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- Bitcoin's Energy Consumption
- How the Navajo Discovered Bitcoin Mining and Now Switching to Renewable Energy
- Bitcoin mining
- Solutions for the energy sector
Reading time: ~5 minutes
The day before yesterday, a small Bitcoin miner, who may have been mining with one or two machines, added a new block to the Bitcoin blockchain and made about $235,000. Last week, the hash rate of the largest mining pools fell by about 11% when the internet was shut down in Kazakhstan. Norton 360 from Norton Antivirus also announced that it now contains mining software. If you want to invest in bitcoins, then visit 1G Profit System (official site)
In Satoshi Nakamoto’s white paper, bitcoin mining was introduced as both an incentive to create new blocks and a means of putting new bitcoins into circulation. Miners earn money – by adhering to the rules – of mining. This incentive encourages miners to be honest. Bitcoin mining is, therefore, the basis for Bitcoin. Yet it is still not understandable by some people.
In short, Bitcoin mining serves two purposes:
- Miners validate transactions against Bitcoin’s consensus rules. Thus, miners ensure the security of transactions by rejecting invalid transactions.
- Miners create new bitcoins per newfound block (currently 6.25 bitcoin). Bitcoin’s quantity on each block is limited and shrinkages over time.
Bitcoin’s Energy Consumption
Some compared Bitcoin’s energy consumption to a country’s energy consumption. Although this does little to help, such comparisons are often flawed because the power consumption is compared with the energy consumption. At the same time, electricity is only part of the energy consumption. Nevertheless, energy consumption is likely to increase in the coming years.
Bitcoin miners are, in principle, always looking for the cheapest energy sources. After all, miners spend most of their money on the energy they use while mining. But, on the other hand, the use of other cheaper options, “renewable energy sources,” increased.
Miners are also increasingly collaborating with energy suppliers dealing with energy overcapacity. For example, Marathon Digital Holdings, an American miner, uses Texas’s abundance of wind and solar energy. Marathon is not the only miner who does this. Marathon also announced a month ago that it wants to mine more than 100,000 machines with renewable energy from Texas.
Hut 8 Mining, a Canadian miner, runs its machines on power generated from excess gas usually flared. This process seems to be a progressively mutual occurrence. Hut 8 is aided by the intelligent mobile power generators from Validus Power, with which the company entered into a tactical partnership in early 2021. Also, Hut 8 recently joined the Business Renewables Center Canada, which aims to accelerate the use of renewable energy in Canada.
The above makes it clear that the discussion about energy consumption and the impact on climate objectives is more nuanced than you might have thought beforehand. The future will show whether Bitcoin mining can contribute to a greener future. In any case, the developments in the sector are encouraging.
How the Navajo Discovered Bitcoin Mining and Now Switching to Renewable Energy
Even though they live in one of the wealthiest regions in the world, the Navajo in the US is not doing well economically. Years of exploitation of the raw materials in their country left them disillusioned. Still, a video from Compass Mining shows how a local bitcoin mining farm is creating opportunities and helping to make the switch to sustainable energy.
The Navajo, or Dineh, live in Navajoland, also known as the Four Corners Reservation, located in the US states of Utah, Arizona, and New Mexico. With nearly 400,000, they are one of the largest tribes in North America, but they are also one of the poorest.
About half of the Navajo have no jobs, and 40% have no drinking water supplies. The sparsely populated area is not very interesting for the financial sector, so few banks are not. The economic situation is partly a result of the treaties with the US. These give the Navajo a lot of autonomy but no control over monetary policy and land ownership.
“The federal government stripped the Navajo people’s land rights,” said the president of the Navajo Tribal Authority. “So a Navajo individual can’t possess the property where they live. ”
However, the soil of Navajoland is rich in resources. For years, coal was mined to power surrounding towns and uranium during the Cold War. Now that the Cold War is over and demand for coal continues to decline due to the energy transition, the Navajo once again seem to be left empty-handed — except for abandoned mines and power plants, poisoned groundwater, and elevated uranium levels in their bodies.
Meanwhile, mining has sounded wrong for the Navajo, but maybe bitcoin mining can change that. A video from Compass Mining explains how the Navajo teamed up with Canada’s West Block in 2018 to start a bitcoin mining farm on Navajoland. Now, about three years later, it has turned out to be one of the more successful decisions.
It created new and well-paid local jobs, bringing new money into and around the community. In the beginning, there were two full-time employees, but with an upcoming expansion, there will be 11. In addition, the investment profits from the mining farm were used by the Navajo to build new public facilities, the video explains.
Solutions for the energy sector
Besides flaring and venting, bitcoin mining also offers solutions for the energy sector in other ways. For example, the same mining installations are also used for ‘stranded gas’, which is usually not profitable to extract from the ground.
Bitcoin mining is attractive to energy producers because it provides them with a new and guaranteed outlet for the power they generate. This allows them to run at total capacity and be more profitable, regardless of local demand and conditions.
This is especially interesting for renewable energy sources. The location is often unfavorable, and the local demand is too limited for the significant investment in a sustainable power plant. It sometimes takes years for local energy needs to increase, and it is not uncommon for investments in renewable power plants to be profitable only after 20 to 30 years.
However, with bitcoin mining, sustainable power plants have a market for all the energy they can generate from day one. This allows them to be profitable sooner, increasing the attractiveness of investments in renewable energy plants.
It seems like a match made in heaven, and the energy sector and bitcoin miners are increasingly finding each other. In Texas, for example, bitcoins are mined on a large scale using surplus energy from wind energy. And Ukraine is considering using the energy surpluses of local nuclear power plants for bitcoin mining because such a generator cannot be switched on and off just like that.
In Paraguay, it is hoped that bitcoin mining for the surplus power of the hydroelectric power station in the Itaipu dam will receive a better price than the low floor prices that neighboring Brazil pays. There are also countless examples of hydroelectric power stations in China, Iceland, and Canada, where bitcoin mining proves to be a godsend.
Thank you for reading!