Is Bitcoin Mining The Most Misunderstood Industry In The US?Shreya
The rising popularity of Bitcoin mining has caught the attention of centralized authorities such as the government and regulators. These organizations are interpreting one side of the story and completely ignoring the other part as per their convenience. Recently, the Bitcoin mining industry has been termed as a hazardous industry because of its alleged environmental effects.
The governments of different countries have been taking several steps to ban and restrict mining activities. Last month, the Home Power and Commerce Committee held a hearing on the environmental effect of Bitcoin mining. Congress also has become very involved in the Bitcoin mining business and has been slowly forming bills to restrict the process. However, the burning question here is why anyone should fear a business with several advantages that only consumes roughly 0.55% of total power consumption?
Power Consumption Facts of Bitcoin Mining
The power consumed by Bitcoin mining is roughly equivalent to the power consumed by the Zinc mining and refinery industry and significantly lower than the extraction of copper and gold. Moreover, Bitcoin mining consumes roughly the equal amount of power as home tumble dryers in the US and one-fifth of the total power utilized by home refrigerators.
Bitcoin mining is a flexible process and can be done from virtually any place with no requisite knowledge. Furthermore, mining can also be done on home computers (while it will not produce efficient results) and only requires a continuous power supply. This flexibility of Bitcoin mining prompts miners to choose preferable locations such as Southwest China with cheap hydropower or the former Aluminum smelting plants in upstate New York.
Miners have also diversified themselves in British Columbia and West Texas because of their suitable conditions and cheap power. West Texas is especially favored among miners because of its massive wind and solar plants that create an overabundance of renewable power that provides negative or zero-pricing events within the US. Miners are attracted to West Texas because of the abundance of cheap power and large spaces to set up their mining farms.
Bitcoin miners are also drawn towards conventional grid power as Bitcoin mining is fully computational and requires minimum physical infrastructure. Miners can establish their farms in rural areas with abundant underutilized power. Moreover, Bitcoin mining has the ability to withstand power interruption without impairing the operations significantly. This fact is because of the process of Bitcoin mining that can be stopped at any moment without losing progress.
How is Bitcoin Mining misunderstood?
When comparing Bitcoin mining to the operability of traditional data centers, it is evident that the mining industry is more flexible. Normal data centers have to keep uptime and redundancy to ensure their clients’ data are backed up every moment, and there is no loss of information. These data centers cannot manage downtime or power consumption and thus requires more power than the mining industry itself.
The flexibility of Bitcoin mining is important as the International Energy Agency has asked for 500GW of new demand response resources globally by 2030 to meet renewable goals. The additional demand-side flexibility is an important enabler of grid modernization. Moreover, unlike traditional data centers, hospitals, households, and the majority of corporate buildings, Bitcoin mining can participate in these demand response programs while maintaining profitability.
These demand programs will also foresee participation from other industrial sources such as electric vehicle charging and hydrogen electrolysis. But Bitcoin mining will be a crucial part as the miners are building high-voltage energy infrastructures on locations with abundance and utilizing energy.
The fact here remains that Bitcoin mining operations that are often scrutinized by anti-Bitcoin activists aren’t nearly as bad as they put them out to be. Even several countries have accepted Bitcoin as a new part of the economy and are facilitating Bitcoin mining activities. Recently, a new Greenidge Bitcoin mining plant was brought online in New York, shifting from coal to natural gas to not only power Bitcoin mining but also power households in the area.
The Bitcoin mining industry has been long scrutinized for its alleged massive carbon footprint backed by bogus studies that only show one side of the story. The fact remains that Bitcoin mining consumes only 0.55% of the total global power consumption and is rapidly shifting to renewable sources of energy as a part of its green initiative.
The policymakers and regulators cannot determine the positive or negative avenues of the industry by themselves without proper research to back their statements. The Bitcoin mining industry will continue to thrive and improve as more and more countries become aware of the positives.