One of the biggest hurdles to crypto adoption is the growing concern about the environmental impact of all the electricity needed to operate blockchain networks. Bitcoin mining is one of the worst offenders because of its Proof-of-Work consensus mechanism which keeps the network secure but also quite wasteful. Just one look at its estimated power consumption is enough to make environmentalists cringe:

• Bitcoin’s average electric consumption is around 145 terawatt-hours of electricity per year, which is a higher annual energy consumption than most countries. In comparison, mining gold uses up 131 terawatt-hours of electricity each year.
• Bitcoin uses up about as much electricity each year as Malaysia (population: 33 million), Ukraine (population: 38 million), or Pakistan (population: 235 million). Compare that with the electric consumption of the Philippines of slightly over 110 terawatt-hours annually.
• According to a study by the United Nations, Bitcoin’s carbon footprint from 2020 to 2021 was the equivalent of burning 84 billion pounds (38 billion kilos) of coal. Around 4 billion trees would have to be planted to offset carbon emissions from this time period alone.
• The Bitcoin network uses up about 20 gigawatt hours daily.
• It takes over 250,000 kilowatt-hours just to mine one Bitcoin.

Now let’s take a closer look at the estimated greenhouse gas emissions, according to one model:

Image Source: Cambridge Bitcoin Electricity Consumption Index

Based on this chart, the cumulative energy consumption is bound to get even higher as the network continues to grow. 

Thankfully, most of the newer blockchains are designed to be way more energy-efficient, but what about the OG of them all? Is there any way to continue using this so-called digital gold without feeling guilty about its carbon impact?

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Solution #1: Integrate crypto mining with other industries.

Many are exploring the possibility of integrating Bitcoin mining operations with other businesses to maximize energy efficiency. For instance, Holland is using the waste heat generated by Bitcoin mining to grow tulips in greenhouses. That’s hitting two birds with one stone — less heat generated overall plus Bitcoin miners get to support local agriculture. 

Other possible uses for this excess heat is to harness it to keep residences warm during winter or to divert it to industrial processes that require a lot of heat. Shifting to more sustainable mining practices has the added benefit of keeping mining profitable by tapping cheaper sources of electricity.

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Solution #2: Use better hardware and infrastructure.

The good news is that mining rigs are getting more efficient as the years go by. Top ASICs and other mining equipment are using less energy to perform the same amount of work that they did half a decade ago. 

Image Source: CoinDesk

Also, let’s not forget to consider the amount of electricity that gets wasted en route from the generators to the actual mining devices. An estimated 60% of the energy gets wasted during the generation process due to inefficient equipment, while 5-7% is lost during transmission and distribution. Even more gets wasted because of subpar wiring and devices.

Image Source: EnerDynamics

Then there’s a third and more well-known option: swapping the source of electricity for something less harmful to the planet.

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Solution #3: Say goodbye to fossil fuels and go big on renewable energy sources.

Switching from fossil fuels to sustainable energy sources such as solar, wind, geothermal, and hydroelectric energy is one of the growing trends in the crypto space. (It’s also a growing trend everywhere because apparently we’re in real danger of either getting burned to a crisp or drowned to death at the rate erratic weather patterns are evolving every year.)

Over the years, regions rich in renewables have become popular hubs for cheaper and more sustainable mining operations. But based on this chart from the United Nations University, fossil fuels like Coal and natural gas still power the majority of Bitcoin mining around the globe.

To lower greenhouse gas emissions, we’ll need to nudge those figures in the opposite direction, as seen in this proposed scenario by Cambridge University:

One of the most promising solutions is to use green hydrogen to power mining operations. Hydrogen is the most energy-rich fuel as well as the most common element on Earth. It’s a nearly unlimited source of energy—once we solve the challenge of extracting it on a larger scale.

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How can green hydrogen make crypto mining more eco-friendly?

Hydrogen for industrial purposes is produced through the electrolysis of water, or by passing an electric current through water to separate it into hydrogen and oxygen. It takes a lot of energy to power this process, but when renewable sources are used instead of fossil fuels the impact on the environment is minimal. Hydrogen produced using sustainable sources is called “green hydrogen.” This is used to fill up hydrogen fuel cells, which are electrochemical cells that combine stored hydrogen with oxygen to produce electricity.

Using hydrogen for energy is cleaner than using fossil fuels because nowhere in the process does it ever release carbon dioxide into the air. Neither does it create toxic waste like the stuff from nuclear power plants that either needs to be buried deep underground or tossed into outer space. In fact, the only byproducts of the whole process are heat, oxygen, and water—all of which don’t pollute the environment.

Compared to other renewables, hydrogen fuel cells don’t take up a massive amount of space the way solar farms or wind turbines do. They don’t require altering the environment either, which is the main problem with hydroelectric power. Best of all, filling up hydrogen-powered cars takes just a few minutes compared to the hours it takes to recharge the batteries of an electric vehicle. Hydrogen fuel cells are designed to last the lifetime of a vehicle, and if they finally wear down, they can be reused or disposed of safely.

While that seems ideal, generating hydrogen from renewable sources is, unfortunately, very expensive. Right now, most of the hydrogen used for industrial purposes is still being generated through the use of fossil fuels such as natural gas. But since more companies are embracing (or being forced to shift to) renewable technology, it won’t be long before green hydrogen becomes a more practical option for crypto operations. To get there, we will need at least three things:

1. More cost-effective electrolysis technology
2. More efficient energy distribution and storage
3. More environmentally-friendly raw materials, manufacturing processes, and transportation methods for building and installing the solar panels, wind turbines, and other equipment to generate renewable energy.

Because, sad to say, there is a dark side to the way renewable energy is being generated right now. Electric cars come with Lithium batteries which are a nightmare to dispose of. The raw materials used to produce solar panels need to be mined from the Earth, and who can say how much this damages the environment? Dams for hydropower can destroy entire habitats, and the type of hydropower based on ocean currents isn’t well-developed yet. Also, someone really needs to come up with ways to keep birds from flying straight into turbine propellers.

Environmental challenges aside, the infrastructure to generate hydrogen through renewables is expensive to set up and not feasible for solo miners. However, as research continues and technology advances, the costs are expected to decrease, making green hydrogen a more accessible option for many mining operations.

Harnessing green hydrogen for cryptocurrency mining has other benefits, too. Economically, it can stabilize energy costs as renewable energy prices tend to be less volatile than fossil fuel markets. Environmentally, aside from reducing carbon emissions, switching to clean fuel cuts down on other forms of air pollution and improves overall air quality—something our poor, overworked lungs will thank us for.

So, is green hydrogen the ultimate solution to Bitcoin’s environmental woes?

Only time can tell. But it’s definitely an option worth exploring, not just for Bitcoin mining, but for the whole crypto space.

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