Bitcoin (BTC) has been in hot water for the massive amounts of energy needed to create new tokens and verify transactions made with current ones.
Green Bitcoin may change the way your think about your investment. While this concern has been around for years, it’s becoming more critical as Bitcoin’s energy use remains to grow beside its increasing popularity.
Just recently, Tesla Inc’s (TSLA) Elon Musk brought the token’s massive carbon footprint to the world’s awareness. Musk announced that Tesla wouldn’t sell its Bitcoin holdings – purchased initially for US$1.5 billion. He continued that his company would no longer accept Bitcoin for payment until cleaner energy sources powered it.
It is estimated that Bitcoin’s global energy consumption will soon exceed Australia. And with the ever-growing focus on climate change and decarbonizing the planet, this puts extra influence on the price.
A ‘Green’ Premium
Where there are problems, there are potential profits to be made. Those profits could come in the form of a premium paid for ‘green Bitcoin.’
As Bloomberg reports:
Some [crypto miners] are working to sell what they call green Bitcoin – coins whose transactions are verified on the blockchain by computers powered only by renewable energy. The bet is that they will be able to command a premium of up to 10%.
Sheldon Bennett is the CEO at crypto miner DMG Blockchain Solutions Inc. DMG says that numerous banks and financial businesses have expressed an interest in transacting in Bitcoin that meets their environmental, social and corporate governance (ESG) commitments.
As claimed by Bennet,
“There’s a market that doesn’t know it yet… More and more, they are saying if there’s an option, I am willing to pay a premium to get it.”
Isaac Maze-Rothstein, a research analyst at Wood Mackenzie, continued,
“There are a bunch of miners who saw what happened with the coal industry. So they only pursue a project if it’s carbon negative. There are others who want to co-locate with wind, or with solar.”
Some crypto miners are also shifting to hydropower. Others – with permission – tap into the unused processing powers of computers visiting their websites.
Nevertheless, Christopher Bendiksen, the head of research at CoinShares, plays a note of caution for any ‘green Bitcoin’ idealists.
He calculates that around 55–65% of Bitcoin mining uses renewable energy sources today. About half of all the mining is done in China, notably subject to its coal-fired power plants.
Are miners producing ‘Green Bitcoin’?
With the Bitcoin price reaching record highs in April, miners may well be willing to settle a bit more for cleaner energy. Bendiksen believes many will return to cheaper, dirtier energy sources.
Bendiksen said (quoted by Bloomberg):
Right now, mining is hyper profitable. And these overactive cost-effectiveness times don’t last forever. When mining costs start advancing Bitcoin price again, the costs will weigh. Bitcoin mining is unforgiving, and you are competing against miners in various nations than you are, and they don’t necessarily care about the environment as you do. It’s pretty dangerous for your competition over time.
Australia-based Iris Energy, founded by Will and Daniel Roberts, has been on top of the ‘green Bitcoin’ theme for a little while now. Back in February, the company raised $25 million to strengthen the computing power of its Bitcoin mining operations in Canada. Those operations are powered by hydroelectricity.
📣 Cryptonetwork.News is now on Telegram. Please click here to join our channel and stay updated with the latest Cryptocurrency, Blockchain, and Cryptomining headlines.