BTC, it was seen as evidence that crypto was going mainstream.

Elon dorsey argue bitcoin renewable energy-i

Indeed, some credit the announcement with starting the bull run that led to Bitcoin’s all-time high of over $64,000 in April.

However, in May, Musk announced it would suspend Bitcoin payments due to environmental concerns. The decision coincided with China’s crackdown on cryptocurrency exchanges and services, and crypto prices began to fall across the board.

Musk explained the decision: “Tesla’s mission is accelerating the interest of sustainable energy.

We can’t be the company that does that and also not do appropriate diligence on the energy usage of Bitcoin.”

He also stressed that he — along with Tesla and SpaceX — intended to hold their Bitcoin.

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Why opt to take Bitcoin payments again?

Musk began hinting in June that Tesla might accept Bitcoin payments if there was evidence of heavy renewable usage. This week, he went a step further: “I think we want to do a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50% and that there is a trend towards increasing that number,” he said.

“If so then Tesla will resume accepting Bitcoin.”

Musk sees hydro, geothermal, and nuclear as good options for Bitcoin mining.

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But perhaps the hope is that this time around, mining companies won’t be forced to use coal to fuel the growth.

Can Bitcoin ever be sustainable?

Bitcoin faces a huge environmental challenge. By design, it’s not mined in an energy-efficient way.

There are newer more eco-friendly cryptocurrencies with different models that consume a fraction of the energy. But we can’t easily re-engineer the way Bitcoin works.

Since we can’t reduce its energy consumption, Bitcoin supporters see renewable energy as a solution.

Indeed, Square’s CEO Jack Dorsey, who also spoke at the conference, argues that Bitcoin could actually incentivize the use of renewables.

Square and Ark Invest recently published a paper describing how Bitcoin mining could accelerate a transition to more sustainable energy sources.

One problem that renewable energy companies face is that the times of heavy production (when the sun or wind are strong) don’t always coincide with the times of heavy demand (when people get home from work and put on the TV). The document advocates that if miners worked with renewable energy and storage companies, it could help even out those fluctuations in supply and demand.

On the other side, environmentalists argue that if Bitcoin increases its consumption of renewable energy, it won’t do anything to solve the planet’s carbon consumption problem.

By William Mathis and Lars Paulsson A trio of Jack Dorsey, Cathie Wood and Elon Musk are promoting the idea that Bitcoin mining can be good for the planet actually. That’s not exactly true.

The basis of the idea is that mining crypto currencies uses a lot of power and can be deployed at any time.

That could help a developer make money minting coins at a time when there’s lots of wind or sunshine, but not much electricity demand. Making better use of wind and solar, where power generation can be intermittent, increases efficiency, lowers prices and helps encourage the green transition.

The theory is based on trends that are already happening, regardless of crypto.

The cost of renewable power is plummeting and an increasing share of energy is being supplied by electricity.

The Centre for Alternative Finance at the University of Cambridge estimates it uses more electricity a year than the Netherlands.

GREEN

In order to incentivize renewables further, crypto miners could sign long-term agreements to buy green electricity. That’s what major companies like Amazon.com Inc. do to help cut their carbon footprints.
It’s helped fuel a boom in renewable power assets in the U.S.

In their research, ARK and Square proposed that a renewable power project could be built without a grid connection, just to power a Bitcoin operation. That would speed up development, but also make the project riskier in the eyes of a lender as the grid connection might never materialize, making a development completely dependent on mining.

But part of the rapid decline in the price of renewables has also been thanks to cheap financing.

To complement this work, ARK Invest has contributed an open source model that demonstrates how bitcoin mining could augment these renewable + storage systems to supply a larger percentage of a grid’s base-load energy demand for comparable or lower cost unit economics.

“Bitcoin miners are unique energy buyers in that they offer highly flexible and easily interruptible load, provide payout in a globally liquid cryptocurrency, and are completely location agnostic, requiring only an internet connection,” the paper read.

Bitcoin miners are an ideal complementary technology for renewables and storage.

“Combining generation with both storage and miners presents a better overall value proposition then building generation and storage alone,” the research paper noted.

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