Tesla solar panels and Megapack batteries are being deployed in Texas in order to mine bitcoin with 100 per cent renewable energy.
The electric car maker partnered with payments firm Block and blockchain firm Blockstream to build a 3.8 megawatt (MW) facility that will begin operations later this year.
Bitcoin mining – the process by which new units of the cryptocurrency are generated – has faced criticism in recent years for the vast amounts of electricity it requires.
Estimates from the Cambridge Bitcoin Electricity Consumption Index suggest BTC mining uses as much energy as a country the size of Egypt, prompting climate activists to pressure the crypto industry to adopt new forms of mining that are less harmful to the environment.
Several solutions have been proposed, including changing bitcoin’s underlying technology from ‘proof-of-work’ to ‘proof-of-stake’, though this would require a consensus among existing miners that is difficult to reach.
A more feasible option is to transition to sustainable energy sources like solar, wind and hydro. The cost of renewable energy compared to fossil fuel-powered generation is the main factor preventing this switch, as crypto mining operations require the lowest possible energy price in order to maximise profits.
A feasibility study on solar-powered bitcoin mining, conducted by a bitcoin mining pool last year, found that it was not profitable at using technologies available at the time.
“This is a step to proving our thesis that bitcoin mining can fund zero-emission power infrastructure and build economic growth in the future,” said Adam Back, CEO of Blockstream.
Cryptocurrency advocates believe the financial rewards from bitcoin mining could actually incentivise the construction of more renewable energy plants.
In the case of solar and wind facilities, there are often times when a surplus of energy is being generated, which could potentially be used to mine cryptocurrency.
“Bitcoin’s climate change issue will become more prominent as price scales, so we will have no choice but to come up with solution,” Marcus Sotiriou, an analyst at the UK digital asset broker GlobalBlock, told The Independent.
“Over the next few years I have the confidence that the bitcoin community will be able to adapt to make bitcoin sufficiently environmentally friendly.”
