Energy Web CEO Jesse Morris explains why blockchain can make “going green” more efficient, how fighting climate change is easier and why they are building on Polkadot.
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Cointelegraph analyst and writer Marcel Pechman explains how PacWest’s plummeting share price and the continued banking crisis could impact Bitcoin. Cointelegraph YouTube Subscribe Own this piece of history Collect this article as an NFT
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The electricity mix of Bitcoin (BTC) has drastically changed over the past few years, with nuclear energy and natural gas becoming the fastest growing energy sources powering Bitcoin mining, according to new data.The Cambridge Centre for Alternative Finance (CCAF) on Tuesday released a major update to its Bitcoin mining-dedicated data source, the Cambridge Bitcoin Electricity Consumption Index (CBECI).According to the data from Cambridge, fossil fuels like coal and natural gas made up almost two-thirds of Bitcoin’s total electricity mix as of January 2022, accounting for more than 62%. As such, the share of sustainable energy sources in the BTC energy mix amounted to 38%.The new study suggests that coal alone accounted for nearly 37% of Bitcoin’s total electricity consumption as of early 2022, becoming the largest single energy source for BTC mining. Among sustainable energy sources, hydropower was found to be the largest resource, with a share of roughly 15%.Despite Bitcoin mining significantly relying on coal and hydropower, the shares of these energy sources in the total BTC energy mix have been dropping over the past several years. In 2020, coal power powered 40% of global BTC mining. Hydropower’s share has more than halved from 2020 to 2021, tumbling from 34% to 15%.Bitcoin mining electricity mix from 2019 to 2022. Source: CCAFIn contrast, the role of natural gas and nuclear energy in Bitcoin mining has been notably growing over the past two years. The share of gas in the BTC electricity mix surged from about 13% in 2020 to 23% in 2021, while the percentage of nuclear energy increased from 4% in 2021 to nearly 9% in 2022.According to Cambridge analysts, Chinese miner relocations were a major reason behind sharp fluctuations in Bitcoin’s energy mix in 2020 and 2021. China’s crackdown on crypto in 2021 and the associated miner migration resulted in a major drop in the share of hydroelectric power in the BTC energy mix. As previously reported, Chinese authorities shut down a number of crypto mining farms powered by hydroelectricity in 2021.“The Chinese government’s ban on cryptocurrency mining and the resulting shift in Bitcoin mining activity to other countries negatively impacted Bitcoin’s environmental footprint,” the study suggested.The analysts also emphasized that the BTC electricity mix hugely varies depending on the region. Countries like Kazakhstan still rely heavily on fossil fuels, while in countries like Sweden, the share of sustainable energy sources in electricity generation is about 98%.The surge of nuclear and gas energy in Bitcoin’s electricity mix allegedly reflects the “shift of mining power towards the United States,” the analysts stated. According to the U.S. Energy Information Administration, most of the nation’s electricity was generated by natural gas, which accounted for more than 38% of the country’s total electricity production. Coal and nuclear energy accounted for 22% and 19%, respectively.Among other insights related to the latest CBECI update, the study also found that greenhouse gas (GHG) emissions associated with BTC mining accounted for 48 million tons of carbon dioxide equivalent (MTCO2e) as of Sept. 21, 2022. That is 14% lower than the estimated GHG emissions in 2021. According to the study’s estimates, the current GHG emissions levels related to Bitcoin represent roughly 0.1% of global GHG emissions.Combining all the previously mentioned findings, the index estimates that by mid-September, about 199.6 MtCO2e can be attributed to the Bitcoin network since its inception. The analysts stressed that about 92% of all emissions have occurred since 2018.Total greenhouse emissions related to Bitcoin as of mid-September 2022. Source: CCAFAs previously reported, the CCAF has been working on CBECI as part of its multi-year research initiative known as the Cambridge Digital Assets Programme (CDAP). The CDAP’s institutional collaborators include finance institutions like British International Investment, the Dubai International Finance Centre, Accenture, EY, Fidelity, Mastercard, Visa and others.Related: Bitcoin could become a zero-emission network: ReportThe new CDAP findings noticeably differ from data by the Bitcoin Mining Council (BMC), which in July estimated the share of sustainable sources in Bitcoin’s electricity mix at nearly 60%.“It doesn’t include nuclear or fossil fuels so from that you can imply that around 30-40% of the industry is powered by fossil fuels,” Bitfarms chief mining officer Ben Gagnon told Cointelegraph in August.According to CBECI project lead Alexander Neumueller, the CDAP’s approach is different from the Bitcoin Mining Council when it comes to estimating Bitcoin’s electricity mix.“We use information from our mining map to see where Bitcoin miners are located, and then examine the country, state, or province’s electricity mix. As I understand it, the Bitcoin Mining Council asks its members to self-report this data in a survey,” Neumueller stated. He still mentioned that there are still a few nuances related to lack of data in the study.
