Bitcoin is just a few weeks removed from its quadrennial halving. And the expected price surge hasn’t materialized yet. But there are other avenues through which cryptocurrency could benefit in a post-halving landscape.
Those include leveraging the supply-dampening halving to increase usage of renewable energy. With the halving cutting the rewards accrued by miners, including those residing in ETFs like the Invesco Alerian Galaxy Crypto Economy ETF (SATO) and the Bitwise Crypto Industry Innovators ETF (BITQ), those companies could be compelled to examine cost controls.
One way to accomplish that goal while potentially improving the industry’s image in the eyes of sustainability-focused investors is to increase use of green energy.
Economic Perks in Going Green for Bitcoin Miners
Bitcoin mining is young relative to other industries. But it has been heavily dependent on fossil fuels over its short life span. To some extent, that’s been beneficial to the miners residing on the rosters of BITQ and SATO. That’s because those companies are tapping into existing utilities infrastructure and accessing reliable sources, such as coal and natural gas.
But given the large power needs of bitcoin miners, dependence on fossil fuels puts the industry front and center for sustainability criticism. Plus, it could make miners vulnerable to high commodity prices. In other words, there are financial incentives for BITQ and SATO miners to consider regarding a wider embrace of renewables.
“In addition to the environmental benefits, the shift towards renewable energy sources in bitcoin mining also makes economic sense. While renewables have a high initial capital expense, once they are installed, the energy produced has a low marginal cost — it costs nothing for the sun to shine or the wind to blow or the geo to thermal,” reported Nathaniel Harmon for Blockworks.
Gradual Process May Result in Rapid Adoption
There are inklings of increased renewable energy consumption in the crypto mining industry. But some experts believe boosting that usage will be a gradual process that will eventually give way to rapid adoption. As renewable costs and reliability improve, more miners may hit the accelerator on sources such as geothermal, solar, and wind.
“We will see more renewable, off-grid mining operations pop up, and we will even see historically dominant fossil fuel miners integrate renewables into their mix. It will likely take bitcoin mining catalyzing a new renewable energy source, like ocean thermal, for some of the staunchest critics outside of the industry to come around and see mining as a net positive. But it’s only a matter of time,” added Harmon.
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