Exploring Bitcoin mining models: How to solve the problem of high energy consumption

As time goes by, the discussion about Bitcoin's energy consumption seems to be heating up, but the topics of these debates are still the same old ones. The media's attitude towards Bitcoin mining is like a bear's obsession with honey. They always pay more attention to the power consumption of Bitcoin mining, and also predict that mining will cause a huge blow to the ecology. It is precisely because of these reports on Bitcoin mining that the media has gained more traffic.

However, there is now a strong argument that cryptocurrency mining is sustainable, that it will not lead to an ecological disaster for the world, or better yet, that it can be used to offset the carbon footprint (which indicates how much a person or group "uses carbon") of other energy-intensive industries. Indeed, under the right circumstances, mining can produce minimal carbon emissions. Moreover, its energy emissions can be recycled and used for other environmental causes.

Energy costs of Bitcoin mining

Bitcoin uses a consensus algorithm called proof-of-work to verify transactions on the blockchain. Basically, miners - the ones who confirm transactions - run energy-intensive calculations on their computers to solve the answers to the difficult mathematical problems required to find new blocks and keep the network secure. Because the Bitcoin network now has greater value, more miners are attracted to it, competing with each other in the process of finding the next block, and therefore they will devote more energy to solving these difficult computational problems.

The energy consumed through Bitcoin mining is more than a small country (such as Bulgaria, North Korea) consumes in an entire year, with electricity consumption ranging from 1 to 35 terawatt hours per year. Some believe that innovations like the Lightning Network will make this problem non-existent, while other critics claim that distributed consensus mechanisms like proof of stake may be more friendly to the ecosystem.

In this debate, some say the process of Bitcoin mining is unsustainable and needs to be fixed, while others argue that such concerns are overblown and there is nothing that needs to change.

For example, Andreas Antonopoulos pointed out that Bitcoin mining can be done using excess energy from power plants that would otherwise be wasted. Therefore, mining revenue can serve as "an alternative store of value," making it "an environmental subsidy for alternative energy sources around the world, so that it can help renewable energy projects pay off their debts in one year instead of five years."

Renewable energy solutions

Environmentalists are very supportive of hydroelectricity. Chinese mining farms have long been getting cheap excess energy from hydroelectric dams, especially in Sichuan province. One of the oldest projects, for example, BW, helped to pioneer the use of hydroelectricity for mining. The mine was founded in 2014, and it has been providing renewable energy for mining equipment since 2015.

Despite its origins in China, hydropower mining has made its way into other countries that offer cheap hydropower. In Austria, the Damblon sisters of HydroMiner have begun using hydropower from hydroelectric power stations in the Alps to support their mining operations. Nadine and Nicole Damblon founded HydroMiner GmbH in 2016 with a wave of Viennese miners. By 2017, the team had established its first mining farm in Schoenberg, Austria, which set a base energy output of 290 kWh for its 120 mining machines. Their second mining farm in Jebus, Austria, has 250 Antminers and GPUs that can receive 600 kWh of continuous power supply.

The team also built a second mine thanks to the H2o token it issued. Each H2o token guarantees 5 kWh of mining time, and token holders can exchange it for any cryptocurrency through the project's platform. As the business expands, the team plans to launch the H3o token, which will pay dividends to holders and, according to its creators, is "the first fully compliant token built under European financial law."

The funds raised by HydroMining through the ICO will seek to build a mining farm outside of Austria, which may be in Canada, Georgia or some other country with low-cost, clean energy. According to Damblons, the cost of hydroelectricity in Austria is 85% cheaper than the global average. Therefore, the electricity consumed by these mining machines is 3-5 cents per kilowatt-hour, and the climate in Austria is an ideal environment for keeping the mining machines cool. When the temperature of the mining machine becomes a problem, they can use the recycled water in the river to keep the mining machine's system working at a normal temperature.

Speaking of heat, hot mining rigs are ideal for home heating, especially for those living in cold climates. In Irkutsk, Siberia, Ilya Frolov and Dmitry Tolmachyov of Russia are using the heat from their mining rigs to heat their tiny home. The water that needs to be heated is connected directly to the mining rigs, which are then heated to a space heater that keeps the room at a comfortable temperature. By tapping into local energy from a nearby hydroelectric power plant, Frolov and Dmitry Tolmachyov are able to heat their cozy little home without any additional energy, and they can even make an extra $430 per month after covering their mining costs.

One company has taken this idea and started a business around it. Designed by Ilya Frolov and Dmitry Tolmachyov, the Qarnot QC-1 is a miner and heater in one; it looks like a space heater, and it works like one, but it actually consists of two GPUs that mine ether by default.

There are also many more creative and unconventional innovations being used in the mining field: Let’s take a look at the Canadian sustainable development solutions company Myera Group. In late 2017, the company’s president Bruce Hardy began using the heat generated by Bitcoin mining to operate a sustainable greenhouse and fish farm in Manitoba, Canada. The heat from the mining machines makes the environment in which the greenhouse plants live very comfortable, while the nitrate-containing wastewater from the fish tanks helps the plants stay hydrated.

Meanwhile, Czech-based cryptocurrency exchange NakamotoX is also using heat from mining and “100% biowaste to generate energy” to grow tomatoes, said Kamil Brejcha, founder of the exchange.

Additionally, NastyMining is an Arizona-based bitcoin mining company that uses solar and wind energy to power its mining equipment. Since 2012, NastyMining has been working to find a middle path for Bitcoin’s energy issues by encouraging its pool’s 30,000 miners to engage in “socially responsible” mining. Since 2017, NastyMining has stepped up its commitment to these sustainable mining practices, utilizing wind turbines donated by YoBit exchange, as well as solar panels generously donated by SunPower Solar to help run ASIC miners at its facilities.

The NastyMining team is just one of many miners looking to use natural energy to offset their carbon footprint, and in the eyes of these innovators, there are other sources of energy than just wind and solar.

As a result, some innovators have seen mining’s weaknesses as their strengths, using this problem as a source of their own solutions. While the examples above are not exhaustive, we only provide a sampling of the countless ways that many entrepreneurs are pushing the limits of cryptocurrency mining’s potential. But as more solutions continue to emerge, these innovations paint a different picture of what else mining can do and what ecological impact it will have on green initiatives.