We’ve all heard the surprising statistics about the world’s cryptocurrency mining demands on our energy: it’s on par with the amount of electricity Ireland uses in a year.
I pay special attention to this as the founder of one of the largest crypto mining companies in the world. We’re now ten years into the crypto era, and the power demands of any developing economy only increase as it matures. The crypto mining industry’s power demands today go to providing proof of work, immutability, and consensus in a decentralized network — it’s the essential three-ingredient cocktail that makes blockchain technology work.
This industry doesn’t use electricity to post status updates and share memes, but instead to revolutionize the world of money and value exchange. Blockchain technology has good momentum behind it, but it’s still in a developmental stage. It’s comparable to the proliferation of the modern internet: no one knows exactly where it’s headed, so only the best ideas will define its future.
Crypto mining chips have certainly gotten more efficient each year, but not to the point that they sufficiently push back against any increased electricity use. I’m not worried about crypto’s energy consumption, and I don’t think you should be either. Here are three big reasons why.
The mining industry is highly flexible in where it can deploy.
Crypto mining companies don’t need to deploy near civilization. They don’t need to be confined to any particular place at all. As long as they have electricity and an internet connection, they can conduct business as usual. That means the mining industry will identify places in the world with an excess of natural energy, like wind and solar, then capture it to power their mining efforts.
Energy usage isn’t inherently bad if it’s renewable.
There’s so much energy available in the world thanks to solar, hydropower, geothermal, wind, and the like. Crypto mining operators seeking the next level of optimization for their businesses will set up shop in places that offer these resources in abundance, working their electric bill toward zero. At Genesis Mining, for example, we advocate working from colder climates that require far less energy to keep hardware running at an optimal temperature.
Research suggests mining contributes to the support of renewable energy.
Not only do crypto companies subsidize the adoption of their products when they use renewable energy, but emergent technologies follow a curve to become more efficient as they develop. Crypto is no exception.
Dr. Katrina Kelly-Pitou is an electrical and computer engineering research associate at the University of Pittsburgh. She wrote an article contending that the environmentalism cries against Bitcoin and related technologies are a “red herring” that distract people from understanding how they actually work. She furthermore connects the dots between alternative energy sources for new technologies and their cost savings for the companies that implement them.
“I am a researcher who studies clean energy technology, specifically the transition toward decarbonized energy systems,” she writes. “New technologies — such as data centers, computers, and before them trains, planes and automobiles — are often energy-intensive. Over time, all of these have become more efficient, a natural progression of any technology: Saving energy equates to saving costs.”
In other words, the effort to label crypto mining as wasteful and resource-intensive will only motivate people to make it more environmentally friendly. If it’s got no place to go but up, then that’s where it’s going to go.
Renewable energy sources for mining operations will become the new normal.
It’s clear to me that mining operations that capture their own energy will have a distinct competitive advantage over those that don’t. They invest in some technology up front, but enjoy free energy afterward. The business of crypto mining depends on harnessing every conceivable efficiency, so it’s pretty tough to beat a $0 electric bill. That’s why there will be a push to develop environmentally friendly blockchain technologies — eco-friendliness is a new category of efficiency for these companies to tap.
Blockchain development is good because it’s going to develop other technologies in parallel. Increased demand for green energy, for example, means there is new business incentive for people to develop a compelling product or solution for sale. NASA developed technologies to help mankind explore space, but created a bunch of new things to improve human life on Earth in the process — things like LASIK surgery, improved firefighting equipment, and even the portable cordless vacuum cleaner. As blockchain proliferation leads us to develop new technologies with it, there’s no telling what side innovations will spin off into something major.
There’s a clear financial incentive for mining operations to reduce their electricity costs, so economics dictates that operators will find ways to pay close to zero for energy. The blockchain space might be breakthrough motivator we need for the green industry to see its next wave of innovation.