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No matter what you think about the benefits of Bitcoin, one thing is clear. It has a huge impact on the environment.
So far this year, computers used to “mine” the cryptocurrency have consumed 146 terawatt hours (TWh) of electricity, according to the Cambridge Bitcoin Energy Consumption Index.
This is more electricity than, for example, Sweden uses each year. And once the price of Bitcoin reaches $100,000, interest in Bitcoin mining will definitely increase.
So it’s good to see that at least one crypto group (US-listed $8.5 billion Mara Holdings) has come up with an environmentally friendly way to mine Bitcoin.
Specifically, Mara purchased a wind farm in Texas. It plans to produce bitcoin there when the wind blows, and expects uptime to be about 30 percent. Tokens generated in this way have a near-zero carbon footprint.
From a financial perspective, this is not a strategy that makes sense for most mining industries. The high capital costs of the machines used to mine Bitcoin must be spread over as many productions as possible.
With Bitcoin prices high and energy prices relatively low, it rarely makes sense to halt production.
According to Aurora Energy Research, the latest generation of computers generates 12.9 Bitcoin per year per 8760 MWh of electricity. At $100,000 per Bitcoin, that’s $147 per MWh. By comparison, wholesale electricity prices in the United States average about $40/MWh.
However, the mala serves two purposes. First, the acquired power plants are located in sparsely populated areas with limited transmission capacity, so there are few buyers for their production. Maybe Mara got it cheap.
Second, Mara uses old and deteriorating computing equipment. It will be less energy efficient than current crops, but this is not a problem if the energy costs are close to zero. Also, the capital cost is negligible, so it is okay to spread it over fewer operating hours.
Mara expects to stop mining once the winds stop, but it can always supplement its energy inputs with non-green power from the grid if prices are low enough. At the end of the day, it is not clear whether there is a truly green market for Bitcoin.
The group has found an environmentally friendly way to make money from Bitcoin, but the supply of struggling power plants that miners can reuse is likely limited.
But there are some regions, such as Texas, where the supply of renewable energy exceeds demand and prices are relatively low. It even makes sense to mine part-time using older equipment. This is not a strategy that can be replicated infinitely. But as far as that goes, it’s a nifty deal.