One topic at the forefront of crypto conversions in 2021 has been energy consumption. Due to record blockchain growth, coupled with the copious amounts of electricity needed to mine bitcoin and other assets, the quest for more renewable energy sources has become a top priority for an industry looking to lower its carbon footprint.
For an industry that loves thinking outside of the box, it should come as no surprise that a rather unique form of all-natural energy is being explored in one of the hottest crypto hubs on planet earth. And when we say “hottest”, we mean it.
How is Bitcoin mined?
For starters, it’s important to understand how cryptoassets like Bitcoin are traditionally mined (procured from the interwebs, for example). Long story short, mining new Bitcoins involves solving a computational math problem, like an algorithm, with powerful computer equipment.
In the early days of Bitcoin, you could mine a single coin with just your personal computer. As the network scaled, however, more computing power was needed to set up a ‘mining rig’, which now requires equipment like a graphics processing unit (GPU) or application-specific integrated circuit (ASIC), as well as a lot more space to facilitate the rigs and cooling power to combat overheating.
Now, considering there’s estimated to be over one million people mining bitcoin across the globe (some with warehouses packed with mining rigs), add up all that computing power and you can expect a pretty hefty energy bill.
Since crypto will have a hard time becoming mainstream at its current energy usage rate, many blockchain and mining companies have been exploring renewable sources to lighten the load on electrical grids. The common pivots are wind, solar, and hydropower, along with other efforts, like developers launching more efficient blockchain upgrades or miners exploring ways to recycle the excess heat emitted from rigs.
And then there’s volcanoes. Yes, the often-dormant earth ruptures are abundant sources of geothermal energy, which a country like Iceland, for example, has used to power 25% of its electricity production. (Fun fact: The remaining 75% comes from hydropower, making Iceland one of just a few countries utilising 100% renewable energy.)
With that said, it should come as no surprise that a country known as the “land of the volcanoes” would tap into geothermal energy to power crypto mining — especially when said country recently adopted Bitcoin as a legal national currency. We’re talking about El Salvador, the Central American nation that has taken a bold stance on bitcoin behind its president Nayib Bukele, who first announced plans to accept the top crypto as legal tender at the Bitcoin 2021 Conference held in Miami over the summer.
El Salvador was fast to act in passing the law, and shortly thereafter, the idea of volcano-powered Bitcoin came to be. How does that work, exactly? Essentially, it was a collaboration between El Salvador’s already existing state-owned geothermal energy company, LaGeo, and bitcoin miners, who had to find out where the two ends meet. Volcanoes already powered 22% of the country’s total energy supply.
After careful planning, the first successful mining of bitcoin using volcanic power occurred on October 1, 2021, when 300 computers inside a trailer at the LeGeo power plant harnessed high-pressure steam energy from the nearby Tecapa volcano to hash out 0.0059 bitcoin ($269 worth). Bukele tweeted his excitement but noted that the mining project was a work in progress, as far as figuring out the best equipment to maximise El Salvador’s abundant volcanic power (the country is said to have 23 active volcanoes).
Going green with Bitcoin
While still in its infancy, projects like the one in El Salvador are good for bitcoin (and crypto as a whole) in the long run. Regulatory hurdles will always hinder innovation, but successful renewable energy initiatives can point to bitcoin’s longevity and open the door for blockchain technology to grow and expand in ways we haven’t seen yet.
Cryptoassets are unregulated in some EU countries and the UK. No consumer protection. Tax on profits may apply.
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