Will the Bitcoin boom lead to greener cryptocurrencies?

A cryptocurrency mining centre in the Russian city of Bratsk. Keeping energy costs and emissions down could add value to crypto assets. Reuters

A stone’s throw from the western bank of the Danube in Budapest stands an enigmatic, modernist statue. It isn’t a famous general or any other figure from Hungarian history – adorning its chest is the symbol for Bitcoin.

The statue in Graphisoft Park is of Satoshi Nakamoto, the pseudonym used by the person – or persons – who invented and launched the digital currency in 2009. The fact that a monument has been erected to the cryptocurrency’s possibly fictitious inventor reveals the financial and cultural impact Bitcoin has had over the past 15 years. That impact is set to continue; on Monday the world’s largest cryptocurrency by market capitalisation surged past $72,100 to reach a record high – not bad from an initial flat price of less than $0.10 a coin.

Much has been written about Bitcoin’s unnerving volatility, but its current resurgence has focused attention on a related aspect of the crypto world: the large amounts of energy needed to power specialised hardware that “mines” these digital tokens.

A bronze statue of Satoshi Nakamoto, the mysterious inventor of virtual currency Bitcoin, was unveiled in the village of Nagytarcsa in Budapest. All photos: AFP

A digital currency enthusiast bites on a Bitcoin as she poses for a photo with the statue of Nakamoto after its unveiling at the Graphisoft Park on September 16

The bronze sculpture depicts a hooded figure with stylised facial features, alluding to Nakamoto, a pseudonym credited as Bitcoin's founder, but whose identity remains unknown

A man wearing a Guy Fawkes mask with the Nakamoto sculpture

Hungarian sculptors and creators Reka Gergely, left, and Tamas Gilly with their creation

Hungarian Bitcoin enthusiasts say Budapest is the first in the world to honour Nakamoto and is an effort to 'raise awareness toward blockchain and cryptocurrencies'

Sculptor Gilly pouring molten bronze in to a mould for the statue

The bust emblazoned with a Bitcoin symbol gets a wax coating

When sculpting the statue, the pair really wanted to make Nakamoto’s face reflective like a mirror in which viewers can see themselves

Between 2020 and 2021, UN scientists examined the activities of 76 Bitcoin mining nations and found that, in addition to a substantial carbon emissions, global Bitcoin mining activities leave significant water and land footprints. Studies from the UN University suggest Bitcoin mining could push global warming beyond set limits and, as far back as 2017, the World Economic Forum was citing reports that claimed Bitcoin mining was using more electricity than countries the size of Ireland, Serbia or Bahrain.

So far, so troubling – but this isn’t the whole story. Research has emerged in recent years that, while acknowledging many cryptocurrencies’ energy-hungry nature, points to growing interest among data miners in using renewable power or harnessing fossil fuel by-products. A 2023 study published by researchers at New York’s Cornell University found that crypto operations such as Bitcoin mining “hold the potential to play a significant role in promoting renewable energy development and aiding climate action efforts”.

The team specifically investigated planned renewable energy initiatives across the US and found that it may be possible for Bitcoin mining to generate profit for wind or solar farms that were in a pre-commercial phase – that is, generating power but not yet plugged into the national grid. This potential profit – which in the case of Texas was estimated to be about $47 million – could then be invested in more renewable energy projects.

Smart investors and governments can help sustain crypto growth – and even establish some stability – if its high energy demand and emissions can be controlled

In addition, a research paper published last June by the MIT Centre for Energy and Environmental Policy Research examined claims that Bitcoin mining could harness methane – a natural by-product of oil extraction – by “incentivising generator construction to convert the otherwise squandered energy into productive use and further lead to mitigating methane emission”.

The MIT researchers also scrutinised the possibility that Bitcoin miners could operate near America’s 3.7 million orphaned and unplugged oil and gas wells, which emit 6.9 million tonnes of carbon dioxide equivalent a year. By subsidising and sealing these wells, it may be possible for miners to “harness the otherwise wasted energy, convert it into electricity, and generate revenue to fund well-sealing efforts while mitigating climate impact”.

Even more futuristic possibilities for greener crypto mining are in the mix. Research from MIT has explored the possibility of “solar micro-mining rigs” that could transform excess capacity from hard-to-trade renewable energy into money.

But will crypto giants enjoying the current boom be interested in using renewable energy? If they want to maintain and increase their coin’s value, then yes. Research published last year by international accounting firm KPMG found that a Bitcoin that took environmental, social and governance goals seriously could develop from being “a misunderstood technology and asset class” to one that would not only “improve the reputation of the overall ecosystem but pave the way for greater use and adoption”.

It isn’t clear if this recent surge in Bitcoin and crypto value will be a sustained one – crypto’s unpredictability is seemingly part of its mystique. However, in the Middle East, digital currencies have a record of high growth, given their potential as a hedge against unstable currencies and attraction to a young and tech-savvy population. Smart investors and governments can help sustain this growth – and even establish some stability in crypto – if its high energy demand and emissions can be controlled. They may not erect a statue to the person who develops a clean-energy crypto-mining technique, but the impact would be just as revolutionary.