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A new study has found that combining Bitcoin mining with green hydrogen could accelerate the transition to clean energy. This is an eyebrow-raising claim given the strong evidence that cryptocurrencies are a major source of pollution.
To avoid misunderstanding, The Verge spoke to researchers to understand the very narrow scenarios in which this concept might work, as well as the possible pitfalls given the complex realities of Bitcoin mining.
Research published in journals PNAShas referred to Bitcoin and green hydrogen fuel as a “dynamic duo” at least seven times. It depicts an ideal scenario in which Bitcoin mining profits would be used to invest in clean hydrogen production and renewable energy.
“It all depends on the user.” [Bitcoin] –Same as a knife. ”
The devil is in the details. Bitcoin must be mined using clean energy. And the big caveat of this study is that it suggests that energy companies and climate change organizations should do the mining. do not have Your average Bitcoin miner has no economic incentive to bring more renewable energy into the grid. In fact, for this to happen, policies need to be put in place to ensure that the funds earned from Bitcoin mining are actually spent on clean energy.
“It all depends on the user.” [Bitcoin] — Same as a knife. It can be used for food, and it can also be used as a weapon, right? ” said Fengqi Yu, one of the study’s authors and a professor of energy systems engineering at Cornell University. “In this context, we have no intention of mining Bitcoin as an open market traded currency.”
It is estimated that Bitcoin mining operations produce approximately the same amount of greenhouse gas emissions annually as the country of Morocco. Bitcoin Mine is a data farm filled with specialized hardware that solves computational puzzles around the clock for a chance to validate new transactions on the blockchain. They earn Bitcoin as a reward, the price of which has recently soared to over $70,000.
A new study presents a potential scenario. Why not spend that profit on promoting the growth of solar and wind energy? The proposal is to do so in a round-about way, with some parts made from fossil fuels.
The challenge with solar and wind is that they are intermittent energy sources that fluctuate throughout the day and throughout the year. Rechargeable lithium-ion batteries could solve this problem, but they have not advanced enough to be highly efficient for long-term energy storage. This is where green hydrogen and Bitcoin mining could step in, the study claims.
The authors refer to hydrogen and Bitcoin as “energy carriers.” By harnessing solar and wind power to produce green hydrogen, the hydrogen can store or “carry” energy as fuel for later use, even when the wind stops and the sun doesn’t shine. According to the paper, Bitcoin could be considered a virtual energy carrier if it is used to buy green hydrogen or support the expansion of solar and wind farms.
You’re saying it’s like using Bitcoin as a gift card to spend on clean energy. The policy would require guardrails to be put in place to prevent money from being spent on other things, like gift cards that are only valid at certain stores. The system could increase solar power capacity by up to 25.5% and wind power capacity by up to 73.2% in the United States, the paper said.
But that depends on a number of hypothetical scenarios. In the real world, it would be difficult to reproduce. Setting up and operating a Bitcoin mine is not cheap. Traditional Bitcoin mines operate 24 hours a day to recover costs and make profits.
“They’re doing things as fast and as crazy as they can right now.”
“They’re not thinking that far into the future,” said Joshua Rose, a researcher at the University of Texas at Austin and an adjunct researcher at Columbia University, about bitcoin mining companies. “They’re rushing things as fast as they can to raise money right now, and they’re not really interested in the long-term 10-year investment cycles that this kind of thing requires.”
Utilities will face high upfront costs to mine Bitcoin, and will face further restrictions if they want to support clean energy.
Rose, who is also a founding partner at consulting firm Ideasmith, worked on an analysis of crypto mining company Rancium in 2021. They found that Bitcoin mines that want to foster the growth of renewable energy would need to shut off power by about 15 percent per year. Whenever wind or solar power generation is low, it actually reduces greenhouse gas emissions from electricity consumption.
Bitcoin companies in Texas, the mining hotspot where Rose’s analysis was conducted, have paused mining in the past, but only because they were compensated. The state’s power grid operator has paid tens of millions of dollars in energy credits to cryptocurrency miners to prevent power outages during periods of peak power demand or shortages. The program has perpetuated the idea that Bitcoin can offer the same energy storage benefits as batteries, even though without financial incentives there is little incentive to reduce mining.
Ultimately, Rose says, Bitcoin can only be compared to half a battery. Energy goes in, but it doesn’t come out. “I don’t think it’s appropriate to call Bitcoin an energy carrier,” Rose said. The Verge. “You could make an argument that we should call this an enabler, and I think that’s what they’re trying to do here, but the idea of calling it an energy carrier is that we’re going to get some energy out of this thing. You end up perpetuating the idea that you can take it out, and that’s not possible. ”
You and your co-authors published a similar paper last year that found that Bitcoin mining could benefit renewable energy projects. Again, our findings apply to the very specific scenario of mining using surplus renewable energy from new solar and wind farms waiting to be connected to the grid.
There is a backlog of infrastructure waiting to connect to the grid. In theory, at least according to this latest study, Bitcoin mines, hydrogen facilities, solar farms, and wind farms could all work together. In reality, companies may be competing for a limited supply of transformers, inverters, and all the other equipment needed to connect to the power grid.
Even in a scenario where utilities are mining Bitcoin to run the show and fund their clean energy ambitions, success will still depend on the wildly volatile Bitcoin price. The current price could be around $70,000, but it has just crawled out of a crypto winter where prices fell below $20,000.
“I’m not saying it’s impossible, but [the price of Bitcoin] It’s unlikely to be zero, right? … If it’s worth it, there are ways to use these mines as tools,” he says. “But no one knows what the future market will be like.”
The authors received funding from the National Science Foundation but no support from industry. He also said that he personally does not own any crypto assets.
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