The government and environmentalists are quick to criticize the amount of bitcoin mining power, but the growing interest of investors in crypto is leading to positive steps in the energy sector.
The impact of the blockchain industry on the energy sector has been a major source of controversy for the past five years. Governments and environmentalists have regularly expressed concern about the amount of energy needed to secure the Bitcoin network. The data shows that network energy consumption is now the annual energy competitor of some smaller countries.
While much of the debate has centred around the adverse environmental impacts of Bitcoin (BTC) mining, the drive to exploit earnings from mining and integrate blockchain technology with the energy grid has also presented new developments that can be beneficial in the long term.
Here’s a look at numerous developments that have arisen out of the request for energy to operate blockchain networks and the positive effects cryptocurrency mining is having on the energy industry.
One of the fastest-growing sections of the cryptocurrency mining industry is the monetization of archaeologically unexploited energy sources such as natural gas that is flared at oil drilling services.
Determining natural gas pockets is a common part of the oil drilling industry, and until recently, this gas was naturally burned in a procedure called “flaring” because the infrastructure required for its collection was non-existent or there had not been sufficient demand for LNG.
As the value of Bitcoin rose over time, the search for inexpensive energy sources led to the installation of shipping containers filled with mining equipment at drilling sites that can use the energy generated from flaring to mine BTC.
While the procedure still results in carbon dioxide emissions, income is created during the process and these funds could be readdressed toward mitigating environmental concerns.
Most recently, some companies have been exploring the integration of mining via flared gas in the Middle East, which accounts for over 38% of the global flaring in 2020 and is one of the biggest chances to turn wasted energy into value.
A second side-benefit of the drive to maximize crypto mining revenues is improvements to the energy substructure and an increased focus on emerging sustainable forms of energy generation.
Studies by the Bitcoin Mining Council have shown that there has been a noticeable growth in the amount of energy resulting from sustainable sources, as opposed to sources like oil and coal.
Less developed countries like Kenya and El Salvador have also benefited from developments in energy generation from sustainable sources like geothermal power plants, which have given their economies an additional source of income.
Whether it’s the use of excess power generated by hydroelectric power plants or a growth in the use of wind and solar power, crypto mining is providing a financial incentive to help further optimization of energy efficiency.
Added energy-related blockchain development is the creation of blockchain-based smart grids that aim to expand energy distribution on a large scale.
Inadequacies in electricity distribution have largely been drawn to the retail level, where smaller firms who own very little of the electrical grid infrastructure mainly offer simple services such as billing and monitoring meter practice.
These types of services can simply be handled by blockchain technology and Internet-of-Things- (IoT)-devices that help consumers bypass retailers and attach directly with wholesale distributors, potentially dipping electricity bills by up to 40%.
Linking consumers to a smart grid also allows them to shop around with different providers to obtain the best rates possible. This could help to level the playing field in an industry that has historically been subjugated by one local energy company.
Schemes like Grid+ and Energy Web Token are serving to lead the way in this field as the old grid design of physical substations, and monitoring gear is replaced with a network of distributed energy resources (DERs) that include battery energy storage systems, solar arrays and natural gas generators.
Although the sector is still in a nascent phase, it’s a drift worth keeping an eye on because, in the coming years, blockchain technology is destined to be further integrated into the energy sector.
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