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August marks the ninth consecutive month of rising inflation for the Eurozone at 9.1%. In July, the official inflation numbers landed at 8.9%. The Eurozone consists of 19 countries, including Germany, France and Belgium. This comes as the European Union (EU) faces a massive energy and gas crisis, largely as a result of the ongoing conflict in Ukraine. Current prices for daily necessities such as food, gas and electricity have soared across the continent. Over the last month, energy prices made up the largest price push, up by an annual rate of 38.3%, While food, alcohol and tobacco all rose by an annual rate of over 10%.Former EU member the United Kingdom also hit a 40-year-high inflation rate of 10.1% in July, as reported by the Organization of National Statistics (ONS).Eurozone countries Estonia and the Netherlands both experienced noticeable inflation spikes of 2% up from July. Related: How to preserve capital during inflation using cryptocurrencies?Florian Glatz, an EU-based lawyer specializing in blockchain technology, co-founder of the German Blockchain Association and member of the EU Crypto Initative, told Cointelegraph:“Europe is facing historic challenges, with inflation eroding away the economic security of middle and lower income households.”Moreover, Glatz believes the crypto industry has been warning global governments that current monetary and economic systems “don‘t hold up to the challenges” at hand. Among those who have already adopted crypto, it’s often seen as a hedge against inflation. Though, for this to work, the crypto community must continue to push for mass adoption and proper implementation. Glatz says the EU needs to become relevant in the digital economy to present a better value proposition for the financial future of its people. “We need a new deal for EU citizens that is powered by financial inclusion, opportunities in new digital markets and the desire to make Web3 the long-awaited Digital Revolution made in Europe.”This comes as the European Central Bank released its guidelines on licensing digital assets, such as cryptocurrencies, on Aug. 17.
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Bitcoin is likely to transition from a risk-on to a risk-off asset in the second half of 2022, as the macroeconomic environment is rapidly shifting towards a recession, said Mike McGlone, senior commodity strategist at Bloomberg, in a recent interview with Cointelegraph. McGlone predicted:“ I see it transitioning to be more of a risk-off asset like bonds and gold, then less of a risk-on asset like the stock market.”According to the analyst, the crypto market has flushed out most of the speculative excesses that marked 2021 and it is now ripe for a fresh rally. McGlone also pointed out that the Fed’s aggressive hiking of interest rates will lead the global economy to a deflationary recession, which will ultimately favor Bitcoin:“I fully expect we’re going to have a pretty severe recession globally, which probably will make Bitcoin shine […] along with gold and U.S. Treasury long bonds.”Don’t forget to check out the full interview on our YouTube channel and don’t forget to subscribe!
