The Republic of El Salvador, a Central American country with close to 7 million inhabitants became the first country in the world to adopt bitcoin as legal tender on June 9, 2021.
Notably, in practice, El Salvador does not have its own currency and uses the US Dollar and now Bitcoin as a medium of exchange. The country's president, Nayib Bukele, said that Bitcoin will be used to help Salvadorans living abroad to send remittances back home while saying the U.S. dollar will also continue as legal tender. He also estimates that the move to adopt Bitcoin as legal tender will bring "financial inclusion, investment, tourism, innovation and economic development" to El Salvador.
However, Mr. Bukele and his government's affair with Bitcoin does not stop there. They have directed state-owned geothermal electric firm, La Geo, to develop a strategy to offer bitcoin mining facilities using renewable energy from the country's volcanoes.
These moves quickly promoted both Mr. Bukele and El Salvador to celebrity status within the cryptocurrency community. The use of cheap and renewable resources for mining cryptocurrency has been a challenge and point of focus for miners. Heavy use of fossil fuels and their harmful environmental impact has been Bitcoin's critic's most used weapon.
When the crypto community saw a country and their leader rally behind "Volcano Mining", social media erupted with admiration and support for the effort. MineBest shared their insight on both the feasibility of harvesting Volcano energy and the carbon footprint of the current global Bitcoin mining operation. MineBest is a global company founded in 2017 specializing in cryptographic computing activities, providing professional hosting services for mining Bitcoins and other cryptocurrencies.
Volcano Energy Harvesting and its Feasibility
Before looking into Volcano-powered Bitcoin mining, it is important to understand what exactly Volcano Power harvesting is. Volcano Power harvesting is, in essence, Geothermal Power harvesting.
Scientists have been able to tap into an immense amount of energy by drilling into volcanoes and utilizing the heat of molten rock. In fact, modern techniques show that drilling isn't a requirement. They could either tap into boiling water in nearby magma-heated rock and use its steam to turn turbines, or make artificial steam by injecting water from the surface.
Geothermal Power is not new to El Salvador. A quarter of the country's total electricity production is represented by Geothermal Power making them one of the top ten geothermal energy producers in the world.
Renewable Readiness Assessment: El Salvador, IRENA – International Renewable Energy Agency, 2020
Nations located near volcanic zones are establishing geothermal resources at a high rate. Globally, the geothermal power market is growing by 4-5% each year, according to data gathered by the Geothermal Energy Association. Close to 700 geothermal projects are underway in 76 countries, with no signs of slowing down.
Bitcoin mining is already relatively green
Some reports suggest that 73% of Bitcoin’s energy consumption was carbon neutral, largely due to the excess of hydropower in major mining hubs such as Southwest China and Scandinavia. On the other hand, the CCAF estimated in September 2020 that the figure is closer to 39%. But even if the lower number is correct, that’s still almost twice as much as the U.S. grid.
There is a clear reason for it. Renewable electricity costs have fallen sharply over the past decade, driven by improving technologies, economies of scale, increasingly competitive supply chains, and growing developer experience. As established earlier, the cheap availability of electricity is the primary requirement for mining profitability.
According to some online reports, not only is most of the mined Bitcoin is coming from clean sources, but also they are accelerating the push to become clean.
Global Bitcoin mining data review Q2 2021, Bitcoin Mining Council, 2021
Cryptocurrency Mining through Geothermal Energy
In contrast to hydro, solar, and wind, Geothermal is the only renewable energy resource that can provide year-round baseload power without having to rely on the grid or, in some cases, expensive energy storage. This competitive advantage is evidenced in Iceland, where geothermal energy provides many of the world’s largest mining facilities.
President Bukele informed that his country’s engineers have recently dug a geothermal well that can provide about 95MW of zero-emission energy and they are starting to design a full Bitcoin mining hub around it.
It is important to note that El Salvador is one of the poorest nations in North America, with a per capita GDP just above $4,000. If El Salvador begins operating bitcoin mining facilities powered by clean, cheap geothermal energy, it could become a global hub for mining, receiving a much-needed economic boost in the process. This will be both in terms of employment and network/block reward profits for the businesses running the operations.
Extracting cryptocurrencies requires vast amounts of often expensive electricity. Some of the fastest computing machines ever built must run constantly in a race against other miners. Any successful mining operation must secure reliable and competitively priced power. Both year-long reliable power and cheap availability of resources are products of geothermal power - states MineBest’s mining expert.
As mining continues to scale and industrialize, demand will increase for baseload power. Firms that develop and operate baseload energy resources will be well suited to take advantage of this. This is where companies like MineBest come in.
As mining has gotten really competitive, both cheap and reliable availability of power (provided by geothermal systems as seen earlier) and access to the best equipment are a necessity.
MineBest provides state-of-the-art facilities and infrastructure maintained by experts around the clock, to give their customers the much-needed edge.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.