There is a new trend emerging in the world of Bitcoin (BTC -0.46%) mining. Traditionally, Bitcoin mining was done by either individuals or companies that had the resources to power the energy-intensive computer rigs used for the task — and to cool them, too. Cheap accessible electricity is one of the primary factors required for any entity that aims to mine Bitcoin profitably.
Now, companies in the energy industry are starting to realize that their ease of access to cheap power could make mining the crypto a lucrative opportunity.
The future of Bitcoin mining
In a revolutionary move, Japan’s largest electricity provider, TEPCO, said this month that it would begin harnessing its unused energy reserves to power Bitcoin mining rigs. Rather than just wasting that energy, TEPCO will divert it to increase profits and diversify income. For every hash TEPCO’s rigs successfully solve on the blockchain, it will be rewarded with 6.25 Bitcoins, generating a profit of about $100,000 based on the current price of the crypto.
This decision to pursue Bitcoin mining is a growing trend among energy providers. In the U.S., oil and natural gas companies such as ExxonMobil are utilizing excess natural gas that would have otherwise been released into the atmosphere or burned off to power their own Bitcoin mining operations.
This trend benefits the energy companies, the Bitcoin ecosystem, and the environment. I believe that if this continues, it could lay the foundation for Bitcoin to cement itself as a viable part of every energy provider’s business model, reduce some of the public negativity about Bitcoin’s high energy consumption, and most importantly, increase its security and decentralization.
In recent years, as Bitcoin’s popularity and power consumption grew, so did the number of critics voicing concerns about the system’s environmental sustainability. But the narrative here could be rewritten if more energy companies start to utilize the excess power they already generate or the fuel they would otherwise waste to power mining rigs.
A win-win scenario
This emerging business model doesn’t only benefit the energy companies that would be padding their bottom lines. The model is mutually beneficial, in my opinion, and would benefit Bitcoin even more.
Bitcoin is considered by many to be the gold standard of decentralization and security among cryptocurrencies. It has obtained this level of recognition due to the number of miners supporting its blockchain around the world, and the inherent characteristics in its code that make hacking the network unprofitable. (To do that successfully would also require vast amounts of energy.)
Whenever more miners join the network, it makes Bitcoin more secure and more decentralized — two of the primary features of Bitcoin that have helped it maintain its position as the world’s most valuable cryptocurrency. Should Bitcoin become even more secure and more decentralized, then it could be viewed as an even more attractive investment. In addition, if large energy companies start to get in on Bitcoin mining, it would further legitimize the cryptocurrency.
Developments like these are why I am optimistic about the future of Bitcoin, even if the views of the pessimists dominate the conversation today. In the world of technology — whether one is looking at cars, computers, or mobile phones — things tend to become more efficient over time — and I believe that Bitcoin will be no exception to that pattern.
Over the long term, it’s not impossible to imagine a future where Bitcoin’s blockchain is powered largely by a combination of energy sources that would otherwise go unused and electricity produced from green renewable sources. Slowly but surely, Bitcoin’s position as a notorious contributor to climate change might be turned on its head.