Australia's Bitcoin opportunity using Renewable Energy
Can Australians utilise the power of clean energy, to drive the Adoption of Bitcoin and Cryptocurrency?
Read on to find out...
Bitcoin or BTC is a digital cryptocurrency, created in 2009 by an unknown person using the name Satoshi Nakamoto. Whilst that may seem strange and obscure, there is a rather compelling reason why.
Transactions are made with no middle men – meaning, no banks! Bitcoin can be used to book hotels on Expedia, shop for furniture on Overstock and buy Xbox games, but much of the hype is about getting rich by trading it. The price of bitcoin skyrocketed into the thousands in 2017.
As for why it will be adopted, there are many reasons. One fundamental reason is that Bitcoin is decentralised, meaning that it is not controlled by any government or financial institution. It is a hard asset that cannot be manipulated... the code that it operates on is fixed. This makes it more secure and less susceptible to fraud than traditional currencies. Another reason is that Bitcoin transactions are fast and cheap compared to traditional banking transactions. Additionally, Bitcoin is becoming more widely accepted as a form of payment by merchants around the world. Finally, some people believe that Bitcoin will become a store of value like gold and even a potential reserve currency in some regions, which could make it a good investment.
However, whilst there are many reasons why it's likely to be adopted, there are also many challenges that it faces. For example, Bitcoin's value is highly volatile and can fluctuate wildly in short periods of time. Additionally, there are concerns about the environmental impact of Bitcoin mining, which requires a lot of energy. Despite these challenges, many people remain optimistic about Bitcoin's future and believe that it has the potential to revolutionise the way we think about money and finance.
How are Bitcoins created?
Bitcoin is created through a process called mining. Miners use powerful computers to solve complex mathematical equations and verify transactions on the network. Once a transaction is verified, it is added to the blockchain and miners are rewarded with newly minted bitcoins.
The idea of using computational puzzles to create digital scarcity-based cryptocurrencies was first proposed by cryptographers Cynthia Dwork and Moni Naor in 1992. The first proposals for such cryptocurrencies were Wei Dai’s b-money and Nick Szabo’s bit gold. Satoshi Nakamoto integrated many existing ideas from the cryptography community to create Bitcoin, which was released as open-source software in 2009.
The total number of bitcoins that can be mined is capped at 21 million. Over 19 million bitcoins have already been mined.
The halvening impacts on Bitcoin mining.
Bitcoin halving, also known as a "halvening", is a planned event that takes place to reduce the rewards that miners can receive.
Essentially, the number of new bitcoins generated per block is reduced by half. It is pre-programmed into the Bitcoin protocol and occurs approximately every 210,000 blocks, which equates to roughly every four years. The whole purpose of halving is to control the inflation rate of Bitcoin and ensure its scarcity.
One immediate impact associated with the halving is a reduction in mining rewards. After each halving, the reward for successfully mining a new block is cut in half. The 2024 halving will decrease the block reward from 6.25 bitcoins to 3.125 bitcoins. This reduction in rewards can have some major financial implications for miners, as they will receive fewer bitcoins for their mining efforts.
The halving cycles often drive innovation in mining hardware. As mining rewards decrease, miners seek more efficient equipment and affordable, sustainable energy sources to maintain profitability. Over the years this has led to advancements in mining technology, resulting in more powerful, yet more energy-efficient mining rigs. The 2024 halving is expected to follow this trend, with miners investing in more advanced hardware to maximise their operational efficiency.
How does Renewable Energy help Bitcoin miners?
Cryptocurrency mining is an energy-intensive process that requires a lot of electricity. According University of Cambridge, the total annual power consumption of Bitcoin, the most widespread cryptocurrency, is currently 145 TWh, which is approximately 0.32% of total global energy consumption. The rapid growth of the crypto economy is placing fresh demands on electricity grids.
However, crypto mining also offers energy companies intriguing opportunities to create new revenue streams, improve demand response and even accelerate the expansion of long-term renewable energy resources.
Renewable energy systems such as solar, wind, hydroelectric and geothermal can be used to power crypto mining operations. 57% of the energy used for crypto mining comes from renewable sources, including carbon generation with carbon offsets as defined by the Bitcoin Mining Council Q3 2021 Report.
The Bitcoin Mining Council has released several quarterly reports since then:
- The Q1 2022 survey found that the members of the Bitcoin Mining Council and participants in the survey are currently utilising electricity with a 64.6% sustainable power mix.
- The Q3 2022 survey found that the global bitcoin mining industry’s sustainable electricity mix is now 59.5%.
- The Q4 2022 survey found that sustainable power increased by 1% year-on-year while bitcoin mining hashrate increased by 45% year-on-year.
These reports indicate that the share of green energy used for crypto mining is growing quickly, but as the hashrate is ever increasing for mining operations to remain profitable, the demand for renewable energy also increases, but at a greater rate in order to keep up.
Given the inherent incentive for miners to minimise energy costs and the fact that clean energy is now the cheapest source of power in some countries as “available” energy, we expect the share of green energy to grow quickly. This is especially true for countries with a strong policy push for decarbonisation.
The carbon footprint of bitcoin mining can be considerably reduced and made more sustainable by switching to renewable energy.
Switching to environmentally friendly renewable energy sources can help reduce the impact of fossil fuel-generated power and offer several benefits, such as high efficiency and low operating costs.
Some progressive mining operations are already well-established using renewable energy sources, including solar, wind and hydropower.
Why mine Bitcoin in Australia?
Australia with it's abundant sunshine, solar power has become increasingly popular due to its high efficiency and low operating costs. Furthermore, Australia is at the cutting edge of Solar and Renewable Energy Research and Innovation, with well established credentials in the global renewable energy industry. With these factors combined, we expect to see an increase in the use of renewable energy systems for cryptocurrency mining.
The Buzz Energy Systems Solution.
Our powerful energy products are designed to be versatile and can provide the essential basis to creating your own Renewable Energy based mining rig at any scale. Whether it be a pre-configured BESS or customised "Built to Spec" system, we have the gear and the know how to get your operation energised. Explore our range or Get In touch to discuss how Buzz Energy Systems can Power Your Way, to the inevitable future of digital money.
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