Some of Bitcoin’s most prominent funders have sought to defend Bitcoin’s environmental efficiency, with a collaboration paper by researchers from financial services firm Square and investment manager Ark Invest claiming that Bitcoin mining can drive greater efficiency in renewable energy production.
The article, written by “The Bitcoin Clean Energy Initiative” or BCEI, attempts to refute the claim that “the computation needed to secure Bitcoin […] is harmful to the environment and ruining the planet, ” arguing that Bitcoin mining stimulates electricity generation “ from renewable carbon-free sources. ”
The newspaper has garnered support from top crypto celebrities including Square’s Jack Dorsey, Tesla’s Elon Musk and Ark Invest’s Cathie Wood.
– Elon Musk (@elonmusk) April 22, 2021
In an April 22 Twitter thread, Square states that while solar and wind can produce energy that is cheaper than fossil fuels, these renewables tend to over-supply when demand is low and conversely struggle to meet consumer and industry needs when demand is high.
According to the researchers, the problem of divergent renewable production and electricity demand could be mitigated by building an ecosystem “where solar / wind, batteries and Bitcoin mining co-exist to form a green network that is almost runs exclusively on renewable energy. “
“Not only is this feasible, it is also possible without compromising the profitability of the industry.”
The paper describes the Bitcoin mining industry as “an energy buyer of last resort” that can be located anywhere in the world.
Despite solar and wind energy costing between roughly half and a third of fossil fuels per kilowatt hour, the paper argues that the geographic limitations of renewable energy plans typically cause energy supplies to be ‘abundant or absent’.
“The end result is considerably more power than society normally needs for a few hours a day and not nearly enough when demand rises. This challenge also takes place seasonally. “
By combining Bitcoin mining with renewable energy storage, the paper states that the limitations of batteries and energy dissipation can be offset by diverting excess electricity to mining companies. If miners were able to capture just 20% of the wind and solar energy delayed on U.S. power grids, BCEI estimates that global mining capacity could triple.
The mobilization of miners as a last resort for electricity would also boost the profitability of the renewable energy industry, by allowing producers to “arbitrage between electricity prices and Bitcoin prices.”
In a sense, the miners’ unlimited appetites allow them to eat what’s left of the ‘duck belly.’ Given these advantages, we believe it makes sense for utility scale storage developers to expand their current battery offering with Bitcoin miners. “
The paper also states that the costs associated with expanding renewable energy will accelerate to decline.
“The Bitcoin and energy markets are converging and we believe that today’s energy asset owners are likely to become tomorrow’s miners,” he said.
– Mati Greenspan (tweets ≠ financial advice) (@MatiGreenspan) April 22, 2021
However, not everyone is convinced by BCEI’s claims, with popular analyst Mati Greenspan describing the report as[ing] Bitcoin’s massive energy consumption. “
Rather than offering a solution to Bitcoin’s ever-increasing energy consumption, Greenspan describes BCEI’s paper as a blueprint for “an energy-intensive feedback loop.”
“The main focus of the paper does not appear to be so much to seek solutions as to justify Bitcoin’s massive energy consumption and paint a rosy picture of how it could positively impact the clean energy sector,” argued Greenspan.
Earlier this year, researchers at the University of Cambridge estimated that Bitcoin consumes 121.36 terawatt hours annually, ranking the network among the 30 largest energy consumers in the world and above the country of Argentina.