Bitcoin miners have plenty of motivation to embrace renewable energy
By and large, the universe of publicly traded bitcoin miners is crammed with relatively young companies. This means that growing pains are to be expected, and there are also many opportunities to get things right.
Fertile territory for improvement for bitcoin miners, including those living in the VanEck Digital Assets Mining ETF (DAM), is to embrace renewable energy as a cornerstone of the mining process. Some DAM member firms are already doing that, and that’s a good thing because the industry is under fire to improve its sustainability posture.
Critics argue that the bitcoin mining industry, by and large, doesn’t cut it when it comes to being a good environmental steward. In fact, they claim bitcoin mining is harmful to the environment.
“With Bitcoin (BTC) as the focus, this analysis estimates climate damages of mined coins and explores several criteria to signal when those damages may be unsustainable. First, the trend of estimated climate damages per BTC mined should not increase, as the industry matures. Second “.
The study indicates that carbon emissions from bitcoin mining increased by 126% in the six years ending 2021. That is more than enough for industry observers to sound the alarm bells regarding environmental sustainability. Translation: DAM components have ample motivation to begin embracing or continue to increase their use of renewable energy.
“Using network hash rate data from January 2016 to December 2021 and mining rig power consumption and efficiency data,” Scientific Reports added. “Based on these estimates, BTC mining in 2020 used 75.4 TWh of electricity, which is more energy than used by Austria (69.9 TWh year)− in 2020) or Portugal (48.4 TWh year− in 2020).”
This trend is moving higher, confirming that bitcoin miners need to make inroads into renewable energy. Beyond getting critics off their backs, there’s good reason for miners to reduce their carbon footprints. In particular, there is evidence to suggest that bitcoin miners who reduce their use of fossil fuels also reduce their costs.
Coal and natural gas are the primary power sources for bitcoin mining in the developed world, and miners need to consider that because the prices of both commodities are rising this year due to weak supplies.
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The opinions and forecasts expressed herein are solely those of Tom Lydon and may not materialize. Information on this website should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any product.
