More Eco-Friendly BTC Mining Aims To Please Tesla, Can’t Compete With Helium Proof Of Coverage Model

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Bitcoin renewable energy needs

In May 2021, Elon Musk realized Tesla could no longer, in good conscience, accept Bitcoin payments, because of environmental impacts that conflicted with Tesla’s planet-friendly mission. Musk admitted “increasing use of fossil fuels for Bitcoin mining and transactions” was going to be problematic.

In fact, according to the Bitcoin Energy Consumption Index, Bitcoin is responsible for venting about 37 megatons of carbon dioxide into the atmosphere per year, with a carbon footprint roughly equal to that of New Zealand.

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By July, however, Musk once again came around to accepting Bitcoin, but only if Bitcoin used at least 50% renewable energy.

But, how will Musk know when Bitcoin meets his green criteria?

Green Bitcoin?

The Green Bitcoin Theory says that most Bitcoin mining tries to maximize profit by using the cheapest available energy, and for most countries the cheapest energy comes from renewables and utility company non-peak hour surpluses. Renewables include water, wind, geothermal and solar.

One of the problems with the Green Bitcoin Theory, however, is that the power generation profiles of renewables are intermittent. But, Bitcoin miners want energy 24/7/365. So Bitcoin mining increases baseline grid demands, and when renewables and utility company surpluses fall short, then mining switches to fossil fuels.

What About Other Cryptocurrencies?

More sustainable solutions have been proven with other cryptocurrencies, at least on smaller scales. The trick is finding the right balance between the more popular investment tokens and amenability to reducing carbon footprints.

For example, SolarCoin tokens are created for every Megawatt hour generated from solar energy. No energy is expended. That’s a very green bonus for solar power companies and may even help to subsidize the creation of more solar energy capacity. It’s not likely to replace any of the most popular and heavily capitalized cryptocurrencies as an investment token, however, so the overall contribution to crypto greening will be commensurately small. 

Helium miners use Hotspot gateways to relay Internet of Things device data via radio waves. Whenever Hotspots relay data or verify signals from other Hotspots, Helium rewards them with HNT native tokens. A Helium Hotspot typically consumes no more than 5 watts of power, or about $5 – $10 per year in electricity. Helium tokens can also be burned to create Data Credits, which pay for the movement of data within the Helium IoT Network. Transmission of IoT Data costs pennies, making Helium one of the most energy-friendly and cost-effective cryptocurrency blockchain projects developed to date. 

Comparison of Cryptocurrency Consensus Mechanisms and Energy Use

Bitcoin energy demands dwarf other coins, not only in kWh/transaction, but also by its cryptocurrency market dominance.

Bitcoin’s proof-of-work consensus mechanism is largely responsible for its intensive energy use, but that mechanism is unlikely to change. Bitcoin PoW verifies transactions and adds blocks to the blockchain. It uses expensive graphics processing units (GPUs) which take extensive time to process and consume huge amounts of electricity.

Proof-of-stake, used by Cardano and many other tokens, was created as a low-energy, low-cost alternative to proof-of-work. It assigns responsibility for the public blockchain ledger according to the number of tokens held by randomly selected validators.

Chia’s proof-of-space consensus mechanism is similar to proof-of-work, except cpu memory or disk space is used to earn cryptocurrency instead of computations.

Chia’s proof-of-space consensus mechanism is similar to proof-of-work, except cpu memory or disk space is used to earn cryptocurrency instead of computations.

Helium’s Proof-of-Coverage consensus uses radio frequency signals to validate that Hotspots are producing wireless coverage. It adds  new blocks to the Helium blockchain, performs new tasks and rewards Hotspot miners.

Green Bitcoin Trends

As previously described, Bitcoin mining is a constant demand on power grids, even grids that rely mostly on intermittent renewable hydro, wind and solar sources.  One solution is to shut Bitcoin miners off during periods of high demand on grid power.

In the western part of the Texas energy grid about 85% of electricity is generated by solar and wind. Bitcoin miners work with the Electric Reliability Council of Texas, drawing energy when supply surpasses demand. During peak energy spikes miners can sell electricity back, as an incentive for doing business in Texas.

The Bitcoin Mining Council was created last year, in part to address climate concerns. They voluntarily collect and track the sustainable power mixes of Bitcoin miners worldwide, and report growing improvements in Bitcoin mining energy efficiency and sustainability.

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