Cathie Wood and Ark Invest analysts break down how bitcoin mining could increase the overall share of renewable energy — and explain why they remain highly convicted in bitcoin and ethereum

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It is hardly unexpected for bitcoin — one of the best-performing assets in the past year — to clash with the increasingly popular trend of environmental, social, and governance investing. 

Since Tesla chief executive Elon Musk backed out of accepting the cryptocurrency as payment on concerns over the massive amount of energy required for mining bitcoin, the digital token’s energy consumption has become a lightning rod for controversy.

The latest calculation from Cambridge University’s Bitcoin Electricity Consumption index suggests that bitcoin consumes 111.51 terawatt-hours per year, which is more than the annual energy consumed by countries such as the Philippines and the Netherlands.

That staggering figure has certainly raised some eyebrows, but it also begs the question of whether bitcoin deserves to consume so much energy.

“If you believe, like many mainstream establishments do, that bitcoin offers no utility beyond serving as a Ponzi scheme or a device for money laundering, then it makes sense why you’d conclude that consuming any amount of energy is wasteful,” Yassine Elmandjra, crypto asset and blockchain analyst at Ark Invest, said in a Tuesday webinar.

Elmandjra, who is obviously in the camp of viewing bitcoin as “a tool to enable sovereignty or escape monetary repression and capital controls,” took it one step further. He believes that bitcoin mining could not only yield more renewable energy but also provide more reliable power to the grid.

How bitcoin mining could increase the use of renewable energy 

To see how bitcoin mining can increase the adoption of renewable and solar energy, Elmandjra said it’s important to understand how bitcoin consumes energy.

He explained that while critics have focused on bitcoin’s high per-transaction energy cost, this metric can be highly misleading because the vast majority of bitcoin’s energy consumption happens during the mining process, which is actually used to secure the network and protect it against nefarious activities.

“Because bitcoin’s energy footprint has grown so rapidly, people sometimes assume that it’s going to eventually take over the entire energy grid,” he said. “But once coins have been issued, the energy required to actually validate these transactions is minimal, so simply looking at bitcoin’s total energy and then dividing that by the number of transactions doesn’t make sense.”

Meanwhile, it is also critical to distinguish between how much energy a system consumes and how much carbon it actually emits, Elmandjra notes. He points to estimates saying that about 40% of bitcoin’s energy outlay is derived from renewables and 76% of miners are using renewables in some capacity.

“We believe that as renewable options like solar continue to become more efficient, bitcoin could actually end up serving as an incentive for miners to build out these technologies,” he said. “With bitcoin mining integrated into a solar battery system, energy providers can basically play the arbitrage between electricity prices and bitcoin prices and then sell surplus solar, and supply almost all grid power demands without actually lowering the profitability of the system.”

He mapped out in a graph (shown below) how as bitcoin …read more

Source:: Business Insider


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