Green crypto mining and the potential for entrepreneurs to make money

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With recent COP26 in Scotland, the world’s attention is shifting from COVID-19 to the climate emergency facing humanity. 

One of the biggest challenges we face is lowering emissions fast enough and extensively enough to hit net zero by 2050, as laid out in the Paris Agreement. And a growing contributor towards carbon emissions is cryptocurrency. 

This is because mining crypto takes up a massive amount of energy used by mining rigs and computers to solve the complex computations necessary to mine a coin or token. 

In a world where crypto and blockchain are becoming more popular, accepted and mainstream, does the solution lie in green cryptocurrency mining? According to Matjaž Škorjanc, CEO of NiceHash, green cryptocurrency mining has enormous potential to lower emissions and make investors a lot of money.

Why does the world of Bitcoin need green crypto mining? 

But how and why does mining cryptocurrencies take so much energy? Matjaž Škorjanc says, “As we all know, Bitcoin (BTC) and other cryptocurrencies are highly volatile in terms of their value. As such, when Tesla CEO Elon Musk Tweets about BTC, it makes a big difference to the entire cryptocurrency industry.

“Earlier in the year (13 May 2021), he Tweeted that Tesla would no longer accept BTC as payment for its vehicles. The reason he gave was the increase in fossil fuels necessary for crypto mining. Naturally, this caused the value of BTC to fall. 

“However, in general, popular cryptos including BTC, Ethereum and Dogecoin all reached record highs at some point in 2021. This is naturally raising interest in – and concern over – the sheer amount of energy needed to mine the coins.”

According to analysis by Cambridge University, published by the BBC, BTC has an annual electricity bill worth more than the whole of Argentina. The researchers conclude that mining for Bitcoin uses about 121.36 terawatt hours (TWh) every year. This led to critics laying into Tesla for its support of cryptos, given its generally green focus. 

If Bitcoin were a country, it would be in the top 30 of global energy users, something that Elon Musk, at least, considered too damaging for his EV brand. Put simply, as the value of BTC and other cryptos continue to rise, the cost of the energy (computing power) needed for mining software also increases, and so do emissions and atmospheric waste. All of which contributes to the global climate crisis. 

Proof of work protocol uses immense energy 

A closer look at the energy usage in mining BTC is worthwhile here. 

Matjaž Škorjanc adds: “When BTCs or any other coins are traded, computers around the world compete to complete a computation. The computation creates a massive number (64-digit hexadecimal number to be exact), also known as hash, in exchange for that token.” 

The hash is recorded on the public ledger, making it a completely transparent process using blockchain tech. The computer or pool of computers that managed to solve the computational challenge first is rewarded with a block of 6.2 BTC, currently worth around US$225,000. Check here for the most up-to-date value of BTC, as it is very volatile and shifts a lot. 

“Every crypto uses a similar hashing tech (hash power) for mining, which uses energy and contributes to high levels of use,” says Matjaž Škorjanc. “Of course, miners don’t use just one computer; instead, they build rigs from multiple GPUs. Ideally, these miners or communities of mining users want the most powerful GPUs on the market to handle the enormous calculations. 

“Keeping GPUs on mining rigs or running mining software constantly, 24 hours a day, seven days a week is extremely energy intensive. It needs much more power than just browsing the Internet. For example, a rig with just three GPUs can use more than 1,000 watts of power – about the same as having an AC unit running constantly.”

Major crypto mining businesses are springing up where energy is cheap 

As the mining sector has grown in size, businesses have inevitably sprung up worldwide using hundreds or possibly thousands of rigs all whirring away in one location. For example, in Kazakhstan, there is a mining business with the capacity to run 50,000 rigs at the same time.

Enegix is one of the

biggest centres for crypto mining globally and boasts a mining power of 4% of BTC’s hashrate. The centre is located near the Russian border and needs as much electricity as it takes to power 180,000 homes in the US. 

Energy for the centre is directly from the grid in Kazakhstan, which sources power from coal. And glwhile electricity is cheap and plentiful in places like Kazakhstan, this doesn’t help the problem of emissions. 


Rigs use a lot of power but also generate heat (as many NiceHash users will know). So, the more rigs working away in one place, the more heat is generated. To ensure that rigs don’t overheat, it’s necessary then to use fans to cool. This, of course, uses even more electricity. 

Fossil fuels are responsible for almost two-thirds of the energy used in the US, with similar figures elsewhere. Most of this is from coal and natural gas. According to the Global Cryptoasset Benchmarking Study by the University of Cambridge this year, most crypto miners (70%) base their mining decisions on how much a coin is worth in terms of daily rewards, with less than a third saying that energy consumption guides their decisions. 

