Development a policy for the production of Bitcoins with renewable energy sources
Corresponding Author(s) : Hamed Afshari
Future Energy,
Vol. 3 No. 2 (2024): May 2024 Issue
Abstract
Bitcoin, the first decentralized digital currency introduced by an anonymous person or group since 2008, has attracted worldwide attention. A significant number of economists have introduced Bitcoin as a new phenomenon in the 21st century that could reduce global inflation. Given the tens of thousands of digital currencies that have emerged since the advent of Bitcoin and its price growth trend over more than a decade, which are signs of the growth of this business. In addition to being money, Bitcoin has always been considered a tool for investing and storing value, which is why it is called digital gold. One of the most important problems in the production or extraction of Bitcoins is the high-power consumption by miners. If the energy sources of electricity generation are supplied by non-renewable energy sources, in addition to emitting air pollutant gases, it will increase greenhouse gases and consequently contribute to climate change. In this research, based on the idea of the authors, which is that the economic support of Bitcoin is energy, a strategy for producing Bitcoin from renewable energy sources is considered. First, the amount of electrical energy consumption by Bitcoin production is calculated based on statistical data, and then based on the price of electricity in different countries of the world and its global average, the base price of Bitcoin is calculated. In the following, four scenarios are proposed for the production of Bitcoin by electricity supplied from non-renewable energy sources. These scenarios include coal-fired steam power plants, natural gas-fired power plants, natural gas/oil gas-fired power plants, and dual-cycle (steam and gas cycles) natural gas-fired power plants. Based on the amount of electricity required to produce one Bitcoin, the amount of pollutants emitted to produce Bitcoin and its social costs are calculated. These costs should be added to the base cost of Bitcoin production if non-renewable energy sources are used to produce Bitcoin. Then, renewable energy sources for Bitcoin production based on the price of electricity generated by renewable energy sources are examined. Based on the analyses, how to choose the best renewable energy source to produce Bitcoin is presented as a scenario. This article briefly answers two key questions: 1. At what price of Bitcoin is it cost-effective for governments to produce it? 2. What is the best renewable energy source to produce it? These two questions can be useful in creating a roadmap and strategy for economists and governments.
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- Combined Heat and Power (CHP) Developers Guides 2009, United Kingdom Government Department of Energy & Climate Change
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References
Atlam, H.F. and G.B. Wills, Technical aspects of blockchain and IoT, in Advances in computers. 2019, Elsevier. p. 1-39.
Sawa, T., Blockchain technology outline and its application to field of power and energy system. Electrical Engineering in Japan, 2019. 206(2): p. 11-15.
Abbaspour, H., et al., Energy, exergy, economic, exergoenvironmental and environmental (5E) analyses of the cogeneration plant to produce electrical power and urea. Energy Conversion and Management, 2021. 235: p. 113951.
Dogan, E., Majeed, Muhammad Tariq, Luni, Tania, Are clean energy and carbon emission allowances caused by bitcoin? A novel time-varying method. Journal of Cleaner Production, 2022. 347: p. 131089.
Gallersdörfer, U., Klaaßen, Lena, Stoll, Christian, Energy consumption of cryptocurrencies beyond Bitcoin. Joule, 2020. 4(9): p. 1843-1846.
Lemieux, P., Who is satoshi nakamoto? Regulation, 2013. 36(3): p. 14-16.
Born, B., International regulatory responses to derivative crises: The role of the US commodity futures trading commission. International Journal Of Law and Buisiness, 2000. 21: p. 607-615.
Farber, M. This billionaire just called Bitcoin a ‘Pyramid Scheme’ See: https://fortune.com/2017/07/27/howard-marks-bitcoin-pyramid-scheme/ [Accessed 7 March 2022]. Available from: https://fortune.com/2017/07/27/howard-marks-bitcoin-pyramid-scheme/ [Accessed 2022].
Paul, V.a.M., C, The age of crytocurrency: How Bitcoin and digital currency are challenging the global economic order. Vol. 1. 2016, USA: New York, NY : St. Martin's Press. 368.
Sarkodie, S.A., Ahmed, Maruf Yakubu, Leirvik, Thomas, Trade volume affects bitcoin energy consumption and carbon footprint. Finance Research Letters, 2022. 48: p. 102977.
de Vries, A., Bitcoin's growing energy problem. Joule, 2018. 2(5): p. 801-805.
Knapton, S. Bitcoin using more electricity per transaction than a British household in two months See: https://www.telegraph.co.uk [Accessed 3 April 2022]. Available from: https://www.telegraph.co.uk [Access 3 April 2022].
Corbet, S., Lucey, Brian, Yarovaya, Larisa, Bitcoin-energy markets interrelationships - New evidence. Resources Policy, 2021. 70: p. 101916.
Rehman, M.U. and S.H. Kang, A time–frequency comovement and causality relationship between Bitcoin hashrate and energy commodity markets. Global Finance Journal, 2021. 49: p. 100576.
