- There is contradicting opinion on where Bitcoin needs to go next as energy consumptions hit record levels, with a recent report by Square terming it the key to clean energy.
- On earth day, and with institutions’ interest at record highs, there is a social responsibility for crypto-friendly companies like Square to address the high energy consumption by Bitcoin.
The crypto community has been discussing the effect Bitcoin has on the environment. In recent months, the industry has recorded a lot of adoption of renewable energy to reduce the skyrocketing energy prices. In addition, this helps reduces Bitcoin’s carbon footprint. As we reported, Ripple co-founder Chris Larsen is calling on Bitcoin developers to consider switching from the current energy-intensive proof-of-work (PoW) consensus mechanism to proof-of-stake (PoS). He argues that while renewable energy helps, this is just part of the solution.
Square on the other hand contradicts this. Led by founder and CEO Jack Dorsey, the firm says Bitcoin’s future is in green energy – and Tesla CEO Elon Musk agrees. In a paper published aptly on Earth Day, Square outlines Bitcoin’s impact on the environment and how renewable energy is the solution. The paper was a collaboration with ARK Invest, Cathie Woods’ investment firm. Square claims that Bitcoin can pave the way for the fast adoption of renewable energy.
When Jack Dorsey tweeted ‘#bitcoin incentivizes renewable energy’, Elon Musk simply replied ‘True‘. His company Tesla is in the spotlight for the acquisition of $1.5 billion worth of Bitcoin. According to Ripple’s Larsen, this wiped out Tesla’s entire fleet’s annual CO2 savings.
Square: Miners are the perfect buyers
One of the key issues with renewable energy is ‘trapped energy’ produced by solar or wind power sources. This power goes to waste if not used. Mining facilities can complement the technology using this excess energy to mine. It will not only reduce the electric cost for miners but also increase profit for the energy producers.
Bitcoin miners, on the other hand, are an ideal complementary technology for renewables and storage. Combining generation with both storage and miners presents a better overall value proposition than building generation and storage alone
One of the biggest issues with Square’s assumption is the geography of the facilities. A majority of facilities are located in China. Unlike its western counterparts, it is not vastly invested in green energy. Additionally, even those in the West, most green energy facilities are in remote areas. A mining facility needs a good internet connection.
Of course, many will argue that an internet connection anywhere in the world is feasible. Furthermore, since the China blackouts rattled the crypto community, Bitcoin mining dominance in China is disrupted and currently being distributed to its main rival, the US.
Square and ARK intend to employ more research into Bitcoin mining and clean energy. Larsen’s view is that renewable energy is not enough to sustain the ever-growing demand. For now, the cryptocurrency community can only wait to see what the future holds for Bitcoin mining, and if – though very unlikely – the top cryptocurrency follows Larsen’s advice and switches to proof-of-stake.