17 Jun Geo-Mining: How Geothermal energy is powering up the bitcoin mining industry.
Mining cryptocurrency, or bitcoin, is an energy-intensive job and entrepreneurs are contemplating a number of methods to power their enterprises, including unique geothermal energy approaches. In an article published in Medium, Lucas Auriemo and Olivia Reblando discussed how geothermal energy and bitcoin mining may coexist.
Bitcoin miners have earned more than $15 billion in combined mining profits. More than two-thirds of that money was generated in the prior two years. Mining cryptocurrency such as Bitcoin may look difficult, but it is a really simple procedure. There are just two considerations: energy and hardware. In terms of energy, geothermal is suitable for satisfying mining needs for low-cost baseload power.
Potential of Geothermal Energy Source:
Geothermal Energy has the potential to significantly alter the way bitcoins are mined. Geothermal energy originates from inside the Earth and is the sole renewable energy source, therefore it does not need extensive energy storage. The first evidence was discovered in Iceland, which has one of the most significant mining facilities in the world. Other renewable resources, such as hydro, solar and wind are used by certain businesses. However, these resources are not as effective as geothermal energy. As a result, geothermal energy might be the future of the bitcoin mining business.
Because geothermal energy has a temperature differential from the Earth’s surface to the core, heat may be extracted at various depths ranging from the top crust to deep within the mantle. As a result, geothermal reservoirs are divided into two types: low-temperature reservoirs (32F) and high-temperature reservoirs (>32F). A reservoir for commercial power production is commonly referred to as a “Hydrothermal Reservoir” which is a high-energy reservoir.
Environmental Aspects of Geothermal Energy:
Geothermal energy is environmentally friendly and renewable. The geothermal power plant in Mexico, for example, solely emits steam and water vapor. Surface disturbances, the physical impacts of fluid withdrawal, heat effects and chemical discharge are the primary environmental repercussions of geothermal development. Geothermal energy is more environmentally benign than traditional fuel sources like coal and other fossil fuels. Furthermore, geothermal power facilities have a lower carbon footprint. It emits little to no hazardous gasses that can contribute to climate change.
There will always be an infinite quantity of resources. The heat from within the Earth is also supplied spontaneously. As a result, it is both renewable and sustainable. According to recent research, the world consumes just 15 terawatts of energy. Geothermal Energy has a higher capability. Most of the Earth’s reservoirs are now inaccessible due to a lack of data on geothermal energy’s overall capacity. However, with continued research on geothermal energy and the expansion of the Bitcoin mining business, this will alter in the future.
Crypto mining raises two environmental concerns: energy use and carbon impact. According to a research conducted by the University of Cambridge, the majority of miners (70 percent) choose which cryptocurrency to mine based on its current price rather than the amount of energy necessary to mine the coin.
The carbon footprint, on the other hand, is determined by the sort of energy required to mine the cryptocurrency. For example, the electricity required to mine bitcoin may be generated using fossil fuels or low-carbon alternatives like nuclear, hydroelectric, wind and solar. However, renewable energy sources (including low-carbon alternatives) now contribute for just 39% of total energy utilized to mine cryptocurrency. The majority of miners (76 percent) say they utilize at least some renewable, clean energy in their operations; nevertheless, due to a lack of economic incentives, they largely rely on traditional, carbon-emitting sources.
There are several approaches to bitcoin decarbonization. These include transferring more electricity generation to renewable energy sources, imposing tariffs to discourage carbon-fueled crypto mining, transitioning from proof-of-work (PoW) protocols to proof-of-stake (PoS) protocols that validate transactions outside the blockchain, and pre-mine the tokens.
How does this affect geothermal operators?
Any successful mining operation requires consistent and reasonably priced power. Demand for baseload electricity will rise as mining expands and industrializes. Firms that build and run baseload energy resources will be well positioned to benefit from this.
This is where geothermal developers step in. Geothermal energy is the only renewable energy option that can offer year-round baseload electricity without relying on the grid or expensive energy storage. This competitive advantage may be seen in Iceland, where geothermal energy powers many of the world’s largest mining operations.
As this industry matured, several firms explored vertical integration of energy generation through hydro, solar and wind. These businesses faltered because they misjudged the restricted capacity factor of these energy resources (=75%). As a result, the future of mining will be dependent on vertical integration of geothermal energy generation.
Mining for cryptocurrencies is not geographically limited. As a result, it is unaffected by geothermal’s most significant limitation: its distance from conventional users. Mining operations may be set almost everywhere. This improves the financial sustainability of future off-grid geothermal power projects. Developers would be able to monetize tens of gigatonnes of untapped geothermal potential with off-grid units.
Kenya has a 10,000 MW geothermal potential:
Kenya is Africa’s leading producer of geothermal energy, with an installed capacity of 863 MW, the majority of which is provided by KenGen. The nation has a geothermal potential of 10,000 MW, which is distributed throughout the Rift Valley circuit. KenGen generates 80 percent of its electricity from renewable sources, including hydro, wind, and geothermal, however the firm does not publish its extra power capacity.
Bitcoin manufacturing requires 204.50 terawatt-hours of electricity every year, which is similar to Thailand’s power usage, and is predicted to emit between 22 and 22.9 million metric tonnes of carbon dioxide per year. After China outlawed cryptocurrency, the United States currently has the greatest proportion of worldwide bitcoin mining at 35%.
Ether, the second largest cryptocurrency, consumes the same amount of energy as the Netherlands. The Ethereum blockchain, on the other hand, has implemented the proof-of-stake approach, which it claims cuts energy usage by 99 percent.
KenGen claims that by providing sustainable electricity, it will help to reduce carbon emissions generated by bitcoin mining. Meanwhile, the Kenyan government is exploring introducing a central bank digital currency, although it remains opposed to cryptocurrency trading due to the frauds that result from it.
Step towards a greener future:
The most recent trends indicate that cryptocurrency mining is becoming more profitable by the day. Ethereum, the decentralized, open-source blockchain with the first-ever smart contract capabilities, has begun to transition from Proof of Work protocols to Proof of Stake protocols, which is hopeful since the blockchain’s energy consumption would be dramatically reduced.