That Work test The Bitcoin (BTC) consensus mechanism is known in the mainstream media and in politics as a huge power hog. It is undeniable that the Bitcoin network consumes a lot of energy. However, the question is to what extent Bitcoin really has a negative impact on the climate. According to tech entrepreneur and self-proclaimed climate activist Daniel Batten, Bitcoin could be the unexpected savior of our planet. Bitcoin has an extremely stimulating effect on investments in sustainable energy. While sustainable energy currently represents a relatively small part of the total energy mix, according to Batten, this could grow to 70 percent by 2030, thanks to Bitcoin.
The problematic energy mix
At the time of writing this report, renewable energy sources represent only a small percentage of the energy mix. If we continue down this path, the amount of renewable energy in the mix by 2030 will be around 24 percent. According to Batten, that’s not enough to deal with spiraling climate change.
In fact, the amount of solar and wind power in the mix is increasing and polluting sources like oil, coal and gas seem to have peaked. However, the increase in solar energy is slowing down. Ten years ago, solar power was still growing at a rate of 54% per year, compared to just 22% in 2020. The adoption and spread of solar and wind power is slowing, and that’s concerning, according to Batten.
According to Batten, we need a catalyst to help sustainable energy break the “dead spot.” Often a technology needs a new type of client for this. Bitcoin, according to Batten, is the “new customer” that needs renewable energy to become a success story and save the planet. Bitcoin mining is location independent, time independent and has an insatiable appetite for more energy. We can better explain why Bitcoin is the ideal customer for sustainable energy with an example.
Bitcoin and windmills
Take, for example, the construction of a fictional wind farm. In the situation without Bitcoin, the entrepreneur has to enter the capital market with an uncertainty spreadsheet. For producers of sustainable energy, there are almost always times of overproduction. The power grid has only a certain need and overproduction usually means wasted power. Because it is difficult to store energy profitably, sustainable energy producers are often forced to “throw away” energy.
This is primarily a waste of energy, but it is also bad for the producer’s profitability. Bitcoin in this case can act as a so-called “buyer of last resort† Energy that the producer normally has to throw away can be sold to bitcoin miners. Thus, they benefit from cheap and green energy and at the same time make sustainable energy producers more profitable. Which means higher turnover and profits for the sustainable industry.
Higher profits mean investments pay off faster and make renewable energy a safer investment. This, according to Batten, will lead to more investment in the industry and thus an increase in renewables in the energy mix. Batten estimates that Bitcoin makes it possible to achieve a 20 percent increase per year in both new producers and the expansion of existing producers. Together, that means 43 percent annual growth.
If the sustainable industry actually manages to grow 43 percent per year, this means in 8 years (in 2030) an energy mix consisting of 70 percent sustainable energy. According to Batten, the difference between sustainable energy with Bitcoin and sustainable energy without Bitcoin is like the difference between hope and indomitable climate change.