Bitcoin miners making critical energy moves
Bitcoin mining is a notoriously energy-intensive endeavor. As a result, politicians and renewable energy regulators often criticize bitcoin miners for their heavy carbon footprint.
Recent data from the University of Cambridge’s Bitcoin Electricity Consumption Index indicates that electricity consumption to mine blocks recently reached an all-time high. Perhaps it is a symptom of the cryptocurrency’s 2023 rebound, but the bottom line is that miners need to reduce their carbon footprints and increase their consumption of green energy.
Some already do, and if the industry proves it is making significant progress in reducing its dependence on fossil fuels, exchange-traded funds such as Invesco Alerian Galaxy Crypto Economy ETF (SATO) could be useful.
SATO, which turns two in October, has 37 shares – a number of which are classified as crypto miners. Already under siege from policymakers to reduce emissions and embrace renewable energy sources, bitcoin miners, including SATO components, need not be forced to go green. After all, some experts believe high energy costs were part of the problem for the sector last year.
“Miners are not out of the woods yet. Inflated power costs will remain a stubborn thorn in the side of the industry, and could quickly worsen if governments succeed in saddled miners with an additional energy tax,” according to a recent report from Coin Metrics. “Even with the recent rally in Bitcoin price, daily earnings for S19 barely hit $7, making every penny count. Without a sustained uptrend, mining margins could soon return to the frigid depths of winter 2022, when the average S19 briefly ran at a loss of more than $1.22 per day.”
The good news for some SATO member firms is data, measured by emission intensity of bitcoin miningindicates that miners are making great strides in reducing carbon emissions.
As Beincrypto.com reports, venture capitalist Daniel Batten recently noted that bitcoin mining’s dependence on fossil fuels has decreased by more than 6% a year since the start of 2020.
“As reported by BeInCrypto in late March, Bitcoin mining is now greener than electric car technology. Hydropower is Bitcoin’s main power source, according to Batten,” the publication reported. “According to Cambridge University, the BTC network is currently consumer around 140 TWh per year. However, this is still less than the 206 TWh per year lost in the US due to transmission and distribution.”
SATO components have good reason to cut emissions in an attempt to appease regulators, but there is more merit to that strategy. By supplying from fossil fuels, miners can potentially reduce costs, increase profits and support sustainability credentials.
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