Go green or die? Bitcoin miners aim for carbon neutrality by mining near data centers

Bitcoin mining (BTC) has always been a controversial topic. But, Bitcoin’s working test (PoW) model has reached new levels of concern as senior executives and investors pay more attention to environmental, social and governance factors.

As such, many cryptocurrencies are highlighting environmentally friendly practices by acquiring carbon offsets. However, some would say that this is not enough to ensure green mining of Bitcoin. Other risk factors may also be involved with carbon credits.

For example, Kevin O’Leary, the Canadian businessman best known as “Mr. Wonderful” for his role in Shark Tank – told Cointelegraph that it usually indexes public mining companies such as Marathon Digital Holdings, Riot Blockchain Inc. and others. However, O’Leary noted that once these companies claimed carbon neutrality through carbon offsets, their stocks plummeted dramatically. O’Leary believes this is because the U.S. Securities and Exchange Commission (SEC) may plan to audit carbon credits soon. O’Leary expressed concern, saying:

“Carbon offsets are not auditable. So indexers like me threw those stocks: we had to sell. The only way institutions will now invest in Bitcoin mining is for those companies to claim that there is no carbon at all.”

Bitcoin mining and data centers

To ensure zero carbon mining, O’Leary explained that Bitcoin miners should build in parallel with data centers. This would then allow mining companies to efficiently use the omitted excess energy from data centers to extract Bitcoin, resulting in a “zero carbon shift,” a process that produces zero carbon emissions.

Bitcoin mining company Bitzero started implementing such a model two years ago in Norway. Akbar Shamji, CEO and founder of Bitzero, told Cointelegraph that the company initially built an infrastructure partnership with the Norwegian local government two years ago that led the region to release unused hydroelectric power generation for Bitcoin mining:

“This was the perfect opportunity to test this idea. At the same time, big data companies started using renewable energy sources in places like Norway, but this was not profitable for the region. We created a long-term energy source and 100% low cost with zero carbon offset to have a market advantage.We get revenue when we extract our first Bitcoin in December 2021.

Aware of the massive demand for data storage today, Shamji further explained that the electricity generated from the data centers should be harnessed properly. “We call this the ‘Norwegian model’. Electricity generation is there but still stagnant at high voltage. full of ASIC miners, “he remarked.

In other words, Bitzero obtains energy directly from the excess capacity of local hydroelectric power plants, resulting in zero carbon offset. At the same time, Shamji explained that Bitzero is offering fixed data centers made of sustainable, local materials that consist of heat capture technology.

“In the case of Bitcoin mining, when electricity passes through these computers, the PoW algorithm does not need much energy to generate. If this were not implemented, the heat generated by these computers would return to the air and be completely lost,” he said. that a zero-carbon displacement model has not yet been widely adopted, Shamji said Bitzero usually extracts 129 Bitcoin a month, using 40 megawatts of energy, adding that this will eventually grow to 110 megawatts.

Cryptographic mining company Argo Blockchain also plans to open a data center in West Texas to conduct mining operations. Although Argo is not taking a zero-carbon shift approach, Peter Wall, CEO of Argo, told Cointelegraph that the company aims to become carbon neutral:

“There’s a huge amount of renewable energy in West Texas, and Argo’s mission is to extract Bitcoin in the most environmentally friendly way possible. We chose Dickens County in particular because there’s a substation that’s adjacent to the property we chose to build Helios, which is our new flagship mining facility “.

Like Shamji, Wall is aware that the clean energy flowing through the substation in Dickens County, Texas, is stranded and unused. “There’s not a lot of local demand or local load to use that energy, so we thought this was a great opportunity to help stabilize the grid,” he remarked.

Interestingly, energy and gas companies are also settling in areas where energy is emitted. For example, Alex Tapscott, author and co-founder of the Toronto-based Blockchain Research Institute, told Cointelegraph that energy producer ExxonMobil has been quietly extracting Bitcoin for a year in the Bakken region of North Dakota as part of a plan to reduce burnt gas emissions. .

North Dakota gas crash. Source: Joshua Doubek

“The pilot project was a success enough for the company to plan to implement it on a much broader basis. ConocoPhillips is working on a similar project,” Tapscott said. In addition, energy company Grid Share recently announced plans to open a Bitcoin mining data center next to a hydroelectric dam on the South Island of New Zealand to support 100% renewable energy in the region.

According to Tapscott, these initiatives may come as a surprise to many people who believe that Bitcoin mining is carbon-intensive. He explained that models like these can be useful in reducing the carbon footprint:

“A typical Bakken well produces oil but also natural gas that burns or burns in the atmosphere. This is a major source of carbon entering the atmosphere. Instead of burning the gas, Exxon has partnered with Denver-based Crusoe Energy. to capture gas and divert it to generators where it extracts Bitcoin.

Tapscott added that Crusoe has found that Bitcoin mining reduces the world’s carbon footprint by up to 63%. “Gas that had no way to reach the market and would be burned directly into the atmosphere, instead, has a useful purpose as a fuel for minting new Bitcoins.”

Zero carbon emissions

While Bitcoin green mining has always been a “buzzword,” some would say that these initiatives, along with zero carbon offsets, have become critical for mining operators who want to stay in business.

For example, lawmakers are seeking to pass legislation to completely ban non-organic cryptographic mining operations. This was recently exposed by the State of New York, as lawmakers intend to restrict Bitcoin mining operations with a bill that is going through the state capital in Albany.

Meanwhile, the Kazakh government has recently proposed requirements for cryptocurrency mining operators to report electricity consumption and “technical specifications” for connection to the grid before operating.

While initiatives such as the Crypto Climate Accord aim to achieve zero net emissions from the electricity consumption of the companies involved by 2025, this also raises concerns about how it can be achieved. Tapscott pointed out:

“This is a laudable goal, as long as it doesn’t force Bitcoin to be something it isn’t. “Working test is a feature that gives the network strength and resilience.”

From an investor perspective, O’Leary added that he will only invest in Bitcoin mining companies and data centers that can prove to be a sustainable source of energy in the future:

“Private capital must comply with environmental, social and government factors. ESG was once a marketing term, but now it’s a real thing. I cannot be subject to an SEC audit and I cannot find an auditor to sign these statements anyway. The cryptographic industry is at an interesting turning point. “

According to O’Leary’s point, Bitcoin miners are facing a turning point, although regulatory clarity remains questionable. Bill Tapscott, CEO of CarbonX, a fintech carbon trading company, told Cointelegraph that the disclosures proposed by the SEC are similar to those many companies already offer based on widely accepted disclosure frameworks, such as the Financial Disclosure Task Force. related to climate and the greenhouse effect. Gas protocol. Elaborated by:

“Disclosure creates a baseline from which the next step for a government or regulator is to introduce a carbon tax or emission and trade cap system, such as the California Quebec Market or ARB’s RGGI. Carbon credits are part of these programs and have been “audited” for years.

Given this, Tapscott explained that mining operators will have to report their emissions, which are likely to be high if the energy comes from fossil fuels, including flue gases, or low if they are from green sources such as hydroelectric. “However, these companies can reduce the risks of future carbon costs by investing a lot of time in carbon credits,” he said.