Square and Ark Invest argue that Bitcoin miners could decrease inefficiencies in the renewable energy sector by acting as an electricity buyer of last resort.
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Bitcoin’s most vocal backers have gone out of their way to make the case for Bitcoin’s environmental efficiency, compiled in a collaborative paper from researchers at Squre and investment manager Ark Invest. In it, they assert that bitcoin mining can drive increased efficiency in renewable energy production.
Authored by ‘The Bitcoin Clean Energy Initiative’ or BCEI, the paper is a counter to the claim that “the computation required to secure Bitcoin […] is environmentally damaging and ruining the planet,” arguing that Bitcoin mining incentivises the generation of electricity “from renewable carbon-free sources.”
The paper has received support from top cryptocurrency visionaries including Square’s Jack Dorsey, Tesla’s Elon Musk and Ark Invest’s Cathie Wood, among many others.
On April 22 in a Twitter Thread, Square argued that while solar and wind can produce energy cheaper than fossil fuels, these renewable sources tend to produce excessive supply when demand is low and conversely struggle to meet needs of the consumers and industries at large when demand is high (notably due to their dependence on the elements).
The researchers explained that the divergence between renewable energy production and electricity demand could be mitigated by creating an ecosystem “where solar/wind, batteries, and Bitcoin mining co-exist to form a green grid that runs almost exclusively on renewable energy.”
“Not only is this doable, it is doable without jeopardising the sector’s profitability.”
Following this line of reasoning, the authors go on to describe the bitcoin mining sector as “an energy buyer of last resort” that can be situated anywhere on the planet.
The paper asserts the geographical limitations of renewable power plans, which typically results in energy supply being “either abundant or non-existent”.
“The end result is significantly more power than society typically needs for a few hours per day and not nearly enough when demand spikes. This challenge also plays out seasonally.”
By combining bitcoin mining with energy renewables, the paper argues that the limitations of batteries and energy waste can be offset by diverting electricity to mining farms. If miners could capture just 20% of wind and solar energy that is delayed on US power grids, BCEI projects that global mining capacity could triple.
Additionally, costs for renewable energy would also see a rapid decline. This is because “bitcoin and energy markets are converging” and BCEI believes that “the energy asset owners of today will likely become the miners of tomorrow”.
However, the argument could be viewed as a justification for bitcoin’s energy consumption.
This begs the question: how much is pristine money – which has never existed in the history of mankind – worth; the answer of which could be found in the trade-off with energy consumption as the network grows.
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