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The Russian government continues to establish links with major players in the cryptocurrency mining industry despite staying skeptical about legalizing cryptocurrency trading and payments.Russia’s state-owned gas giant Gazprom Neft has entered into a partnership with BitRiver, the largest crypto-mining colocation services supplier in Russia providing hosting services for major crypto mining operations. Gazprom will provide BitRiver’s partner data centers with electricity generated from the associated petroleum gas, the companies officially announced on June 16.As part of the collaboration, BitRiver will be developing a digital infrastructure based on the oil fields that Gazprom provides crypto mining services from the flare gas.Gazprom first deputy CEO Vadim Yakovlev emphasized that the business model of Gazprom, itself, doesn’t envision work with digital assets. The gas giant is rather aiming to optimize the use of energy resources ito enable renewable energy by enabling “new ways of beneficial use of associated petroleum gas,” he noted, stating:“Reducing our carbon footprint is an essential component of Gazprom Neft’s ESG policy. […] By combining technologies and competencies with partners, we create the best industry practices for the efficient and environmentally friendly use of natural resources.”Gazprom is one of the largest oil and gas companies in Russia and also one of the biggest gas suppliers for the European Union. The oil giant was reportedly ranked as the world’s third-largest producer of carbon emissions as of 2019.According to the announcement, flare gas-powered crypto mining projects are especially relevant when working in new oil fields that do not have any established gas transmission infrastructure. Another option is to set up such developments on remote oil fields in Siberian regions as such fields are associated with surplus electricity and unprofitable flare gas logistics.BitRiver founder and CEO Igor Runets noted that the new partnership with Gazprom is part of the company’s ambitious plan to increase its total power capacity to 2 gigawatt in the next two years.The Russian government had previously considered a project to mine Bitcoin with associated petroleum gas in October 2021.Related: Gov’t says crypto miners consume 2% of total electricity in RussiaRussia is a major player in global energy markets as well as Bitcoin (BTC) mining. The country was the third largest BTC hash rate producer in the world as of August 2021, according to the Cambridge Bitcoin Electricity Consumption Index. According to the latest index update, Russia tumbled to the fifth spot as its BTC hash rate declined to 8.6 EH/s in January 2022 from 13.6 EH/s in August 2021.
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The blockchain industry’s impact on the energy sector has been a major source of controversy over the past five years. Governments and environmental protection advocates have routinely expressed concerns about the amount of energy required to keep the Bitcoin network secure. Data shows the network’s energy consumption now rivals the yearly energy consumed by some small countries.Historical Bitcoin network power demand. Source: CCAFWhile much of the debate has centered around the negative environmental impacts of Bitcoin (BTC) mining, the drive to maximize earnings from mining and integrate blockchain technology with the energy grid has also introduced new developments that have the potential to be beneficial in the long term. Here’s a look at several developments that have arisen out of the demand for energy to operate blockchain networks and the positive effects cryptocurrency mining is having on the energy industry. Recapturing wasted energyOne of the fastest-growing segments of the cryptocurrency mining industry is the monetization of historically wasted sources of energy such as natural gas that is flared at oil drilling facilities. Discovering natural gas pockets is a common part of the oil drilling industry, and up until recently, this gas was typically burned in a process called “flaring” because the infrastructure needed for its collection was non-existent or there had not been sufficient demand for LNG. As the value of Bitcoin rose over time, the search for inexpensive energy sources led to the installation of shipping containers filled with mining equipment at drilling sites that can utilize the energy generated from flaring to mine BTC. While the process still results in carbon dioxide emissions, income is generated during the process and these funds could be redirected toward mitigating environmental concerns. Most recently, several companies have been exploring the integration of mining via flared gas in the Middle East, which accounted for over 38% of the global flaring in 2020 and presented one of the biggest opportunities to turn wasted energy into value. Blockchain technology can make energy generation more efficientA second side-benefit of the push to maximize