Can Volcanos Be Bitcoin’s Green Savior?

Summary

• Crypto mining’s energy-guzzling methods have been questioned by authorities and activists.
• Investors are evaluating the high impact of bitcoin mining on the environment.
• Finding long-term green power channels to mine crypto is the biggest challenge right now.

Power-hungry cryptocurrencies’ growing energy problem has led to many ardent proponents backing out. Investors who had warmed up to Bitcoin, one of the most promising digital currencies rewriting investment or payment methods, are now wavering.

A 2018 Nature.com report claims Bitcoin alone could produce enough carbon emissions “to push warming above 2 °C within less than three decades,” if the high adoption rate continues. Over the last couple of months, top investors started questioning the high cost of bitcoin mining for the environment.

El Salvador’s back-to-back unprecedented moves last week offers a ray of hope.

The Salvadorian Push

Nayib Bukele, El Salvador’s 39-year-old president, sure knows how to stay in the limelight.

After irking the international community with a coup attempt and alleged authoritarianism, the millennial political leader tried to turn the tides by adopting bitcoin as a legal tender, making the Central American nation the first in the world to do so.

He then went a step ahead and announced that the crypto token will be mined with power drawn from volcanos.

El Salvador has nearly 23 active volcanos. The renewable geothermal electricity generated from these volcanos will be harnessed by state-owned power company LaGeo to fuel the energy guzzling bitcoin mining process. Work on the facility is reportedly underway.

This latest green development is likely a bigger achievement for the crypto world than its new legal tender status in El Salvador.

Bitcoin Mining Over Bitcoin As Legal Tender?

El Salvador’s clout in international trade and economic ecosystem is limited. Nearly 70 per cent citizens of this small nation do not have bank accounts. The country is dependent on remittances, mostly from the US, for about 25 per cent of its national income, according to World Bank data. El Salvador’s bitcoin adoption may barely impact the larger ecosystem of virtual currencies.

The untraceable, unregulated, and volatile nature of cryptocurrencies also poses more questions than answers, given the Salvadorian president’s controversial past.

But by tapping into volcanic power for crypto mining, President Bukele seems to have wowed supporters as well as critics.

Bitcoin is already changing the course of currency worldwide and green bitcoin could propel cryptocurrencies to new highs.

Representative image of volcano (Source: Pixabay)

Green Bitcoin: What is the Future?

Among the many arguments against cryptocurrencies, its appetite for high electricity usage due to mining is a constant thorn. As countries pledge to protect the planet, bitcoin’s abysmally high carbon footprint could derail efforts to reduce carbon emissions.

Mining is an intensely competitive ballgame. With more miners entering the quarry as crypto prices rise, complex mathematical equations that lend digital currencies its credibility get trickier, leading to higher power consumption of machines producing bitcoin.

FOMO investors biting into the crypto pie are often unaware of the underlying technologies needed to run this cycle smoothly and securely.

Studies are all over the internet. Annual greenhouse gas emissions from bitcoin mining are equivalent to New Zealand’s entire greenhouse gas emissions.

Even cryto whale Elon Musk, who pumped up bitcoin’s value by accepting it as a form of payment for Tesla cars, pulled down its value days later saying the token increases carbon emissions. On Sunday, June 14, he confirmed Tesla will resume bitcoin transactions once miners confirm “reasonable (~50%) clean energy usage”.

China’s ban on cryptocurrencies, also due to environmental concerns, have further contributed to bitcoin’s volatility.

The world’s first and largest cryptocurrency has been alternating between bull and bear phases as investor confusion persists. Meanwhile, the quest for finding sustainable and renewables sources to fuel crypto mining is underway.

But all this could change if El Salvador’s volcano-powered bitcoin mining becomes a success. The country could end up becoming a crypto land for enthusiasts.