2024-04-20 05:00:00
If Bitcoin has been a very profitable asset in recent months, it is also very energy intensive. While the network (called blockchain) allowing the exchange of bitcoins consumed less than 100 Terawatt hours (TWh) per year at the start of 2023, according to Bitcoin electricity consumption index (CBECI) recently published by the University of Cambridge, its appetite has exploded to stand at 175 TWh today. That is more than the consumption of the Netherlands or Argentina, according to this reference index.
If the queen of cryptocurrencies is so energy intensive, it is because of the method of securing its decentralized exchange network called blockchain. Bitcoin exchanges between users are validated by “ minors », Internet users checking that no transaction is fraudulent. In order to attract these shadow workers, the algorithm behind the blockchain distributes bitcoins to them for each verified transaction. The latter then compete for the right to validate transactions and be paid.
And that’s where it hurts. The Bitcoin blockchain uses the method of “ proof of work » (« Proof of work “) to designate the winners of this competition. Concretely, the network asks its miners to solve very complex calculations via their computers, with the fastest being declared the winner. In other words, securing the Bitcoin network requires the intensive use of numerous graphics cards and other very energy-intensive calculators. The problem is that the more miners there are in competition, the more complex the calculations are… and the more machines and electricity you have to use to be rewarded.
The surge in bitcoin prices attracts new miners
A mechanism that is gaining momentum with the professionalization of the sector.
« Mining has become a real industry governed by large players listed on the stock exchange like Marathon Digital Holding, Riot Platforms or CleanSpark who invest hundreds of millions of euros in their infrastructures. We are no longer in an activity carried out by geeks in their rooms. There are therefore structurally many more people competing “, explains Justine Destobbeleire, crypto consultant at Sia Partners.
But the current resurgence in consumption is also cyclical since it comes at a time when the price of crypto has soared, going from 16,000 dollars in December 2022 to 63,000 today. “ The driving force behind mining is the price of the price of bitcoin. The more expensive it is, the more profitable it is to mine and the more miners there are in competitions », Points out Alexandre Stachtchenko, strategy director at the Paymium crypto exchange platform.
Bitcoin, an executioner for the climate…
But it is above all the energy sources used to power all these machines that really poses a problem for detractors of cryptocurrency,
According to l’index de Cambridge, Bitcoin currently emits 87 megatons of CO2 per year, a little less than the emissions of Belgium (116 MtCO2). A reporte the same university, published in September 2022 indicated in particular that the main source of energy for Bitcoin mining was coal with 36%, followed by gas with 25%. In the end, according to Cambridge, 62% of the energy mix of digital currency was still composed of fossil fuels when the study was published.
« A few years ago, many miners settled in Mongolia or Kazakstan where coal-fired electricity was subsidized, but since 2021, many of them have been driven out », nuance Alexandre Stachtchenko.
In the absence of reliable data for the industry, it is very difficult to know in real time the energy sources used by miners. However, the strategy director of Paymium affirms that “the market has changed enormously in two years and that it should now use less than 20% coal. » And for good reason, with the surge in the prices of fossil fuels, including coal, miners have turned away from them. “ At 3.5 or 4 cents per kilowatt hour, it is no longer profitable. Unless you own a mine, there is no point in mining with this energy », Says Sébastien Gouspillou, co-founder of the mining company Bigblock group who even goes so far as to estimate the share of coal in the mining energy mix at only 4%. So, ” we see that miners are increasingly turning to “waste” energies which are very inexpensive or even free », Analyzes Justine Destobbeleire.
…or an ecological solution?
Among this type of so-called “wasted” energy, the use of “flares”, these burnt methane leaks coming from oil wells that do not have the infrastructure to recover the gas, is the most telling example. In search of the cheapest possible energy, miners quickly understood the benefit of using these waste flames to power their machines. “ This particularly encourages oil tankers to burn methane rather than leaving it in the open air, which is much more polluting. », Claims the strategy director of Paymium. Thus, these solutions brandished by the industry as “ carbon negative » (which includes flaring) now represent 17.9% of the network’s total consumption, according to Daniel Batten co-founder of CH4 Capital, a company aiming to eliminate methane from the atmosphere.
Like the use of miners in Texas, the use of surplus electricity production constitutes the other major trend among miners. Texas, for example, has decided to ask the latter to absorb the excess energy produced by photovoltaic or wind power plants during peaks in exchange for a small part of their income. The French company Bigblock group has opted for a similar solution but in Africa.
« Many African electricity companies operating hydraulic dams or solar power plants have production much higher than their demand since many people are not yet connected. Governments have therefore understood the benefit of calling on miners to make their investments profitable while waiting for demand to arrive. », explains Sébastien Gouspillou.
A win-win solution according to him since it allows his company to have access to electricity at two or three euros per kilowatt hour and “should last for 10 years until populations are sufficiently connected », Estimates the miner.
It remains that for the minor, “ the greening of Bitcoin will depend on coal prices in the future. » Moreover, the trend might still be reversed since following having soared and gone from 50 euros per tonne in 2021 to more than 300 dollars in 2022, the price of coal has fallen below 150 euros today. Above all, the French miner is concerned regarding the growing place occupied by gas in the Bitcoin energy mix. “ Today, many gas wells, in Argentina or the Arabian Peninsula, are used for mining since their States do not have the means to connect them to the network. », alerts Sébastien Gouspillou. The greening of cryptos should therefore take a little more time, to the great dismay of its defenders.
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