Is Bitcoin Mining Carbon Neutral?
With the explosion of Bitcoin mining operations popping up around the world, so to have come the critics of its carbon footprint on the earth.
It’s no secret that today’s mining operations require extensive amounts of energy to operate at the level needed to successfully mine for Bitcoin. This has been highly criticized due to ever-rising fossil fuel consumption in the form of coal powered energy.
But does it have to be that way? Or is there a better, more carbon neutral way to mine for Bitcoin? The answer to this is yes. Follow along with us and we’ll show you how mining for Bitcoin can be carbon neutral.
How Is Bitcoin Mined?
The first step into understanding the carbon footprint of Bitcoin is to look at quick overview of how exactly Bitcoin is mined.
Bitcoin is mined by users who use supercomputers to solve complex computational puzzles. They compete with other users who are also trying to solve the same puzzle and whoever comes to the correct answer first, will then have their answer verified by other miners to be correct.
Once determined to be correct, it is posted on the blockchain ledger and the user is rewarded with Bitcoins. In 2020 a miner receives 6.25 BTC for successfully posting to the blockchain.
What Kind of Equipment is used in Bitcoin Mining?
As was previously mentioned, Bitcoin mining requires heavy-duty computer hardware. Because of this, mining operations often consume large amounts of energy to be successful. Therein lies the environmental conundrum.
A large-scale mining operation uses high-power computers, with massive processing power and graphics cards that are of extremely high capability. Without this equipment, it is highly unlikely to be able to successfully mine Bitcoin with the speed needed in today’s competitive mining environment.
Many mining operations are large in scale, using many different servers at any given time, really pushing their energy consumption through the roof.
How Much Energy Does Bitcoin Mining Use?
So just how much energy does Bitcoin mining use? The answer obviously depends, but reports have shown that a single Bitcoin transaction will generally use about 1200 kilowatt hours or kWh of electricity.
To put that into perspective, this amount of energy could power the average American household for about a month and half. That is certainly an eye-popping number for more reasons that one.
First, it is very taxing on the power grid to see that kind of power being used, and in turn, causes an uptick in the amount of fossil fuels that are needed to maintain power for mining operations.
Secondly, the cost for a mining operation is extensive. Energy on average will cost about $0.09 per kWh in the United States. This means that each Bitcoin transaction will cost about $108 per. Over the course of a year, that number adds up, and that doesn’t even include unsuccessful mining transactions.
Can Bitcoin Mining Be Carbon Neutral?
With all of the energy that Bitcoin mining uses, is it possible to operate a mining operation that is carbon neutral? That is the big question that many people are asking, and many of the bigger players in the cryptocurrency are looking to figure out. Carbon offset credits are one way that mining operations can be incentivized to leave a smaller carbon footprint. A carbon offset credit is essentially requiring that the holder is responsible for a reduction or removal of carbon emissions in compensation for carbon emissions made elsewhere, leaving a net-neutral carbon footprint.
This generally works when one party (in this instance, a Bitcoin mining operation) that has unavoidable carbon emissions purchases carbon credits from parties that are able to install more environmentally friendly technology, thus reducing their overall carbon footprint.
In addition to carbon offset credits, many of the larger miners of Bitcoin are looking into the viability of renewable energy sources to power their operations.
Renewable energy such as hydroelectric power has been used as a more environmentally friendly option to provide the energy required for Bitcoin mining. In addition to this, wind and solar power are other viable options.
The downside to renewable energy is that the infrastructure for clean energy is still evolving. There are some people however who believe that the rise of crypto mining will create a stronger push toward renewable, allowing for incentive to construct power sources like hydroelectric dams and turbine farms.
While Bitcoin mining has taken its fair share of criticism for the amount of energy consumes, the prospects are bright when it comes to mining operations becoming carbon neutral. Many of the biggest players in the game are looking to carbon offset credits and renewable sources of energy to fuel their mining. As the industry evolves, this push should grow and show much less of an impact on the environment in the years to come.