Will the Bitcoin boom lead to greener crypto?

There is more interest in using renewable power or fossil fuel by-products to ‘mine’ currencies

Astone’s throw from the Danube in Budapest stands an enigmatic statue. It isn’t a famous general or any other figure from Hungarian history – adorning its chest is the symbol for Bitcoin.

The statue in Graphisoft Park is of Satoshi Nakamoto, the pseudonym used by the person – or persons – who invented and launched the digital currency in 2009. The fact that a monument has been erected to the cryptocurrency’s possibly fictitious inventor reveals the financial and cultural impact Bitcoin has had over the past 15 years. That impact is set to continue; on Monday the world’s largest cryptocurrency by market capitalisation surged past $72,100 to reach a record high – not bad from an initial flat price of less than $0.10 a coin.

Much has been written about Bitcoin’s unnerving volatility, but its resurgence has focused attention on a related aspect of the crypto world: the large amounts of energy needed to power specialised hardware that “mines” these digital tokens.

Between 2020 and 2021, UN scientists examined the activities of 76 Bitcoin mining nations and found that, in addition to substantial carbon emissions, global Bitcoin mining activities leave significant water and land footprints. But this isn’t the whole story.

Research has emerged in recent years that points to growing interest among data miners in using renewable power or harnessing fossil fuel by-products. A 2023 study published by researchers at New York’s Cornell University investigated planned renewable energy initiatives across the US and found that it may be possible for Bitcoin mining to generate profit for wind or solar farms that were in a pre-commercial phase – that is, generating power but not yet plugged into the national grid. This potential profit – which in the case of Texas was estimated to be about $47 million – could be invested in more renewable energy projects.

In addition, a research paper published last June by the MIT Centre for Energy and Environmental Policy Research examined claims that Bitcoin mining could harness methane – a natural by-product of oil extraction – by “incentivising generator construction to convert the otherwise squandered energy into productive use and further lead to mitigating methane emission”.

But will crypto giants enjoying the current boom be interested in using renewable energy? If they want to maintain and increase their coin’s value, then yes. Research published last year by international accounting firm KPMG found that a Bitcoin that took environmental, social and governance goals seriously could develop from being “a misunderstood technology and asset class” to one that would not only “improve the reputation of the overall ecosystem but pave the way for greater use and adoption”.

Smart investors and governments can help sustain this growth – and even establish some stability in crypto – if its high energy demand and emissions can be controlled. They may not erect a statue to the person who develops a clean-energy crypto-mining technique, but the impact would be just as revolutionary.