crypto mining profits is improvements to the energy infrastructure and an increased focus on developing sustainable forms of energy generation. Studies by the Bitcoin Mining Council have shown that there has been a noticeable increase in the amount of energy derived from sustainable sources, as opposed to sources like oil and coal. Less developed countries like Kenya and El Salvador have also been able to benefit from improvements in energy generation from sustainable sources like geothermal power plants, which have given their economies an additional source of income.Whether it’s the utilization of excess power generated by hydroelectric power plants or an increase in the use of wind and solar power, crypto mining is providing a financial incentive to help further optimization of energy efficiency and generation. Related: Marathon Digital moves Montana BTC mine to pursue carbon neutralitySmart grid technologyAnother energy-related blockchain development is the formation of blockchain-based smart grids that aim to improve energy distribution on a large scale. Inefficiencies in electricity distribution have largely been traced to the retail level, where smaller firms who own very little of the electrical grid infrastructure mainly provide simple services such as billing and monitoring meter usage. These types of services can easily be handled by blockchain technology and Internet-of-Things- (IoT)-devices that help consumers bypass retailers and connect directly with wholesale distributors, potentially reducing electricity bills by up to 40%.Connecting consumers with a smart grid also allows them to shop around with different providers to obtain the best rates possible. This could help to level the playing field in an industry that has historically been dominated by one local energy company. Projects like Grid+ and Energy Web Token are helping to lead the way in this field as the old grid design of physical substations and monitoring equipment is replaced with a network of distributed energy resources (DERs) that include battery energy storage systems, solar arrays and natural gas generators. While the sector is still in a nascent phase, it’s a trend worth keeping an eye on because, in the coming years, blockchain technology is bound to be further integrated into the energy sector. Want more information about trading and investing in crypto markets?The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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Canadian oil and gas company Bengal Energy, is dipping its toes into Bitcoin (BTC) mining as a way of utilizing the untapped energy from its gas wells in the far reaches of the Australian outback. According to a report from The Australian, Bengal Energy is set to conduct a pilot program where roughly 70 Bitcoin mining rigs will be set up inside a portable building — known in the local mining industry as a “donga” — which will be assembled near a series of previously out-of-operation gas wells in the Cooper Basin. According to Bengal Energy’s chief operating officer, Kai Eberspaecher, the company acquired the gas wells from its local oil and gas extraction partners, Santos Energy and Bridgeport Energy. Eberspacher added that the recently acquired gas wells posed an interesting problem to the energy company because they are what is known as “stranded wells.” This means that while the company can technically produce power from the gas on site, the current distribution pipelines are too far away to reach. A pipeline that can service Bengal’s remote gas wells is currently under construction, however the delays in development have been further exacerbated by Covid-related supply chain issues.“We were basically looking at six months of having wells ready but without an outlet. We were dealing with stranded assets.”Portable Bitcoin mining rigs in dongas were hit upon as a solution to the problem. A trial donga will be outfitted with 66 mining rigs that can generate approximately 0.005 BTC per day which equates to roughly $235.If the trial is successful, Bengal Energy is reportedly seeking to multiply its Bitcoin mining output by a factor of 10 to 20 times, meaning that total income could reach anywhere from $2000 to $5000 per day. Related: ExxonMobil is using excess natural gas to power crypto miningBengal Energy adds its name to a growing list of mining companies including ConocoPhilips and Exxon Mobil, that are seeking to harness the full potential of typically wasted or stranded energy through portable Bitcoin mining operations. In response to the widely-published criticisms of Bitcoin mining on environmental grounds, fossil fuel companies have become increasingly concerned with finding new ways to limit the harmful byproducts of mining operations as well as harnessing any sustainable alternatives where possible. The Bitcoin Mining Council estimated a sustainable energy mix of 58.5% for the global industry in the fourth quarter of 2021. Miners in Norway are even using waste heat to dry out lumber.
