When it comes to energy usage and management, crypto mining and data centers are two different sides of the same coin. Crypto mining activities and data centers are both essentially IT system banks, requiring constant processing and cooling.
Yet, although data centers are regarded important with the shift to cloud solutions and services, crypto mining, particularly Bitcoin mining, has elicited a mixed reaction, notably from legislators worried about the limited wider advantages.
Although authorities in Sweden have called for limitations, including bans, crypto miners have fought back with a variety of measures they are taking, as are data centers, to shore up their ‘green’ credentials and demonstrate a much more sustainable solution on a voluntary basis.
Renewable Energy for Mining and Data Centers
The most apparent and probably simplest alternative is to use renewable energy to power mining. According to the Bitcoin Mining Council’s most recent study, the Bitcoin mining sustainable electricity mix climbed to about 60% globally in 2022, a 6% increase over 2021.
According to the Council, a voluntary worldwide forum, the data on which this number is based currently includes more than fifty percent of the worldwide Bitcoin network, with members and other survey participants attaining a two-thirds sustainable power mix. The Council says that Bitcoin mining is “one of the most sustainable sectors globally” based on this data.
Data Centers and Crypto Mining should be More Green
Further advancements will result in more efficiency, but the crypto mining effort will increase over time as the quantity of Bitcoins generated decreases, and the cap is neared. Another method that is gaining traction is the utilization of waste energy, such as nuclear and flared gas, for mining cryptocurrencies. One example of the latter is miner EZ Blockchain, which uses otherwise wasted nuclear power in West Point, Georgia. It is one of the dozens in US states like Ohio and Pennsylvania.
The European Central Bank has proposed potential moves on the value of crypto assets, including what may become a standard framework for climate risk pricing. The ideas include evaluating if the disproportionate carbon footprint of particular crypto assets jeopardizes the attainment of their green transition to net zero.
Investors should also consider whether investing in certain crypto assets is compatible with their environmental, social, and governance (ESG) goals, and financial institutions should factor climate-related financial risks into their climate strategy.