The approaching Bitcoin halving might result in a more eco-friendly Bitcoin mining process, as miners could shift towards renewable energy sources to reduce costs and remain competitive.
As Bitcoin’s block rewards decrease from 6.25 Bitcoins to 3.125 Bitcoins and the hash rate keeps climbing higher, mining companies may experience reduced profits.
As a result, miners might be motivated to seek out more efficient use of capital through renewable energy options, suggests Matteo Greco, research analyst, at Fineqia International.
“This dynamic compels mining companies to optimize capital efficiency and seek cheaper electricity sources, leading to an increasing use of renewable energy in BTC mining.”
Critics frequently point out that Bitcoin consumes significant energy and relies heavily on non-renewable fuel sources. However, as per the Bitcoin ESG Forecast, a monthly report authored by Daniel Batten, the managing partner of CH4 Capital, over half (54.5%) of the Bitcoin network’s power consumption will come from renewable energy sources by the end of January 2024.
The Bitcoin mining process encourages miners to operate more efficiently, potentially contributing significantly to the growing sustainability of the network. Greco remarked:
“The BTC mining rewards mechanism inherently drives greater efficiency with each step, enhancing network security, reducing carbon emissions, and promoting research into sustainable block confirmation methods.”
Chinese Bitcoin mining: Greener after mining ban
In spite of a prohibition against Bitcoin mining, China is reportedly responsible for approximately 15% of the total Bitcoin computing power globally, based on data from Batten’s Bitcoin ESG Forecast published on April 5.
“No off-grid coal-based mining occurs anymore. It’s too easy to spot, it competes for baseload energy and interferes with the central government’s emission targets. This has caused a significant reduction of the emission intensity of the Chinese mining post-ban.”
An alternative finding is that Chinese miners primarily utilize hydroelectric power for their operations, which is plentiful and affordable during the wet seasons in Xi’an, Wuhan, Beijing, and Xining, as indicated by Batten using the following chart.
In conclusion, Batten pointed out that many retail investors are currently losing money by mining Bitcoin, primarily as a means to leave the Chinese financial system behind.
“They convert Chinese yuan for ASICS and electricity which creates BTC, which gets converted into USD. Many retail miners are happy to take the profitability hit simply to have a way to convert Yuan to USD.”
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2024-04-16 14:04