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United States-based energy producer Exxon Mobil has reportedly been running a pilot program aimed at using the energy from excess gas to power crypto mining rigs — and it may be expanding its operations to four other countries.In a Thursday report, Bloomberg said Exxon Mobil had inked a deal with Crusoe Energy to use excess gas from oil wells in North Dakota to run Bitcoin (BTC) miners. The project reportedly uses 18 million cubic feet of natural gas per month — roughly 0.4% of the oil giant’s reported operations in the state, producing 158 million cubic feet of natural gas each day.The company launched the pilot program in January 2021 and is now reportedly considering expanding to Nigeria, Argentina, Guyana, and Germany in addition to launching a similar project in Alaska. Cointelegraph reported in February that oil and gas giant ConocoPhillips was running a program selling excess gas to third-party BTC miners for fuel.Transporting natural gas requires pipelines which cannot always safely accommodate the amount produced. Companies are often forced to burn off any excess gas or vent it into the air, ultimately harming the environment and the firms’ profit margins. “It is creating use of what would be otherwise wasted,” said Danielle Fugere, president of environmental shareholder advocacy group As You Sow, referring to the energy being diverted to Bitcoin miners.According to a report from Argus Media, Crusoe Energy operated 60 data centers for crypto mining across four U.S. states as of September 2021 powered by “gas from the oil wells that would otherwise be flared on site.” Instead of burning off the gas, diverting it to crypto mining reportedly reduces carbon dioxide-equivalent emissions “by as much as 63%.”3/ @CoinSharesCo estimates that 69 TWh of wasted power in the U.S. is lost annually to flaringThrough #Bitcoin mining data centers, like those provided by @CrusoeEnergy & @upstreamdatainc, wasted flared energy can be repurposed but it can also reduce CO2 emissions. pic.twitter.com/2XjeFynrI7— Messari (@MessariCrypto) March 6, 2022Related: Stranded no more? Bitcoin miners could help solve Big Oil’s gas problemThough the Bakken shale basin in North Dakota is a major source of natural gas for the United States, Texas is also home to many oil and gas companies in addition to crypto mining firms seeing the potential for energy production in the state. In contrast, New York lawmakers have proposed suspending proof-of-work mining powered by fossil fuels in response to critics citing environmental concerns.
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The energy usage and environmental impact of Bitcoin (BTC) mining have been frowned upon and been under the scanner by various international financial institutions. The International Monetary Fund (IMF) mentions how Bitcoin mining consumes “vast amounts of computing power and electricity.”Bitcoin mining is an energy-consuming process, as it is a proof-of-work (PoW) blockchain network that involves providing cryptographic proof to the network that a quantified amount of a specific computational effort has been used. The information used to verify this is stored in a block to be accepted into the network by other participants. Elon Musk, one of the richest men in the world and the co-founder and CEO of Tesla, in February 2021 announced that the car manufacturing company will accept Bitcoin as payment for its products and services. But, in May of that same year, Tesla discontinued its support for the acceptance of Bitcoin payments, citing the company’s concerns about the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” This also led Musk to hail Dogecoin (DOGE) as a better means of payment than Bitcoin due to the high environmental cost of BTC transactions.Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe— Elon Musk (@elonmusk) May 13, 2021However, a new solution seems to be emerging that has the potential to address the narrative that has permeated the mainstream conscience. Associated natural gas is a byproduct of oil drilling, the volume of which is often outweighed by the costs of getting it to a refiner, leaving it “stranded” at the well. Thus, it is often just burned off at the oil derrick, earning it the moniker “flare gas.”On Feb. 17, CNBC reported that the oil giant ConocoPhillips is running a pilot program in Baken, North Dakota. Instead of burning associated gas, the company is selling it as fuel to third-party Bitcoin miners.The idea of using associated gas to mine Bitcoin is not new. Back in 2019, Brent Whitehead and Matt Lohstroh started the company Giga Energy Solutions, which mines Bitcoin with electricity generated from such gas. The firm delivers a shipping container that is full of Bitcoin mining equipment to an oil well and then diverts the stranded natural gas into generators that convert the gas to electricity, using it to mine Bitcoin.Crusoe Energy is another company that uses the energy from flare gas to mine Bitcoin. The firm has grown to become one of the biggest players in the space and has also received investment from one of the oldest cryptocurrency exchanges in the world, Coinbase and Winklevoss Capital, a company founded by the Winklevoss twins, the founders of crypto exchange Gemini.A report from Crusoe Energy Systems claimed that using this gas to mine Bitcoin reduces CO2-equivalent emissions by about 63% compared to the continued flaring of the gas.Cointelegraph spoke with Ethan