Well-known institution report: Why Bitcoin can become the key to future clean energy?

There has been a lot of talk recently about the environmental impact of Bitcoin, and mainstream media has been keen to claim that Bitcoin’s consensus mechanism (Proof of Work) is a potential threat to the future of the Earth.

However, a white paper recently published by two well-known institutions, Square and ARK Investment Company, put forward the opposite view on part of the argument of the "Bitcoin Clean Energy Initiative", pointing out that Bitcoin is actually "a key driver of the future of renewable energy."

The research paper states that Bitcoin mining and renewable energy together promote the "energy transition". Therefore, energy asset owners may be "future Bitcoin miners" operating resilient power grids, and Bitcoin miners have characteristics that can support this new energy model.

First, as the white paper claims, miners are geographically agnostic, with flexible and interruption-prone loads.

As such, they are “unique energy buyers” that can face the main challenges of low and intermittent growth in the clean energy sector as demand rises.

The white paper states, “On the other hand, Bitcoin miners are an ideal complementary technology for renewable energy creation and storage, combining power generation with storage and miners to provide a better overall value proposition than building power plants and storage plants separately.”

At the same time, Bitcoin uses the cleanest and cheapest energy. The levelized cost of energy (LCOE) is a measure of how much it costs to produce an energy source. Over the past decade, the production costs of solar and wind energy have fallen.

The white paper claims that solar costs have fallen by 90% and wind by 71%, so without the intervention of external factors (such as subsidies), the costs are 3 to 4 cents per kilowatt-hour and 2 to 5 cents per kilowatt-hour respectively.

By comparison, the same levelized cost of energy (LCOE) for fossil fuels coal and natural gas is 5 to 7 cents per kilowatt-hour. The study added, "Solar and wind are the lowest cost and most scalable energy sources today, and more importantly, we believe they will become more widely used over time."

Bitcoin mining could serve as a "complementary" technology to harness these cleaner and cheapest energy sources. The white paper argues that the above combined with methods of storing energy could lead to clean energy projects becoming a "profitable field" that benefits investors.

More flexibility in building solar and wind projects, and when “correlation studies are completed,” Bitcoin mining can explore integration with major energy grids as it becomes sustainable, which can be resilient in “black swan events” and provide “ready-to-use excess output” to the energy grid.

Because miners have an "unlimited appetite" to absorb this "excess" energy and store it with lithium ions, it can maintain its capacity to meet the daily needs of consumers. The white paper points out that in the long run, as the use of electric vehicles grows, the demand for electricity supply will be greater.

The model proposed by Square and ARK Investments can promote the deployment of solar and wind energy resources. At the same time, it allows Bitcoin mining to enter a "quite large" and greener industry. The study pointed out that without miners, an estimated 40% of the power grid can only meet demand by raising prices, and the emergence of miners makes the power grid more profitable and sustainable.

The white paper states that “With Bitcoin mining integrated into solar systems, energy suppliers, whether utilities or independent entities, will have the ability to arbitrage between electricity prices and Bitcoin, and potentially sell ‘excess’ solar energy to meet all electricity needs without reducing profitability.”

At press time, BTC is trading at $55,394, down 1.8%. On a weekly and monthly basis, Bitcoin has seen losses of 12.9% and 3.8%, respectively, with a market cap of $1.3 trillion.