Governments and environmentalists are quick to condemn the amount of electricity Bitcoin mining consumes, but increased investor interest in cryptocurrency is driving to positive changes in the energy sector.
The impact of the blockchain sector on the energy sector has been a major subject of debate over the last five years. Governments and environmentalists have frequently raised worry about the amount of energy necessary to secure the Bitcoin network. According to data, the network’s energy consumption currently rivals that of some small countries.
While much of the discussion has focused on the negative environmental implications of Bitcoin (BTC) mining, the desire to maximize mining profits and integrate blockchain technology with the electricity grid has also resulted in new advancements that have the potential to be positive in the long run.
Here are some of the changes that have resulted from the demand for energy to power blockchain networks, as well as the positive benefits cryptocurrency mining is having on the energy business.
Regaining wasted energy
The monetization of previously wasted sources of energy, such as natural gas flared at oil drilling sites, is one of the fastest-growing parts of the cryptocurrency mining industry.
Discovering natural gas pockets is a regular component of the oil drilling industry, and until recently, this gas was often burned in a process known as “flaring” since the infrastructure required for its collection was lacking or there was not enough demand for LNG.
As the value of Bitcoin increased over time, the quest for cheap energy sources led to the deployment of shipping containers containing mining equipment at drilling sites, where the energy generated by flaring may be used to mine BTC.
While the process still produces carbon dioxide emissions, revenue is made and these monies might be used to address environmental concerns.
Recently, some firms have been investigating the integration of mining through flared gas in the Middle East, which accounted for more than 38% of worldwide flaring in 2020 and presented one of the most significant chances to convert wasted energy into value.
Blockchain technology has the potential to improve the efficiency of energy generation.
A second unintended consequence of the quest to optimize crypto mining income is improved energy infrastructure and a greater emphasis on developing sustainable types of energy generation.
According to studies conducted by the Bitcoin Mining Council, there has been a considerable increase in the quantity of energy obtained from sustainable sources as opposed to sources such as oil and coal.
Less developed countries such as Kenya and El Salvador have also benefited from advancements in energy generation from sustainable sources such as geothermal power plants, providing their economies with an additional source of revenue.
Crypto mining is offering a financial incentive to help further optimize energy efficiency and generation, whether it be the exploitation of extra power generated by hydroelectric power plants or a rise in the use of wind and solar power.
Smart grid technology
Another energy-related blockchain development is the creation of blockchain-based smart grids, which aim to improve large-scale energy delivery.
Inefficiencies in energy distribution have largely been linked to the retail level, where smaller enterprises with very little ownership of the electrical grid infrastructure primarily provide simple services such as billing and meter consumption monitoring.
These services are easily handled by blockchain technology and Internet-of-Things (IoT)-devices, which allow users to circumvent merchants and connect directly with wholesale distributors, potentially lowering electricity bills by up to 40%.
DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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