EXCLUSIVE: ESG Expert Talks Evolving Bitcoin Mining Narrative, 'Impunity' In Other Industries' Energy Use

Bitcoin has come far since it was first introduced to the financial world by Satoshi Nakamoto, but the heartbeat of the ecosystem – Bitcoin mining – is what has been keeping the community alive for more than a decade. An evolving narrative is changing the way the industry is viewed by the world, and with much-needed positive recognition from governments, the burgeoning sector may finally find its place in the spotlight of efforts toward helping meet global zero-emission targets.

Bitcoin miners turning toward renewable energy sources

More and more $BTC miners are investing in renewable energy sources to power their operations, and others, like Gryphon Digital Mining, have already been certified to be 100% renewable.

In an exclusive with International Business Times, prominent Bitcoin ESG (environment, social, and governance) analyst Daniel Batten shared his thoughts on the collective efforts of the Bitcoin mining industry toward more sustainable operations and the impact of the government's approach on the sector.

"Through the work of Margot Páez and also the Digital Assets Research Institute, we are now getting much better data on use of sustainable energy ... the whole industry is now trending towards sustainable energy at roughly 3.5% per year, putting the industry on track to be 80% sustainably powered by the end of 2030," said Batten, who is also a climate tech investor.

Páez is known in the cryptocurrency community for her research on climate modeling and Bitcoin's intersection with climate change and the energy sector.

What recent studies say on Bitcoin mining and energy

A February study published in the peer-reviewed Proceedings of the National Academy of Sciences (PNAS) journal suggested that synergizing hydrogen technologies with $BTC mining can enhance the deployment of renewable energy sources. "Specifically, leveraging the economic potential derived from green hydrogen and Bitcoin for incremental investment in renewable energy penetration, this dynamic duo can enable capacity expansion of up to 25.5% and 73.2% for solar and wind power installations," the researchers wrote.

For Batten, the study has "sound model assumptions" since Bitcoin mining has previously been shown to improve profitability in some ventures, including businesses requiring low-temperature heating, OTEC (ocean thermal energy conversion), and renewable micro-grid development.

Miners won't really face challenges in terms of adopting the model suggested in the study. However, there will be initial "skepticism from the solar or wind producer," Batten noted. He believes, though, that once solar and wind producers get a good grasp of how the synergy will work, "it's likely to be the single best influence on how fast they can expand, because they now have a guaranteed buyer for all their energy, including a large amount of energy that no one previously wanted."

What are the options for smaller miners?

Ever since the April halving, competition has only intensified, and at this point in the game, smaller Bitcoin miners "have no choice but to transition to the cheapest energy available," Batten said.

The World Bank has said renewable energy sources are a great alternative to spiking fossil fuel costs. These sources will not only help countries mitigate climate change but can also "build resilience to volatile prices, and lower energy costs."

In the Global Electricity Review 2023 presented by independent global energy think tank Ember, it was revealed that the reason why some governments are now prioritizing wind and solar sources is due to such sources being "cheaper and more secure than fossil fuels" in many countries.

The International Energy Agency (IEA) backs this data, as it said utility-scale solar PV and onshore wind "are the cheapest options for new electricity generation in a significant majority of countries worldwide."

In the case of Bitcoin mining, Batten noted that transitioning will only drive greater sustainability not just within the industry but also contribute to the global efforts on climate action.

"Bitcoin mining will be helping to prevent the waste of previously wasted renewable power which will help accelerate renewable transition. This is no longer theory – it has been observed firsthand on the ERCOT grid and there is now a Cornell university paper backing data that renewable transition is in fact being accelerated by the economic lift that Bitcoin mining companies provide renewable operations," he added.

Bitcoin mining and the government

More and more miners have become transparent about their energy use in recent years amid lingering concerns among environmentalists who remain skeptical of the industry's power usage. However, there is still the issue regarding the approach governments and regulators have taken in demanding information from miners.

"What is clear is that Bitcoin mining companies are generally happy to share with academic institutes, but distrustful of the way government has tried to extract data using threats of fines, and singling Bitcoin mining out while ignoring larger and less flexible data center users," Batten pointed out.

The IEA said in its Electricity 2024 report that collectively, data centers, AI, and crypto mining could double electricity consumption by 2026. The report didn't single out Bitcoin mining as the only sector to see its power consumption climb.

The issue of singling out $BTC mining emerged way back in 2022, when it was reported that the White House was drafting policy recommendations on how crypto miners can lower their energy consumption. But, is policy the right route?

Batten believes policy that specifically targets Bitcoin miners' electricity consumption and renewable energy transition is "unnecessary and potentially counterproductive." Miners are already transitioning without government mandates, and more mining companies are taking the step toward more environmentally responsible operations even without regulatory pressure.

"It's also a dangerous precedent for government to start mandating that certain industries are allowed to use a certain source of energy only, while others such as Netflix, AI, gaming and others have impunity to use whatever source they like," he argued.

A path for the industry's efforts to be seen

Professional services firm KPMG wrote in 2023 that "the use of energy is not the primary issue, but rather the emissions associated with the production of that energy such as those from burning fossil fuels." The report reiterated that if comparisons were to go with, "it's helpful to compare the emissions associated with Bitcoin's operations with the emissions of a wide range of industries and services."

Compared to the 4,500 MTCO2e (unit of measurement that means a metric ton of carbon dioxide equivalent) from the tourism sector, and 2,865.2 MTCO2e emitted by livestock and manure industries, Bitcoin emitted 67, as per the Cambridge Bitcoin Electricity Consumption Index.

Instead of writing up policy targeting the mining industry's power use, the government might as well "shine the light on the positive example that Bitcoin mining companies were showing in helping them meet zero-emission targets, to inspire other industries to do the same," Batten said.

The road to sustainable operations is different for each miner, but as more Bitcoin miners voluntarily make the transition – as per Bitcoin ESG Forecast's June report that $BTC mining's sustainable energy use hit an all-time high of 54.5% -- the narrative around the industry may finally become much more positive, and proper recognition may finally be granted to an industry whose collective efforts toward climate action has often been overshadowed by earlier negative narratives and generalized misconceptions.