Bitcoin mining is often perceived as environmentally damaging because it uses huge amounts of electricity to power its intensive computing needs, but what if the mining process could be used to mitigate climate change instead of accelerating it?
Bitcoins on a credit card – illustrative photo. Image credit: Dmytro Demidko via Unsplash, free license
A new study by Cornell researchers investigated planned renewable energy projects across the U.S.. It calculated each project’s potential to profit from bitcoin mining during the pre-commercial development phase when a wind or solar farm generates electricity but has not yet been integrated into the grid.
The findings suggest some developers could be recouping millions of dollars, which could be invested in future renewable energy projects.
The study, “From Mining to Mitigation: How Bitcoin Can Support Renewable Energy Development and Climate Action,” was published in the journal ACS Sustainable Chemistry & Engineering and is authored by doctoral student Apoorv Lal and Fengqi You, the Roxanne E. and Michael J. Zak Professor in Energy Systems Engineering. Jesse Zhu, distinguished professor from the Western University of Canada, also contributed to the research.
The analysis showed that Texas is the state with the highest potential, with 32 planned renewable projects that could generate combined profits of $47 million using bitcoin mining during precommercial operations.
The researchers determined that the Aktina Solar and Roseland Solar Projects in Texas – each with 250 megawatt capacities – were found to be the most profitable, generating a maximum profit of $3.23 million. The Western Trail Wind project, with a capacity of 367 megawatts, showed profitability of $2.65 million.
Projects in California produced the second highest amount of profits in the study, while Colorado, Illinois, Iowa, Nevada and Virginia had fewer installations but still show profitability.
“Profitability of a mining system hinges on periods of steady energy availability since renewable energy sources can vary significantly,” said You, a senior faculty fellow at the Cornell Atkinson Center for Sustainability. “Therefore, it is important to site the mining farm strategically to maximize productivity.”
As an example, You pointed to California, Colorado, Nevada and Virginia as states where solar installations were the only type of renewable energy project that proved profitable in generating bitcoin during the precommercial phase.
The researchers suggest several policy recommendations that could help improve the economic feasibility of renewable energy projects and reduce carbon emissions. One is to provide economic rewards for environmentally responsible cryptocurrency mining, such as carbon credits for avoided emissions.
“These rewards can act as an incentive for miners to adopt clean energy sources, which can lead to combined positive effects on climate change mitigation, improved renewable power capacity and additional profits during precommercial operation of wind or solar farms,” Lal said.
“We also recommend policies that encourage cryptocurrency-mining operations to return some of their profits back into infrastructure development. This would help create a self-sustaining cycle for renewable energy expansion.”
While other aspects of cryptocurrency mining still have environmental costs, such as metal depletion and hardware that becomes obsolete within a few years, the researchers said the results indicate that there are ways to mitigate some of the environmental costs of cryptocurrency mining and foster investments in renewable energy.
Source: Cornell University