Since July 2018, the energy used for mining bitcoins has declined by nearly 2 percent, while the hash rate has increased by 60 percent.
Despite the record hash rates in computing power required to generate new blocks, the power required to fuel these transactions has shrunk to 69.79 terawatts per hour (TW/h) from 71.12 TW/h in July 2018.
A hash rate is the speed at which a bitcoin miner can solve a bitcoin code. It is also known as the computing power used for processing a bitcoin. Currently it takes close to 90 quintillion hashes per second to process a bitcoin. A year ago, it was 40 quintillion hashes per second.
Since July 2018, the energy used for mining bitcoins has declined by nearly two percent over the year, while the hash rate has increased by 60 percent during the same time period.
Underscoring this trend is that bitcoin mining companies are using renewable sources to power mining operations. According to a report from CoinShares, 74 percent of bitcoin mining operations use renewable power energy sources.
Additionally, the report adds that mining operations have grown more efficient. Since November 2018, improvements in cooling and overhead costs have driven down the average mining costs. The cost to mine a bitcoin has dropped from US$6,800 to US$5,600 in less than a year.
Compounding this effect, CoinShares reported that in 2019, bitcoin miners are projected to earn US$6.2 billion, with the majority earned through minting new coins. This is equivalent to a US$1 billion uptick in earnings from the previous year.
Using renewable energy to power bitcoin mining processes is not a new development. In fact, since 2018 the amount of bitcoin mining energy derived from renewable sources dropped from 77.6 percent.
As renewable power maintains its foothold, there are three key renewable sources in bitcoin mining operations. Wind, solar and hydropower are among the various types of underutilized renewable energy sources that power bitcoin mining projects.
Take, for example Soluna, a blockchain mining company that is building wind power plants to mine blockchains at scale. With plans to develop in Morocco, Soluna is building a number of sites that generate 12 megawatts (MW) of wind power across a 37,000 acre site.
On the other side of the world, Hut 8 Mining (TSXV:HUT) operates bitcoin mining facilities in Alberta. In May, it reported that 77 percent of its mining operations are powered from renewable energy. As of September 2018, it was operating four wind turbines.
While renewables are claimed to account for a large portion of bitcoin’s mining energy supply, many individuals have shown signs of skepticism. To couch misconceptions about blockchain mining requiring exorbitant amounts of electricity, in May several miners discussed global blockchain operations at a Fidelity Mining Summit in Boston.
“Bitcoin is at the center of the next great infrastructure that we’ve never seen before. We’re going to go to places that have incredible renewable energy sites,” John Belizaire, CEO of Soluna, said at the summit.
Countering the belief that blockchain mining is mainly powered by coal in China, CoinShare notes that Sichuan — a region for bitcoin mining in China — has a 90 percent renewable energy penetration rate. Sichuan accounts for 50 percent of the world’s total bitcoin mining. Renewable power sources in China are typically fuelled from hydropower sources.
As bitcoin miners seek cost effective mining methods, many operate bitcoin mining rigs in regions where renewable energy sources are plentiful and where cooling costs can be kept to a minimum. Case in point, other bitcoin mining epicenters around the world — aside from Sichuan — are British Columbia, Newfoundland, Quebec, Alberta, Iceland, Washington State, New York State, Norway, Sweden, Georgia, Armenia and the Yunnan province in China.
As renewable energy gains dominance, a number of green bitcoin mining projects are slated for future development. Solar power mining projects by Plouton Mining in California and mining projects in Africa by Pieta are among a few.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.