74% of Bitcoin Mining Is Powered by Renewable Energy

John Vibes
  • A new study from CoinShares indicates that 74% of Bitcoin mining operations are powered by renewable energy. 
  • This research challenges the idea that that proof of work mining is harmful to the environment and a drain on non-renewable resources.

A recent study, published by the cryptocurrency investment and research firm CoinShares, estimates that renewable energy powers roughly 74.1% of Bitcoin (BTC) mining operations.

The paper also indicated that Bitcoin (BTC) mining operations are often concentrated in areas where renewable energy sources are abundant. Miners are actually incentivized to do this because it is more profitable in the long term for them to use renewable energy in most cases.

However, it seems that renewable energy use in the industry is slightly down from last year, when roughly 77.8% of miners were using renewable sources. 

According to the report:

“The renewables estimate is down from 77.8% in our November 2018 report and reflects increased visibility of the industry on our part as well as movements within the industry.”

If these numbers are correct, that would make the blockchain industry “more renewables-driven than almost every other large-scale industry in the world.”

In addition to these energy statistics, the report also suggests that the average miner is still making a profit, even during the prolonged bear market. According to the report:

“Among our findings is an estimate that since November, the market-average, all-in marginal cost of creation, at ¢5/KWh, and 18-month depreciation schedules has decreased from approximately $6,800 to approximately $5,600, mainly as a result of lower assumed cooling and overhead costs. This suggests that, at current prices, the average miner is highly profitable, with even older gear and high-cost producers currently able to make positive ROI.”

The paper also covered many other interesting trends, like the changes in the network's average hashrate. 

Energy Usage Concerns 

Additionally, it is important to note that proponents of cryptocurrency insist that the technology consumes much less energy than the traditional banking and credit card companies.

It has even been calculated that Bitcoin mining uses less electricity annually than seasonal Christmas lights. Most of the large crypto mining operations are making significant efforts to reduce their carbon footprint. 

Last year, Cryptosolartech, Spain’s largest Bitcoin miner, announced that they were building a 300 MW solar farm to power its mining operations.

In March of this year, the leading crypto mining startup Bitmain was reportedly planning to set up 200,000 units of mining equipment in areas of China that offer inexpensive hydroelectric power.

New York-Based Asset Manager Secures $190 Million for Bitcoin Fund

The New York Digital Investments Group (NYDIG) has raised $190 million for a bitcoin fund called the NYDIG Institutional Bitcoin Fund LP, according to a filing with the Securities and Exchange Commission disclosing it.

The bitcoin fund has 24 unnamed investors and was originally registered with the Securities and Exchange Commission in 2018. It originally raised $31 million from three investors, and in 2019 it raised an additional $54 million from six other investors. The fund has grown to $190 million since.

Notably, the NYDIG made headlines back in Mat after closing a $140 million fund called the Bitcoin Yield Enhancement Fund. The filing did not reveal a lot of details about the new fund and, as such, Forbes reports it's unclear whether the funds are different

If they are indeed different, then the NYDIG has become one of the largest institutional investors in the cryptocurrency space in the United States, with a total of $330 million invested in bitcoin across both funds.

Whether the new fund is a rebrand or not is further complicated by a recent name change, as the NYDIG Institutional Bitcoin Fund was previously called the NYDIG Institutional Digital Asset Fund. The asset manager did not disclose the new fund’s proposed net asset value, or any other details.

The New York-based asset manager also operates another bitcoin fund, called the NYDIG Bitcoin Strategy Fund. It’s a portfolio fund in the Stone Ridge Trusts VI and invests in cash-settled bitcoin futures contracts with the CME. The current size of the fund is unknown.

The NYDIG is a holder of the coveted BitLicense from the New York State Department of Financial Services (NYDFS), which makes it a regulated entity in the state. The former financial regulator who create the BitLicense in 2015, Benjamin Lawsky, joined the fund manager last year, 11 months before it received the license.

Even if the new fund is a rebrand, NYDIG is a new major institutional player in the cryptocurrency space. Institutional investing in the space has so far been dominated by Grayscale Investments, which has over $4 billion worth of assets under management.

Earlier this year, it’s worth noting, 3iQ announced the listing of a $14 million closed-end fund that gives investors exposure to bitcoin on the Toronto Stock Exchange (TSX).

Featured image via Pixabay.