Vera, chief financial officer and chief operations officer at Viridi Funds, a company that offers crypto investments to Bitcoin miners, about the impact of ConocoPhilips involvement in the innovation. Ver said, “While ConocoPhillips is one of the major energy companies that have publicly announced their entry into Bitcoin mining, there are many other energy companies that have already started the process of setting up mini-test sites. If the economics of Bitcoin mining increase and total mining revenue on a USD basis grows, many of the large energy producers will look to enter the space in a bigger way.”Energy impact of Bitcoin mining could be overratedAs per the University of Cambridge’s Cambridge Bitcoin Electricity Consumption Index metrics, the estimated power demand for the Bitcoin network is 15.57 GW (GigaWatts) which annualizes at 136.48 TerraWatt hours (TWh). The look at historical data of power demand for the network reveals that this demand is continuously increasing through the years as the network grows.Despite this increase in demand for power, the environmental impact could be overrated. A report from CoinShares released in January this year attempted to gauge the carbon emissions caused by Bitcoin mining. Contrary to popular belief, the report’s findings suggest that Bitcoin mining only accounts for 0.08% of the world’s carbon dioxide, or CO2, production. The report found that the network emitted 42 megatons (Mt) (1Mt = 1 million tons) of CO2 in 2021 out of the world’s total emissions of 49,360 Mts of CO2.Sam Tabar, chief security officer of Bit Digital, a publicly-traded Bitcoin mining company, told Cointelegraph:“The environmental impact of Bitcoin mining is massively exaggerated by traditional financial authorities (IMF, etc.) because they know they can divide a new counterculture movement by using fake environmental arguments. They are trying to gaslight us against each other. They gaslight the world with fake green arguments, and I understand why: They don’t want to lose influence over the levers of power of a system that only works for the elite.”Related: Are we misguided about Bitcoin mining’s environmental impacts? Slush Pool CMO Kristian Csepcsar explains.In this regard, Vera mentioned that gauging the environmental impact of Bitcoin is a highly nuanced topic and is one that can’t simply be explained by the energy consumed metric. He said that “In many cases, Bitcoin mining incentivizes the development of renewable energy which will have profound impacts on long-term energy infrastructure and environmental impact.”Oil giants could lead the change to make Bitcoin greenConsidering that using stranded natural gas to mine Bitcoin could reduce the net carbon emissions of mining, as well as reduce emissions from flare gas, other major oil companies could soon jump on the opportunity, especially as governments and regulators have been cracking down on gas flaring.In November 2020, Colorado regulators gave the initial okay to ban gas flaring in order to curb methane pollution. Regulators in the state of New Mexico imposed a rule in March 2021 that requires oil operators to gradually eliminate gas flaring. The rule dictates that 98% of the nature-stranded gas should be captured by April 2022 instead of flaring.However, such decisions are highly difficult to pass in a country where both sides of the government are heavily dependent on lobbying from big oil companies. In October 2021, Bloomberg reported that President Biden’s crackdown on methane emitters is set to stop short of imposing a ban on flaring.An outright ban on gas flaring would be good news for the Bitcoin mining industry as that oil producers would have either of two options. First, to reduce the production output of oil which wouldn’t be economically viable. Or, second, utilize excess stranded natural gas on-site, which is where Bitcoin miners could step in to create synergies with big oil companies like ExxonMobil, British Petroleum (BP), Chevron or Valero Energy.Vera stated that “With high oil prices, the majority of these producers are turning to utilize the stranded gas on-site such as Bitcoin mining, instead of burning it up. We expect the trend to continue in the future as more governments regulate the ability for oil companies to flare excess gas.”The World Bank also has its own initiative to help reduce gas flaring around the world. The Global Gas Flaring Reduction Partnership (GGFR) is a multi-donor trust fund that comprises governments, oil companies and multinational companies that are committed to reducing gas flaring. Bitcoin mining pools and companies could enter collaborations with this trust fund to further this initiative.However, oil companies could have a two-faced approach to the issue at hand, thus, raising questions on their intentions. For example, in 2020, BP urged regulators in Texas to ban the routine flaring of natural gas. But, in January 2021, the Texas Railroad Commission passed 121 of the company’s requests for flaring.With regulators and governments around the world cracking down on gas flaring, the Bitcoin mining industry has an opportunity to reduce the CO2 emissions and methane pollution in the atmosphere. Vera concluded on this synergy, stating that “Bitcoin miners are a natural partner to all energy producers including renewable and oil and gas. Bitcoin mining improves the ability for these companies to manage and utilize their resources in the most profitable way.”
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