Use of Crypto Energy Helps Boost Renewable Energy Investments
Ever since crypto-assets burst into the mainstream financial conversation, there has been a debate about how much power and energy crypto transactions consume. The statistics and anecdotes that have been used include the reality that bitcoin consumes more energy than some countries, and that bitcoin mining is like adding an entire new city to some specific power grids. Crypto mining consumes, absolutely, significant amounts of power and energy, but that misses the biggest and most important point.
All major industries, including incumbent financial services and the multitude of streaming content providers so beloved around the world, also consume large amounts of electricity and have done so for decades. This is not presented to serve as an excuse, nor to try to equivocate very different industries from each other. Rather, it is to highlight the simple reality that energy consumption and use is a fact that any industry must be able to account for. In other words, the question must be answered; is the energy consumed and used by crypto-assets worth it?
This opens the door to more comprehensive questions that should be addressed; What are the energy issues for investors and policymakers to keep in mind as the energy conversations around crypto continue to evolve?
Crypto can encourage green innovation. Starting with perhaps the most impactful point of all, the growing use and integration of crypto-assets across the economy drives home the point that crypto-assets can help drive innovation in digital technology. ‘green energy. This fits with the growing political attention given to renewable and green energy resources, including solar, wind and hydroelectric sources, but the conversation does not stop there.
Even now, when green renewable energy solutions still appear to be in the works rather than ready for mass market adoption, crypto miners and operators are actively working with power producers to find solutions. market based. For example, there are many examples of crypto organizations working with oil and natural gas producers to utilize excess natural gas or other resources that would otherwise be wasted.
As paradoxical as it may seem at first glance, the increasing power used by the crypto industry could actually pave the way for solutions that are both more efficient and greener over time.
Crypto is already green. One statistic that is often overlooked in what can become some very intense debates about the merits of crypto-assets is the reality that – to a large extent – crypto mining and other activities are already harnessing green, renewable energy resources. . Depending on the specific study referenced, the actual percentage of energy from green sources has been quoted between 25% and 60%, but the message is the same. Crypto operators, seen through this lens, might actually be greener than the norm.
According to a study published by the US Energy Information Administration, on average, 12.1% of the energy consumed and 20.1% of the electricity produced comes from renewable sources. Expressed in a different and verifiable way by publicly available information, crypto mining and operators can use more renewable energy than the average organization, at least in the United States.
The crypto market is, of course, global, so it would be difficult to extrapolate US trends globally, but it’s encouraging to see how this sector has seemingly wholeheartedly embraced energy sources. renewable.
Proof of Stake is on the rise. For all the heated conversation around the topic of crypto power consumption, it’s also important to remember that these comments (in most cases) only refer to the power used by bitcoin miners. Bitcoin, as it is commonly known, relies on the Proof-of-Work (PoW) consensus protocol to verify blocks and maintain the integrity of the existing blockchain. These debates ignore the growing and diverse range of products and services that do not operate under the proof-of-work protocol, but instead use the Proof-of-Stake (PoS) consensus methodology.
According to the specific study referenced, the transition from PoW to PoS will reduce power consumption around certain blockchain and crypto products by up to 99%, which will clearly change the tone of current food-related conversations. With many of the newest crypto-asset applications – decentralized finance and non-fungible tokens to name just two – running on the Ethereum blockchain, and with the Ethereum community poised to transition from PoW to PoS, there’s a sea change potentially coming for space.
As with anything blockchain and crypto-asset related, the seemingly straightforward headlines that dominate the conversation may overlook the nuanced layers that need to be analyzed. Blockchain and crypto-assets consume quite large amounts of energy; it is indisputable. Where the conversation should – and increasingly is – focus on 1) the rationale for this energy consumption, and 2) how this energy is obtained. Crypto uses energy, like any commercial enterprise, and the value provided by crypto applications far exceeds the cost they incur.