Bitcoin Halving Could Lead to Greener Mining Network and Sustainable Energy Trend
Summary:
The anticipated Bitcoin halving might lead to a more environmentally friendly Bitcoin mining network, highly dependent on sustainable energy sources. As a consequence of the halving process and the constantly increasing Bitcoin hash rate, miners might focus on sustainable energy sources for greater capital efficiency. Despite a Bitcoin mining ban, China accounts for approximately 15% of the global Bitcoin hash rate, with off-grid coal-based mining replaced by abundant and affordable hydroelectric power.
The impending Bitcoin halving could pave the way for a more eco-friendly Bitcoin (BTC) mining network that relies heavily on sustainable energy sources. The halving will slash Bitcoin block rewards from 6.25 BTC to 3.125 BTC. Coupled with a persistently rising Bitcoin hash rate, this could negatively affect mining firms' profitability. This impending scenario could push miners to explore enhanced capital efficiency through more sustainable energy sources, says Matteo Greco, a research analyst at Fineqia International. According to him, this situation forces mining entities to maximize capital efficiency and find less expensive electricity sources, which might boost the use of renewable energy in BTC mining. Bitcoin has been denigrated for its massive energy consumption and dependence on fossil fuels. However, by January 2024, renewable energy sources are expected to power more than 54.5% of the Bitcoin network's energy consumption, according to a monthly research report by CH4 Capital managing partner Daniel Batten. Additionally, Bitcoin mining mechanics promote greater efficiency, which could contribute to the network's increasing sustainability. Greco highlights that the inherent BTC mining rewards system encourages efficiency at every stage, fortifies network security, reduces carbon emissions, and accelerates research into sustainable block confirmation methods. Despite a prohibition on Bitcoin mining, China still represents about 15% of the worldwide Bitcoin hash rate, as per Batten's report. Off-grid, coal-based mining no longer takes place. Miners primarily rely on hydroelectric power in mainland China because of its abundance and affordability during the rainy months in Xi’an, Wuhan, Bejing, and Xining. Batten revealed that a large number of retail participants are mining Bitcoin even at a loss, primarily to find an escape from the Chinese financial system. He mentions that these retail miners willingly accept a profitability hit to convert Yuan to USD through Bitcoin mining.
Published At
4/16/2024 1:45:30 PM
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