Over the past five year, the impact of the blockchain industry on the energy sector has been a significant source of controversy. Both environmentalists and governments have expressed concern about the energy needed to secure the Bitcoin network. Data shows that the network’s energy consumption is now comparable to the annual energy consumption of some small countries.
Historical Bitcoin network power demand. Source: CCAF
Although much of the discussion has been about the negative environmental effects of Bitcoin (BTC), the drive to maximize profits from mining and to integrate blockchain technology into the energy grid have also led to new developments that could prove to be beneficial over the long-term.
Here are some developments that have resulted from the need for energy to run blockchain networks. Also, see the positive impact cryptocurrency mining has on the energy industry.
Rectifying wasted energy
The monetization and sale of previously untapped energy sources, such as natural gas flared at oil drilling sites, is one of the fastest growing segments of cryptocurrency mining.
Exploiting natural gas pockets is an important part of the oil-drilling industry. Until recently, the gas was burned in a process known as “flaring” due to a lack of infrastructure or a lack of demand for LNG.
Bitcoin’s value grew over time and so did the need for cheap energy sources. Shipping containers were filled with mining equipment to be used at the drilling sites.
The process still produces carbon dioxide, but income is earned during the process. These funds could be used to mitigate environmental concerns.
Recent research has shown that several companies are exploring the possibility of integrating mining via flared gas from the Middle East. This region accounted for more than 38% of global flaring in 2020, and represents one of the largest opportunities to convert wasted energy into valuable resources.
Blockchain technology could make energy generation more efficient
The push to maximize crypto mining profits also has a second benefit: improvements in the energy infrastructure, and a greater focus on sustainable energy generation.
The Bitcoin Mining Council has found that energy from renewable sources is rising in comparison to oil and coal.
El Salvador and Kenya are two examples of less developed countries that have been able to reap the benefits of energy generation from sustainable sources such as geothermal power plants. This has provided an additional income source for their economies.
Crypto mining provides a financial incentive for further energy efficiency and generation optimization, whether it is the utilization of excess power from hydroelectric power plants or the increase in wind and solar power.
Related: Marathon Digital opens Montana BTC Mine to pursue carbon neutrality
Smart grid technology
Another blockchain-related development in energy is the creation of blockchain-based smart Grids, which aim to improve energy distribution at large scales.
Inefficiencies in electricity distribution can be largely attributed to retail firms, which own very little of the infrastructure. They mainly offer simple services like billing and monitoring meter usage.
These services can be easily handled using blockchain technology and Internet-of-Things (IoT-devices) that allow consumers to bypass retailers and connect directly to wholesale distributors. This could potentially reduce electricity bills up to 40%
The smart grid connects consumers to different providers, allowing them to compare rates and get the best rate. This could level the playing field in an area that was historically dominated by one company.
Grid+ and Energy Web Token have been instrumental in leading the field. The old grid of monitoring equipment and substations is being replaced by a network distributed energy resources (DERs), which include solar arrays, battery energy storage systems and natural gas generators.
Although the sector is still very young, it is a trend to watch. Blockchain technology will be integrated further into the energy sector in the future years.
You would like to learn more about investing and trading in the crypto markets?
Go green or die? Bitcoin miners seek carbon neutrality by mining near data centresGov’t claims that crypto miners consume 2% in Russia’s total electricity. Enterprise blockchain to play pivotal role in creating sustainable futureEarth Day analysts claim that Bitcoin mining naturally gravitates towards green energy.Twitter debates the role and importance of renewable energy in Bitcoin miningcom. You should research before making any investment or trading decision.
Eileen Wilson –Technology and Energy
My Name is Eileen Wilson with more than 5 years of experience in the Stock market industry, I am energetic about Technology news, started my career as an author then, later climbing my way up towards success into senior positions. I can consider myself as the backbone behind the success and growth of topmagazinewire.com with a dream to expand the reach out of the industry on a global scale. I am also a contributor and an editor of the Technology and Energy category. I experienced a critical analysis of companies and extracted the most noteworthy information for our vibrant investor network.