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Does Bitcoin mining help or hurt the environment? Blockchain experts sought an answer to that question in a newly released, first-of-its-kind academic paper on the matter. Their conclusion: It could help, with some key changes.
“Our findings show that renewable-based mining could potentially drive a net-decarbonizing effect on energy grids, although key adaptations in mining practices are needed to fully realize this potential,” reads the abstract of the paper, written by blockchain researchers Juan Ignacio Ibanez and Dr. Alexander Freier.
Published earlier this week, their analysis examined the realities of the mining industry’s carbon footprint and its potential to expand renewable energy capacity, providing a “balanced” perspective between both sides of the Bitcoin environmental debate. After just two days, the paper has amassed more views than 95% of the 24 million papers ever published on Altmetric.
BIG UPDATE: In it’s first 48 hours the #Bitcoin mining research paper is now #1 in views (6 months) and has an altmetric score of 344.
This paper is now in the top 5% of all papers ever tracked (24+ million) by altmetric 👀
— Dennis Porter (@Dennis_Porter_) August 10, 2023
The analysis states that a series of “unique characteristics” set miners apart from other energy buyers, helping provide “additional income and ancillary services” to renewable energy grids. Some of these characteristics include flexibility of load, interruptibility, portability, and waste heat utilization.
For example, miners can help absorb excess power generated by wind and solar facilities, helping those firms become more profitable. They also could be used to monetize stranded natural gas and landfill gas that would otherwise be flared into the atmosphere as highly pollutive methane, using containerized mining and generator solutions.
Though mining’s impact on grid management and renewable power generation is already “visible," the paper notes that it still isn’t large enough to impact the sector at large. “Should the adoption of PoW mining intensify, this scale could change,” it stated.
Some challenges on the industry’s road to decarbonization include the short-term price volatility of BTC itself –which directly impacts mining profitability – alongside external regulatory challenges. Furthermore, alternative technologies may “supplement Bitcoin mining in the process of grid decarbonization,” such as water desalination, CO2 removal, and batteries.
So far, estimates of Bitcoin’s CO2 emissions vary widely, depending on the measurements and sources used. On Wednesday, the Bitcoin Mining Council’s survey data suggested that the sector’s sustainable power mix is roughly 59.9%.
But there are issues with studies that ask miners to self report, because most overestimate how green their operation is.
"There may be a selection bias in the sample," study author Ibanez told Decrypt. "Forty-three percent of the miners report their energy mix to the Bitcoin Mining Council, but probably the greener miners are the most willing to report."
Even if the methods for measuring industry greenness at the moment leave some room for improvement, Ibanez said he's sure of one thing: The industry will become more green over time.
"The competition within the Bitcoin mining market is becoming increasingly fierce, making cheap energy a key differentiator in the business," he said. "Renewable penetration is growing, and there are increasing periods of energy 'excess supply' where energy is very cheap or even negatively priced—making flexible buyers like Bitcoin miners key for financial sustainability."
Editor's Note: This post was updated to add comments from author Juan Ibanez.