European clocks losing time
The Guardian newspaper not long ago reported (see) that clocks in Europe were losing time. The reason was an unprecedented lag in the continent’s electricity grid. Since 1930, electric clocks have kept time based on the rate of the electrical current that powers them. If the current fluctuates, clocks can speed up or slow down. But what was causing the fluctuations?
European authorities traced the power fluctuations to North Kosovo. A peculiar aspect of this region is that it doesn’t charge its residents for their electricity. Electricity for the residents of cities in North Kosovo costs nothing – zilch! Enterprising residents were literally printing currency- cryptocurrency to be accurate. With free electricity, Bitcoin and Ethereum rigs in almost every home were humming away. Literally, thousands of households were into the cryptocurrency mining business. Such operations are hardly profitable if one pays for electricity. With free electricity business was booming and the surge in demand was affecting the European energy grid.
Bitcoin is energy hungry
Bitcoin has also provoked controversy for the enormous amount of electricity it consumes. The massive energy demand comes from the computing power needed for bitcoin mining – a process whereby networked computers verify transactions. Analysis by Cambridge University suggests that Bitcoin mining consumes around 103 Terawatt hours per year. Bitcoin’s electricity consumption scale is evident in the chart below, which compares Bitcoin’s energy usage with the total electricity consumption by countries such as the Netherlands and UAE.
Bitcoin is causing ripples amongst cryptocurrency investors, climate campaigners, and energy experts alike.
Surplus energy
Bitcoin is causing ripples amongst cryptocurrency investors and climate campaigners alike. It is attracting scorn for its price volatility, its use in illegal transactions, its thefts from exchanges and more recently for the enormous amount of electricity it consumes. The high energy demand to mine bitcoins creates an opportunity for renewable energy – mainly surplus renewable energy. What if surplus energy can be used to mine cryptocurrency? China already does this with hydropower. Crypto mining operations shift to China in the rainy season – a time when massive amounts of clean energy are wasted in the provinces of Sichuan and Yunnan because production capacity significantly outstrips demand during the wet season (generally April through to September). China carries out bitcoin mining operations n provinces of Sichuan and Yunnan to leverage the surplus energy available during the wet season. This is why China only accounts for 10% of global bitcoin mining in the dry season, whereas the number jumps to close to 50% in the wet season (see).
Wasted energy
Low carbon energy sources such as solar and wind are revolutionising the energy industry. However, the wind doesn’t always blow, and the sun doesn’t always shine. Equally, there are times when the wind blows a bit too much, and the sun shines a bit too much, producing surplus renewable energy. In the absence of energy storage systems that make economic sense, surplus energy is dumped, or the output is turned down – a scenario called curtailment in the industry. Curtailment is revenue lost for business. Moreover, green energy that could have otherwise been harnessed is wasted. Britain wasted 1.49 million megawatt-hours of Wind energy in 2017 (see). At an average wholesale price of £45/MWh, that equates to around £67m.
Bitcoin a buddy of renewable energy
Why not use surplus energy to mine cryptocurrency when there is sagging power demand but surging renewable power? Bitcoin mining is relatively mobile. New mining rigs can be set up reasonably quickly and in even the most remote areas. In such a scenario, Bitcoin miners will not compete with other energy consumers but instead uptake surplus energy that would otherwise be wasted. Cryptocurrency mined with surplus green energy can be used to feed the hungry, reduce child mortality in developing countries, put a roof over the head of the poor or fund research into ailments that plague humanity. Mining cryptocurrencies with surplus renewable energy has tremendous potential. It can convert waste to value. Perhaps alongside offsetting carbon and striving for NetZero, energy giants should also set themselves targets for the betterment of society by offloading surplus energy into cryptocurrency mining farms instead of wasting such energy. In that aspect, Bitcoins have the potential to become a buddy of renewable energy.
