CAN BITCOIN SAVE RENEWABLE ENERGY?

highselfesteem (35)in #bitcoin • 6 years ago (edited)

Can Bitcoin Save Renewable Energy?

Bitcoin has a problem of waste. Renewable energy has a problem of excess. There is a solution.

Bitcoin can bridge the financial gap that takes renewable energy from its place as an emerging technology to a place of market dominance. Two emerging technologies of the 21st Century could use the weaknesses of the other to strengthen themselves. The marriage of renewable energy and bitcoin is a synergistic relationship waiting to happen.

Problem Bird #1 – Wasted Renewable Energy

The main problem with renewable energy is that the power comes intermittently and in huge spurts. Many people have argued that extra renewable energy doesn’t always mean less carbon emittance. Power grids need baseload power at a moment’s notice that is steady and predictable. Baseload power is the minimum amount of power a grid needs over a period of time. Solar, wind and water power cannot provide this steady baseload all year round or even in every 24-hour cycle. Natural gas and coal provide most countries with this crucial part of modern infrastructure. Although renewable energy growth has been parabolic in the last decade it hasn’t yet wiped out the previous generation of fossil fuel-based energy production. If you cannot rely on the renewable sources at all times, then you must have other forms of baseload capacity to avoid blackouts.

On a sunny summer day in Berlin you might have enough renewable energy to run the city during the day. But since peak energy usage is at night you must keep the baseload turned on. Consumers get double the power plants and double the electricity bill. In the long term this problem may be solved, and many people are working on innovative ways to store energy through gas production, water pumping and battery storage. Progress has been made and power plants are being shut down. But in the intervening decades renewable energy plants will continue to create excess energy that can cost them money to use.

Problem Bird #2 – The Spiraling Cost of Bitcoin Mining

How much energy does bitcoin use? A lot. The same amount of energy that the whole country of Ireland uses in a year. Mining bitcoin involves computers solving difficult equations that require enormous amounts of computing power. This mining by its nature must be costly so as to keep the network safe from attack. The incentive for miners to mine is the price of bitcoin itself which is rewarded to computers who solve the equation first. A currency like bitcoin with its proof of work model inevitably leads to an arms race in computing. Efficiencies notwithstanding this generally leads to an increase in energy use. Naturally, market forces have pushed bitcoin mining into parts of the world where energy is cheapest. China as a country has the largest distinct group of bitcoin miners for that very simple reason. Claims have been made in recent months that each bitcoin costs over $8,000 to mine. Of course, that depends on your location. Rational miners will only mine for as long as its profitable or if they presume bitcoin will increase in value enough to make it profitable in the future. Eventually miners who pay more for electricity than they gain in bitcoin will switch off their computers or turn them to more profitable uses, (often mining other cryptocurrencies).

Killing Two Technology Problems with One Renewable Stone

However, there might be an innovative way for renewable energy companies to make themselves financially viable. As previously mentioned the energy from renewables comes in spurts. There is an abundance of energy that we haven’t yet found a way to store. When California has a very sunny day and creates more energy than it needs it will find it hard to sell that excess energy to anyone. If the sun is shining there in California then the neighbouring states of Nevada, Arizona and New Mexico probably have their own fill of energy at the same time too. As electricity travels over long distances there is a diminishing rate of return. It is not economical to send electricity from California to New York for example. California has not released details of how much excess energy it creates but its renewable power generation alone could power bitcoin for a year ten times over. If even a small percentage of that could be profitably turned over to mining operations it would take a huge financial pressure off the backs of consumers paying the highest electricity rates in the US. In recent winters and springs the state of California has actually paid Arizona to take excess energy from them to avoid damaging their own power infrastructure. Why not fire up those GPU’s and make coin instead?

If power companies can turn their excess power to mining currency, then they might just turn their operations from loss making into profit making. The beauty of bitcoin is that there are no losses as you send it over long distances. You can convert a bitcoin to any currency and buy your materials or fuels from anywhere on the planet. You can invest the profits in renewable energy projects on the other side of the planet. Or use it to plant trees. Or pay for the desalination of water in one of your own cities. While the issue of baseload power remains, you have now created some incentive to keep renewable plants open in places where they might not otherwise be viable. The more money spent in the renewable sector will lead to more competition and efficiencies. It may help renewables to wean themselves away from subsidies. Mining bitcoin can bridge the gap needed until national grids are modernised and battery technology is drastically improved. One day every car may be rechargeable. One day every home may have a powerbank capable of storing enough energy for their needs. But that day has not yet come. Bitcoin mining can build that bridge.
What good is it to have renewable energy infrastructure sitting there when there is a glut of sun, water and wind to harness. The extra energy is free.

Why not use it to create a baseload for the world’s cryptocurrencies?

Imagine the sun rising over your country and lighting up solar panels. The solar panels mine bitcoin at no extra cost. The sun moves on its way around the planet (from our perspective) and your country having made its share, focuses once more on the national grid. As the sun moves around the planet it lights up a continuous line of solar panels that use any excess energy to generate a highly valued, highly transferable currency which they can use instantly in any market worldwide.

The same line of thinking can be applied to hydroelectric dams that are forced to release water in times of unexpected rains and to wind turbines during exceptionally windy times of the year. As the planet tilts on its axis and creates the seasons you can also produce an excess during the Northern Hemisphere’s summer and an excess to the south of the globe during the Northern Hemisphere’s winter. There are currently some lucky and rational thinking countries that can run themselves completely on renewable power if they have a small population and an environment that allows for it. Hats off to Norway, Lesotho, Costa Rica, and Bhutan for harnessing the power right under or over their noses.

The benefits of renewable energy need to spread to the rest of humanity. Look at the stark difference in temperature between Moscow in the summer and Moscow in the winter. The same goes for Tokyo, New York, Milan and many more of the world’s cities. Now think about those cities creating a store of wealth of currency that they can use in winter months to convert into energy. Let them make hay while the sun shines.