 

Switching from proof of work to proof of stake mining protocol

In May, Musk said that he was in touch with crypto miners based in North America, and they had pledged to use renewables rather than fossil fuels for their energy sources. He also went on to hint that Tesla would reinstate BTC as a payment method if users could prove what he calls “reasonable clean energy usage.”

Ethereum is the second biggest blockchain crypto and is planning to revolutionise how energy is used by its miners (hash power). To do this, Ethereumm is launching Ethereum 2.0, an upgrade that should be completed early in 2022 for the whole market. This will replace proof of work (the computers solving computations method) completely. Instead, computers will be selected randomly to create blocks for the chain. Computers not selected will then validate the blocks.

Each miner must stake 32 Ether (Ethereum coins), which are worth around US$85,000. This method is called ‘proof of stake’ and reduces the energy needed to mine Ether. From the 10,000 alt coins available, a growing number use proof of stake, which means less power consumed. 

For example, Cardano uses its own proof of stake mining protocol and only uses about six gigawatt hours a year. Comparing Cardano and BTC shows that Cardano uses less than the power needed for the tiny country of Niue, which has a population of 1,620. On the other hand, BTC uses the same amount of energy that Pakistan uses every year, with a population of 225 million. 

 

Opportunities abound for cryptopower entrepreneurs

Aside from more environmentally friendly alt coins, miners have huge potential to turn BTC’s need for massive amounts of energy into an asset. This can be by using waste fuel from other industries, using the flares produced by oil and gas fields or balancing grids in different countries. Whichever method is chosen, there are ways for cryptopower entrepreneurs to make mining greener. 

Now that countries like Iran, Indonesia, and China are either totally banning BTC mining or hugely restricting it (as a form of defence intelligence), this makes even more opportunity for the US and other countries. Two years ago, for example, the US had only a 4% share in the global crypto mining market. 

Today, the US is the second biggest miner globally and accounts for 17% of new BTC tokens (according to the University of Cambridge Centre for Alternative Finance). 

Matjaž Škorjanc says: “The world must find ways to lower the environmental impact of mining cryptocurrencies. Supporting this There are myriad benefits in digital currencies, but these can’t be at the expense of the environment, particularly as we are at such a crucial point in the fight against climate damage. 

“The proof of work protocol is a valid way to create a form of artificial scarcity, but the computational power it takes is enormous. I’ve already mentioned Ethereum’s very important transition to proof of stake, and other currencies are already doing this. In addition to previously mentioned Cardano, other cryptos that use much less energy include Stellar, XRP and algorand.”

As an example of just how important this is, when Ethereum makes the switch from proof of work to proof of stake, energy use will be slashed by 99.95%. A brand new crypto called Candela has its own protocol that only works through solar-powered mining. 

However, BTC is the original and biggest crypto, and it’s extremely unlikely to change how it generates coins. As it stands, more and more miners are joining to compete for coins through proof of work, and this is set to carry on until the last BTC is mined, which will be around 2140. 

Alternative ways to find energy for BTC mining are available

So, new ways to create the energy needed are necessary. In Texas, for example, the free market has come to the rescue of a power grid that failed badly in the winter of 2020. Right now, 16GW of new solar and wind energy generating projects are underway to ensure that the state never faces the shortage that caused such devastation last year. 

However, during normal times with no cold weather or weather emergencies, a surplus of energy will be created. And this is where BTC miners come in, soaking up the excess. They can buy energy when it’s not needed and then simply shut down the mining rigs when demand surges higher, in a cold winter, for example. 

Adds Matjaž Škorjanc: “There are massive opportunities for these kinds of totally new ways to create, use and balance energy, and BTC mining will benefit – as will the entrepreneurs who get ahead of the energy game right now (many are NiceHash Users). Bitcoin is here to stay, and this requires disruptive innovative energy solutions. They are out there, and I look forward to seeing more emerge over the coming years and NiceHash will certainly embrace them”

Matjaž škorjanc is co-founder and Mining Manager of Slovenian company NiceHash. NiceHash are the world’s leading cryptocurrency mining software services provider and cryptocurrency coin marketplace.

Sagar Saxena

Passionate about Blockchain and has been researching and writing about the Blockchain technology for over a year now. Also holds expertise in digital marketing. follow me on twitter at @sagar2803 or reach out to him at sagar[at]coingape.com

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