"Bitcoin is an energy sink", "Bitcoin consumes more than Belgium"...

You've probably heard these arguments at least once before, and you'll continue to hear them as global warming becomes a critical issue - and so much the better!

Is this justified?

That's what we wanted to see, with figures and experts to back it up.

First the numbers. At the risk of angering a few, bitcoin does indeed have a significant consumption. We're currently talking about 94 TWh per year, which is the equivalent of a country like Kazakhstan or more than Belgium (so your cousin is right 😝). On another note, bitcoin consumes 50% more energy than all American lighting, according to Cambridge University, an authority on the subject.

Is Bitcoin as bad for the environment as people say?

Part of the answer to this BIG question lies in analyzing the energy mix used by miners to run their machines.

• What is the share of fossil energy?

• What is the share of renewable energy?

According to the latest quarterly report from the Bitcoin Mining Council (BMC), an organization of the world's leading bitcoin miners, 59% of the energy they consume would be from renewable sources.

"It's a level that few industries can claim, especially the banking sector," explains Romain Nouzareth, co-founder and owner of Sato, a Canadian miner that runs on 100% renewable energy (hydroelectricity in his case).

At his facility in Joliette, Quebec, he even uses the heat from his machines to heat the nearby plant.

This figure of 59% renewable energy share should even increase in the coming years, according to Romain Nouzareth: "Miners are pragmatic economic agents, they want to get their electricity at the lowest price and renewable energies are the cheapest on the market".

According to a report published in June 2021 by the International Renewable Energy Agency (IRENA), "green" energy has indeed become cheaper than all other energies. This dramatic price drop is linked to the improved competitiveness of solar and wind technologies over the last decade.

It is therefore likely that the share of renewable energies will increase significantly in the mix of miners. All the more so with the geopolitical context that is pushing up the price of gas and oil.

Gas prices in Europe have doubled in a year and the Russian-Ukrainian war may continue to raise the temperature... In the United States, many mining facilities connected to carbon sources are also in trouble. In the state of Georgia, Compass Mining announced in late August that it was closing several sites due to soaring prices.

"Today it is very difficult to mine from fossil fuels, unless you find yourself in conditions, like in Kazakhstan, where the boss of the coal-fired power plant also runs the electricity company and a mining farm," notes Sébastien Gouspillou, boss of Big Block Datacenter, a French mining company with a strong presence in Africa. In short, the return of cheap fossil fuel energy is not for tomorrow.

Mining can help the energy transition

In this economic context favorable to renewable energy, mining offers another very important asset: financing infrastructure. "It is still often more profitable to build coal-fired power plants than hydroelectric dams," says Sébastien Gouspillou.

Why? Because dams are expensive and therefore take a long time to amortize, and especially because many of them are built in regions where there is not necessarily the infrastructure (connection, lines, etc.) or the demand that goes with it.

Bitcoin mining can precisely enable the recovery of surpluses and thus contribute to the financing of infrastructure. "We can improve the profitability of dams," continues Sebastien Gouspillou.

"For energy storage, we traditionally use batteries but their cost is extremely important, so the mining of bitcoins presents interesting prospects for optimizing renewable facilities," stresses for his part Damien Ernst, energy expert and professor at the University of Liege. "But this is not the only option, the transformation of electricity into hydrogen can also work well," he says.

According to Sébastien Gouspillou, bitcoin mining would be like an "economic battery" that would improve the profitability of renewable energy (MicroStrategy's boss, Michael Saylor, says the same thing). "Despite what the degrowthists say, we still need to build a lot of infrastructure to produce electricity. Bitcoin can tip the balance in favor of renewable facilities," he insists.

In total, there are more than 2,400 coal-fired power plants in 79 countries, and their power generation capacity is expected to increase by 21% through new projects, notes the NGO Global Energy Monitor in its annual report.

According to the same source, no less than 34 countries are currently building new sites using this very polluting energy...

"We must succeed in making them understand that mining can be a solution for their income and the planet", underlines Sebastien Gouspillou, who says he is "more and more listened to". The Frenchman also underlines to have installations in Kenya and in Congo, while hoping to succeed soon with other countries of Central Africa.

A concrete example: the transformation of flared gas

Bitcoin mining can also be an asset to reduce the environmental impact of another extremely polluting activity, often overlooked, namely "flaring gas".

What is flared gas?

It is this release that escapes with great flames from oil and gas facilities when energy is extracted from underground. Flaring alone would be responsible for the equivalent of France's greenhouse gas emissions, according to the World Bank.

It represents a monumental waste of a natural resource that could be used for productive purposes, such as power generation. The amount of gas currently flared each year could power the entirety of sub-Saharan Africa.

Some argue that flared gas should be seen as an opportunity for economic gain, with a number of options operators can consider to monetize their gas, including mining. "It's wasted energy, so you might as well take advantage of it to mine bitcoin, especially if it reduces emissions into the atmosphere," judges professor Damien Ernst.

In some cases, oil companies "graciously" let miners use the flared gas to avoid paying environmental fines. But it also happens that this gas is "sold" to the miners, as in the United States, which creates a market (absolutely not virtuous) for the benefit of the oil companies.

The transformation of flared gas into electricity is still experimental. It is difficult to control and few miners are able to do it... This could nevertheless evolve, in particular via the company Crusoe Energy, which raised more than 500 million dollars last spring to develop the adapted system. Several projects are expected to be launched around the world. The American hydrocarbon giant Exxon is currently conducting several experiments in this direction.

Why are we so demanding with Bitcoin?

For obvious political reasons! Bitcoin does not please many industries. But its energy consumption is also a real issue that nobody can avoid, especially at a time when the fight against global warming has become paramount. A fact that the industry players (not all of them) share, without wanting to take all the responsibility.

"Climate is obviously an issue for us, but it is up to the states to make the strategic decisions. Our job is to provide a solution to best manage the power grid," he says.

Some people also advocate integrating miners more into the economic circuit. "Let's generate income from an energy that has not found a buyer until now, in order to contribute to lowering everyone's bill," concludes Romain Nouzareth.

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