Over the past year, Bitcoin has registered some very impressive gains. Investors have flocked to buy the precious cyber currency – even seasoned investors in the stock market are curious about the hype that surrounds Bitcoin, #cryptocurrency and #block chain technology. One must keep in mind that creating each digital bitcoin is very energy intensive – it’s important to use energy wisely, and #solar is a good option. Could Bitcoin be linked to #solar power? Presently, most of the energy used by computers generating Bitcoin comes from fossil fuels. In other words, the digital currency is produced using sources that cause a great deal of pollution.
A Solar Future?
Let’s take Bitmain Technologies LTD as an example. The company has eight warehouses in northern China, and each warehouse is roughly 100 meters long. All of these warehouses are linked to a server farm used to mine Bitcoin. In total, there are approximately 25,000 computers that are working day and night to produce the precious currency. Solving the complex, encrypted calculation that is required to generate every single Bitcoin takes time. And it takes energy; energy that may come entirely from solar sources in the future. At this time, most of the energy comes from coal instead of solar panels. And cryptocurrency mines are popping up all over China.
Where Are the Mines Located?
Currently, more than 50 percent of all currency mines are located in China. Just 16 percent of the total “mines” in existence are located in the United States. The problem is that these places are using astonishing amounts of energy, and not enough of it is coming from solar sources. The industry’s power use may already equal close to three million US homes. And keep in mind that that difficulty of the token-generating calculations is rising as more Bitcoin is being generated. This translates to an increase in energy – an increase that is not currently supported by renewable sources like solar panels.
According to Christopher Chapman, an analyst for Citigroup Inc., generating Bitcoin has become quite a dirty concept. It’s consuming huge amounts of energy, energy that cannot be supplied by the solar industry. However, progress is being made and solar energy is slowly gaining traction with some of the currency mines.
Bitcoin has always been closely linked to energy. The person who developed the digital currency, Satoshi Nakamoto, created a system that awards the coins when a complex puzzle is solved. The digital ledger is encrypted and records all transactions and all the work done. If generating Bitcoin was a hobbyist culture back in 2009, now it is a global phenomenon. Unfortunately, it has nothing to do with solar energy.
The coins managed to fetch almost $18,000 a piece in December, 2017. This is obviously a great deal of money, and server farms are using more and more power every month to generate new Bitcoins. Just a fraction of this power comes from solar sources; the rest comes from fossil fuels and coal. During the first day of trading, Cboe Global Markets Inc. reported the price of one Bitcoin to reach $18,850. It was December 11 and the company had just begun to offer Bitcoin futures.
China is at present time the largest operator of computer mines that are used to farm bitcoin. And around 60% of China’s energy comes from burning coal instead of harvesting solar energy. In fact, China accounts for approximately 25% of the power used to generate crypto currencies worldwide. This means tremendous amounts of power are used to generate Bitcoin, and just a small portion of this energy comes from renewable sources like solar, wind and geothermal. Creating each coin is also a lot more difficult and requires a lot more solar energy than it did back in 2009.
At the time of writing, China is the largest consumer and producer of coal in the world. However, as mentioned, around 58 percent of the large cryptocurrency mining farms are based in China. These mining pools are heavily depending on coal. However, unlike solar energy, coal is an exhaustible source of energy.
The Demand for Energy (Even Solar) Is Expanding
Nobody knows for sure how much energy (including solar energy) is being consumed daily to generate Bitcoin. Some estimate that it is the output of just one large nuclear reactor, while other specialists estimate that it equals the energy consumption of the entire population of Denmark. However, everyone agrees that the Bitcoin industry’s power needs are rapidly growing. Now, with the currency being valued so high, companies are rushing to bring more mining pools online. And each one of them requires energy (including from solar) to work and mine coins.
According to Alex de Vries, a 28-year-old block chain analyst, the energy use has increased by 30 percent in the past month. He stated that the energy consumption (excluding solar) is “insane” and that it is capable of killing the planet if it is used on a global scale. Why? Because just a small portion of this energy comes from renewable sources like solar. If solar power was used more, the impact of the industry would be a lot less dangerous for the planet. However, harvesting so much power requires impressive investments of money, time, and manpower – going solar would be useful.
On the bright side, advances in technology (including solar) make Bitcoin mining operations more efficient. New generations of computer hardware consume a lot less energy. And advances in solar energy technology increase the output of solar panels. Some analysts say that even the most severe estimates of energy demand (including solar) account for just 0.1 percent of the worldwide energy consumption.
However, everyone agrees that producing cryptocurrency is becoming more expensive. Even with solar energy, there are costs. At this time, China has vast supplies of coal and has plenty of coal-fired generators. Bitcoin harvesters are looking for the cheapest energy, so they are flocking to China. However, China is still slow to harvest solar energy at its full potential. Even though coal may be cheap today, solar energy may be cheaper in a few years.
Puzzles Are Getting Harder
The algorithm of Bitcoin makes the creation of each token batch more difficult. This means that the more tokens which are created, the more difficult is to create the next ones – and energy consumption is directly affected by the algorithm. Solar energy must be able to keep up the pace. The marginal cost of each bitcoin will likely double in the second quarter of 2018, reaching $14,175. Keep in mind that even the solar industry – which is growing rapidly – may not be able to keep up with this pace. The marginal cost of each Bitcoin was just $2,856 at the start of 2017. Miners are at serious risk if the prices tumble. They absolutely need cheap energy (including solar) at this point; and they are hoping that solar energy will be able to provide them with a viable option. Truth be told, solar projects are constantly being developed all over the world. In addition, governments are providing many benefits for companies that produce power from solar sources – or any renewable sources for that matter.
The good news is that not all bitcoins are created using dirty coal. Many computers in Iceland are using energy generated by clean geothermal plants. Iceland doesn’t have much solar power potential, but their geothermal plants are very efficient. And even in China, there are many coin mining operations that are centered around hydroelectric plants. In the near future, we will see the same happening around solar plants.
Innovation Is Everywhere
Hydrominer IT-Services GmbH has thought of a brilliant solution to their coin farming needs. They placed their servers inside hydroelectric plants. This means that their computers have direct access to energy (albeit not solar) right at the source. The company had begun mining in 2013 and is on the rise.
They did not start their coin mining operation as an environmental project. They didn’t think about solar or hydro energy. However, their solution is perfect for their needs. And they must agree that most people don’t agree with using coal as a source of power. Solar and hydro energy are cleaner and they get the job done without harming the planet. However, according to the company, the problem is that energy (even solar) is quite expensive in Europe.
With the advancement of solar technology, we will begin seeing coin farms being powered entirely by solar energy. When this starts to happen, no one will be able to say that the bitcoin mining operations are responsible for climate change and the use of coal to produce energy. Solar power – once again – is the answer! Follow solar news to see if a mainstream link is established between cryptocurrency and solar energy.