Das, D. and A. Dutta, Bitcoin’s energy consumption: Is it the Achilles heel to miner’s revenue? Economics Letters, 2020. 186: p. 108530.
Li, J., et al., Energy consumption of cryptocurrency mining: A study of electricity consumption in mining cryptocurrencies. Energy, 2019. 168: p. 160-168.
Vranken, H., Sustainability of bitcoin and blockchains. Current Opinion in Environmental Sustainability, 2017. 28: p. 1-9.
Bevand, M. Electricity consumption of Bitcoin: a market-based and technical analysis See: http://blog. zorinaq. com/bitcoin-electricity-consumption [Accessed 3 May 2022] Available from: http://blog. zorinaq. com/bitcoin-electricity-consumption [Access 3 May 2022].
Digiconomist. Bitcoin energy consumption index See: https://digiconomist.net/bitcoin-energy-consumption/ [Accessed 15 January 2021]. Available from: https://digiconomist.net/bitcoin-energy-consumption/ [Access 15 January 2021].
de Vries, A., Bitcoin’s energy consumption is underestimated: A market dynamics approach. Energy Research & Social Science, 2020. 70: p. 101721.
Sarkodie, S.A., Owusu, Phebe Asantewaa, Dataset on bitcoin carbon footprint and energy consumption. Data in Brief, 2022. 42: p. 108252.
Stoll, C., Klaaßen, Lena, Gallersdörfer, Ulrich, The carbon footprint of Bitcoin. Joule, 2019. 3(7): p. 1647-1661.
Krause, M.J. and T. Tolaymat, Quantification of energy and carbon costs for mining cryptocurrencies. Nature Sustainability, 2018. 1(11): p. 711-718.
Mora, C., et al., Bitcoin emissions alone could push global warming above 2 C. Nature Climate Change, 2018. 8(11): p. 931-933.
de Vries, A. and C. Stoll, Bitcoin's growing e-waste problem. Resources, Conservation and Recycling, 2021. 175: p. 105901.
de Vries, A., Renewable Energy Will Not Solve Bitcoin’s Sustainability Problem. Joule, 2019. 3(4): p. 893-898.
Malfuzi, A., et al., Economic viability of bitcoin mining using a renewable-based SOFC power system to supply the electrical power demand. Energy, 2020. 203: p. 117843.
Lei, N., E. Masanet, and J. Koomey, Best practices for analyzing the direct energy use of blockchain technology systems: Review and policy recommendations. Energy Policy, 2021. 156: p. 112422.
McQuillan, B., et al., High efficiency generation of hydrogen fuels using solar thermo-chemical splitting of water (solar thermo-chemical splitting for H2), in Prepared under Solar Thermochemical Hydrogen Grant No. DE-FG36-03G013062 2010: University of Nevada Las Vegas Research Foundation, USA.
de Vries, A., Bitcoin boom: What rising prices mean for the network’s energy consumption. Joule, 2021. 5(3): p. 509-513.
Fujii, K., et al., Hydrogen production by the magnesium–iodine process. Advances in Hydrogen Energy, 1982. 3: p. 553-6.
Bitcoin miner beats 1 in 1.3 million odds to mine a BTC block See:https://www.theblockcrypto.com/post/129894/bitcoin-miner-beats-1-in-1-3-million-odds-to-mine-a-btc-block [Accessed 30 Apr 2022]. [cited 2022; Available from: https://www.theblockcrypto.com/post/129894/bitcoin-miner-beats-1-in-1-3-million-odds-to-mine-a-btc-block [Access 2022].
Kamiya, G., Bitcoin energy use-mined the gap. 2019. https://www.iea.org/commentaries/bitcoin-energy-use-mined-the-gap
Top 10 Bitcoin Mining Hardware [2022 Updated List] See: https://www.softwaretestinghelp.com/bitcoin-mining-hardware/ [Accessed 5 May 2022]. [cited 2022; Available from: https://www.softwaretestinghelp.com/bitcoin-mining-hardware/ [Accessed 5 May 2022].
Combined Heat and Power (CHP) Developers Guides 2009, United Kingdom Government Department of Energy & Climate Change
David Birchby, J.S., Sally Whiting, Michel Vedrenne, Air Quality damage cost update 2019. 2019. p. 1-54.
Karkour, S., Ichisugi, Yuki, Abeynayaka, Amila, Itsubo, Norihiro, External-cost estimation of electricity generation in G20 countries: case study using a global life-cycle impact-assessment method. Sustainability, 2020. 12(5): p. 2002.
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Average renewable electricity generation cost globally in 2020, by energy source See: https://www.statista.com/statistics/478049/global-utility-scale-electricity-generation-cost-by-resource/ [Accessed 17 May 2022]. Available from: https://www.statista.com/statistics/478049/global-utility-scale-electricity-generation-cost-by-resource/ [Access 2022].
Renewable power generation costs in 2020 See: https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020 [Accessed 17 May 2022]. Available from: https://www.irena.org/publications/2021/Jun/Renewable-Power-Costs-in-2020 [Access 2022].