As Bitcoin is a decentralized store of value with limited supply, its individual and institutional use is increasing rapidly day by day. In parallel, there is an increase in Bitcoin mining activities. In addition to individual miners, the existence of special facilities for Bitcoin production also brings comments on energy consumption. Many authorities have different interpretations, mostly biased, about the energy spent in Bitcoin mining. In this article, you can find answers to questions about energy consumption in Bitcoin mining and the use of clean energy in Bitcoin mining.
What is Bitcoin Mining?
The production of Bitcoin takes place as a result of a process called mining. Bitcoin mining; Devices with special software and hardware approve Bitcoin transfer transactions by solving complex problems, and as a result, they are rewarded with newly produced Bitcoin. The people who perform the Bitcoin mining process are called miners.
Energy Consumption in Bitcoin Mining
Miners can be individuals as well as some companies specialized in this regard. A single computer mining Bitcoin or large facilities with a large number of systems also require a certain amount of energy.
Since miners are rewarded with Bitcoin for each new block they add to the blockchain, there is a competition between them and they try to improve their software and hardware in order to be the first miner to produce Bitcoin. The establishment of more advanced, fast and powerful systems also brings about an increase in energy consumption. The carbon footprint left by this energy to the environment has become a frequently discussed topic recently.
Use of Renewable Energy in Bitcoin Mining
The growing debate of energy consumption in Bitcoin mining pushes miners to look for alternative ways of production, encouraging them to use more sustainable energy sources. Some mining companies have installed systems in the Arctic circle, some on active or passive volcanic skirts within the borders of a country, and on large plains to use direct solar energy. For the production of electricity to be used in Bitcoin production, energy types such as hydroelectricity, natural gas and solar energy are being used. Bitcoin facilities built at the foot of a volcano are trying to use geothermal energy as an energy source.
As in different fields or sectors, environmentally friendly actions have started to be taken rapidly in Bitcoin production. Thanks to these fruitful actions, more than 50% of the energy used in Bitcoin production today is provided by renewable energy sources (see: Bitcoin Letter to the Environmental Protection Agency) and this rate is increasing rapidly. In addition, it is observed that the energy used in Bitcoin production is at a lower level compared to the energy spent in gold mining or banking transactions.