From technical improvement efficiencies to novel market-based solutions, a plethora of projects are trying to improve the bitcoin mining’s environmental footprint.
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The environmental impact of bitcoin mining was trending again in the last few weeks due to a looking to limit its grid participation and a that condemned the industry.
Bitcoin mining consumes about 145 terawatt hours (TWh) of electricity per year, says data from , which is about the power consumed by Sweden, according to the .
To critics, bitcoin’s proof-of-work algorithm is as its electricity demand continuously grows. To industry advocates - it's a feature, not a bug - as it secures the network while ensuring decentralization.
There is a third camp that sees bitcoin’s energy consumption as an opportunity. A slew of new products and companies are trying to mitigate the environmental impact with several innovative solutions that build on top of what is already in place to help miners become more sustainable.
Some of these projects are creating or taking advantage of market instruments that incentivize making bitcoin more “green,” while others are technical, centered around improving efficiencies and synergies around reusing the heat generated by the data centers.
One such product, offered by crypto lender BlockFills and fund Isla Verde Capital, aims to help not only miners but also investors to find a “green” solution for their energy usage.
The is tradable environmental assets in the forms of carbon emissions offsets and Renewable Energy Credits (RECs). Carbon credits, assets that represent sequestered greenhouse gasses through projects such as reforestation, are as well known as they are .
Renewable energy credits (RECs) represent ownership of the sustainability of electricity produced. These certificates represent 1 megawatt hour (MWh) of power produced from renewable sources such as wind, hydro and solar. They are usually separate to any power purchase agreements and are usually traded over the counter (OTC).
BlockFills and Isla Verde Capital tailor the purchase of RECs and carbon credits to miners’ needs, and later retire them, such that they can make claims about renewable energy sources.
The RECs are also geared towards bitcoin investors. “Massive asset managers” are now “looking at bitcoin, but they have these sustainability mandates that they must follow,” said BlockFills John Divine. The RECs can help them invest comfortably.
This might actually raise the price of RECs, “which directly incentivizes investment in renewable energy technology,” Divine said.
Switzerland-based Block Green is another project that is trying to incentivize sustainable mining through a decentralized lending protocol. On their platform, liquidity providers looking for bitcoin-native investments can buy future hashrate over a specified period of time, or computing power.
The platform includes about a company’s financials, operational data, their energy sourcing and strategy. Block Green believes that market mechanisms on the platform will incentivize sustainable mining as liquidity providers will pick miners with sustainable operations, lowering their cost of capital.
“We are currently working with some of the largest miners in the U.S. and Canada and we have begun integrations with institutions such as custodians, exchanges and asset managers looking to give users access to transparent and scalable” returns on their bitcoin, said a spokesperson for the firm.
Another solution that is using financial incentives is offered by Clean Incentive and Sustainable Bitcoin Protocol (SBP). These companies are trying to promote investments in “clean” bitcoin by creating new, blockchain-based assets that miners can trade to capitalize on their use of renewables. Investors looking to verifiably own environmentally-conscious bitcoin are the right fit for these assets.
Similarly, Clean Incentive looks to “collect, validate and tokenize ESG [environmental, social, and governance] attributes” from a network of miners, said its founder and CEO Casey Martinez, a data scientist with experience in renewable energy.
Some of the more technical solutions that firms are providing include both hardware and software-related products.
For every megawatt (MW) of energy used for the actual computing in a data center, LiquidStack's solution uses 0.02 MW for cooling, whereas other options use 0.1 MW to 0.7 MW, LiquidStack said.
“What made LiquidStack attractive was its potential to improve sustainability for data centers, including bitcoin mining, and its innovation,” said Amber Mulligan, VP of Strategic Sales and Marketing, Commercial HVAC Americas at Trane.
LiquidStack’s technology also makes heat reuse easier and more efficient, opening the door to a host of synergies for miners, said Mulligan, noting that because the heat is actually managed with liquids instead of traditional air cooling, capturing it and directing it to other uses is easier.
On the software-side, Vancouver-based mining services firm, Lincoin, has created a program that miners can use to more efficiently and profitably manage their operations, including their participation in demand response programs and heat reuse activities.
The software, called Rails, integrates real-time data from over 20,000 grid nodes in 9 deregulated electricity markets in the U.S. and Canada, said a press release.
With SBP, miners can verify their use of clean energy with third-party auditors and be added to a registry. After that, for every block reward they get, they receive a Sustainable Bitcoin Mining Certificate, a blockchain-based asset which they can sell to institutional investors.
The startup is still in stealth mode, but has already onboarded several miners, Martinez said Clean Incentive with a small-scale miner from Canada, Ocean Falls Blockchain, in November.
Immersion cooling firm, LiquidStack, offers a hardware-based cooling solution that can cut the energy used by the computers in bitcoin mines by 40% and reduce their land use by one third,
The firm, one of the earliest in the space, in March, a 150-year old firm in the heating and cooling space which brought in $16 billion in revenues in 2022.
Demand response is when a miner, or other energy consumer, shuts down their operations at times of peak demand, such that the grid can meet the consumption needs. . refers to the practice of using excess heat from a mining operation for another activity, such as greenhouse farming.
This article first appeared on Coindesk, written by