Bitcoin mining has long been criticized for its environmental impact, with headlines often painting a grim picture of its energy consumption. However, two recently published studies are shifting this narrative, showing that bitcoin mining can be sustainable and help reduce carbon emissions.
The Role Of Bitcoin Mining In Carbon Reduction
A recent study from the Bitcoin Policy Institute challenges the belief that bitcoin mining is environmentally harmful. Titled "How Bitcoin Mining Reduces Carbon Emissions", the study highlights how mining operations are increasingly powered by renewable energy sources. It also shows that these operations can help stabilize energy grids by using excess capacity during off-peak times. This turns bitcoin mining into a tool for reducing carbon emissions rather than worsening them.
Many miners now work in areas with excess renewable energy, preventing the waste of power. These miners act as a buyer of last resort, utilizing otherwise stranded or wasted energy sources like wind or solar, which might otherwise be curtailed.
By doing so, they create an additional revenue stream and reduce the need for costly curtailment while stabilizing grid operations. This mutually beneficial arrangement helps to monetize surplus energy and contributes to a more efficient energy ecosystem.
Bitcoin's Long-Term Viability
A common question around the long-term business strategy of bitcoin mining is whether it will remain profitable as the available bitcoin supply decreases. The final bitcoin is expected to be mined around the year 2140. After this point, miners will no longer receive block rewards but will still earn transaction fees, which will continue to make mining a lucrative business and ensure the network remains secure.
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As global economies face rising instability and fiat currencies collapse due to hyperinflation, bitcoin, as decentralized internet money, could become a lifeboat. A global peer-to-peer cash system that operates without central control may be a lifeline to sustaining economies. Technology and energy efficiency advances will also help keep bitcoin mining profitable in the long term.
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By addressing this long-term viability, the BPI study provides important context for those evaluating bitcoin as a sustainable industry. Bitcoin is the only asset on the planet with absolute scarcity, with a 21 million-capped supply. As the available supply of bitcoin reduces, the scarcity is expected to drive up its value. There is no guarantee that scarcity alone will increase bitcoin’s price, but historically, limited supply and positive demand have this effect. Advances in mining hardware and renewable energy integration will help mitigate the rising energy demands, allowing miners to remain competitive and environmentally sound.
Exposing Flawed Research And Sensational Headlines
In a parallel development, the Digital Assets Research Institute published a paper titled “Runaway Citations and the Persistence of Bitcoin Misinformation” that dissects seven years of inaccurate research on bitcoin and its energy use. This paper argues that much of the past research on bitcoin mining was based on non-empirical data and faulty assumptions, leading to sensationalist headlines that painted an inaccurate picture of bitcoin's environmental footprint.
For years, studies have relied on outdated models or data that failed to account for bitcoin miners' increasing shift to renewable energy. These misinformed studies have shaped public policy, contributing to regulatory frameworks hindering bitcoin's growth. DA-RI's paper highlights how policymakers, regulators, and the media have often failed to grasp the nuances of bitcoin mining, allowing skewed perceptions to dominate the discourse.
Impact On Policy-Making
These studies will have implications for future policy-making. Regulators and lawmakers who once relied on flawed research to frame their arguments against bitcoin can now reconsider their stance. The BPI study provides evidence that bitcoin mining can contribute positively to global carbon reduction goals when powered by renewable energy. Meanwhile, the DA-RI paper demonstrates the need for empirical, well-researched data in shaping regulatory decisions.
As governments worldwide increasingly prioritize green initiatives, bitcoin mining could help achieve these objectives. The new research challenges the idea that bitcoin is an unsustainable energy drain and positions it as a potentially beneficial component of a greener future. Regulators who understand this can craft policies encouraging sustainable mining practices rather than stifling the industry through misguided restrictions.
A Changing Perspective
Thanks to new research from the Bitcoin Policy Institute and the Digital Assets Research Institute, policymakers and the public are beginning to understand that bitcoin mining can be part of the solution rather than the problem of global carbon reduction efforts.
These studies call for reevaluating regulatory approaches to bitcoin mining, emphasizing the importance of fact-based decision-making and the potential for this technology to contribute positively to environmental goals. As more governments and organizations recognize the potential for sustainable bitcoin mining, we may see a more balanced and informed approach to bitcoin regulation in the coming years.
Susie Violet Ward is a financial analyst and journalist specializing in bitcoin. She writes for Forbes, focusing on the intersection of bitcoin and environmental issues.