Bitcoin Mining: Paving the Way for Electrification Worldwide

In many parts of the world, access to electricity is a luxury that we often take for granted. For example, the Sub-Saharan Africa (SSA) region faces severe power shortages, with over 600 million people without electricity. This deficit leads to economic stagnation, reduced food production, poverty, and even internal conflicts. The correlation between electrification and economic growth is undeniable, and regions with electrification rates below 80% continue to suffer from a decline in per capita GDP. The challenge lies in extending power infrastructure to these underserved areas, which is capital-intensive and often financially unfeasible for resource-limited governments. This is where Bitcoin mining becomes a potential solution, providing a pathway for electrification to regions that have been without power for an extended period.

Bitcoin mining has long been a controversial topic, with critics often focusing on its environmental impact. However, behind the sensational headlines and mainstream media narratives, there lies a story of potential humanitarian benefits and energy innovation. By harnessing stranded energy in remote areas, Bitcoin mining can provide a source of income for new power plants, supporting grid construction.

While the smear campaign against Bitcoin mining continues, awareness of the importance of using idle energy for Bitcoin mining is slowly gaining attention. In fact, this story is vividly presented in the recently released award-winning documentary “Stranded: Dirty Coins,” showcasing how Bitcoin miners in regions like SSA ingeniously repurpose stranded power, injecting vitality into both Bitcoin and forgotten power infrastructure.

In this article, we will explore the overlooked positive aspects of Bitcoin mining, comparing its energy consumption with other industries and arguing how Bitcoin mining has the potential to incentivize the discovery of new energy sources and the construction of new energy infrastructure.

What is Stranded Energy?

@makir/what-is-stranded-energy-why-it-matters-to-bitcoin-c9a9a43e4a04">Stranded energy refers to energy that exists at a certain location but is not effectively utilized or used for production purposes. It is essentially energy that is isolated or “stranded” at a location for various reasons, such as a lack of transportation infrastructure or mismatch between energy production and demand locations.

For example, when developing a new power grid, especially in remote areas, energy infrastructure may be in place before demand catches up. This means that the generated energy exceeds the immediate need until more users connect, leading to it being “stranded” and ultimately wasted until more connections are established. This is a significant problem that Bitcoin mining can help solve, and this area is particularly detailed in the benefits of mining discussed by Stranded.

Alana emphasized in an interview how Bitcoin mining serves as a financial catalyst for building essential grid infrastructure by monetizing surplus energy in areas lacking traditional demand. She further elaborated on this point, stating, “I never thought about the concept of demand growth for the grid. In the film, I wanted to convey that having access to electricity is a huge privilege, and the mining industry can fund new grid infrastructure for places that have never had electricity before.”

Take Ethiopia as an example. It has the potential to generate over 60,000 megawatts (MW) of “renewable” energy but currently has an installed capacity of only 4,500 MW. 90% of the electricity comes from hydropower, with geothermal, solar, and wind energy filling the gap. However, the country still faces a severe energy shortage, with only 44% of the population having access to electricity. With projects under construction, such as the Grand Ethiopian Renaissance Dam (GERD), expected to generate an additional 5,150 MW, the government anticipates a total installed capacity of 17,000 MW over the next decade. The introduction of Bitcoin mining could potentially provide funding for these power infrastructure projects.

Removing Misconceptions about Bitcoin Mining

One of the most common misconceptions about Bitcoin mining is that it consumes an excessive amount of energy, surpassing the entire energy consumption of a country. Critics often point out that reports claim Bitcoin mining consumes more electricity than many countries, including Ireland, Nigeria, and Uruguay. The Bitcoin Energy Consumption Index by cryptocurrency platform Digiconomist estimates an annual energy usage of 33 terawatt-hours, comparable to countries like Denmark.

However, it is essential to analyze this criticism and consider it in the broader context of energy consumption. While the energy consumption of the Bitcoin network is indeed substantial, it must be remembered that energy consumption itself is not inherently bad. This criticism tends to presuppose that energy is a finite resource and allocating it to Bitcoin mining would deprive other industries or individuals of ownership of this valuable commodity.

In reality, energy is a crucial and scalable resource, and the concept of one use wasting more or less energy than another use is subjective. All users, including Bitcoin miners, incur costs and pay the full market rate for the electricity they consume. Dismissing other industries solely because of the energy consumption of Bitcoin mining is a fallacy. As Alana also pointed out, “People’s perception of Bitcoin, as often repeated by the media, is a common misconception. No one has considered the energy consumption of the industries they interact with every day. It’s not a common number people are familiar with, but for Bitcoin, due to all the energy consumption, it is certainly considered dirty!”

Comparison of Bitcoin with Other Energy-Intensive Industries

To properly assess the issue, let’s compare Bitcoin mining with some other energy-intensive industries that often escape similar scrutiny:

I don’t know your situation, but I can’t recall the last time I heard complaints about the high energy consumption of the paper and pulp industry in the media. To counter the “dangerous” myths surrounding Bitcoin mining and its energy usage, a nuanced understanding of energy consumption is needed. While examining the environmental impact of any industry is crucial, solely criticizing Bitcoin mining while overlooking other energy-intensive industries is a flawed approach.

Where to Go from Here?

Unlike any technology before it, Bitcoin mining incentivizes exploration of cost-effective energy utilization methods without geographical or traditional energy constraints. This financial impetus could trigger an unprecedented energy revolution since the Industrial Revolution, potentially propelling humanity towards becoming a Type I civilization. Alana shares a similar perspective, stating, “The next one is about how we can achieve a Type I civilization, with Puerto Rico as a model of failure for the significant infrastructure changes we are undergoing. It is a crucial moment in the island’s history and can serve as an example for failed power grids worldwide.”

As economic incentives drive Bitcoin mining to saturate the energy industry, a fusion is occurring. Energy producers are monetizing surplus and stranded energy through Bitcoin mining, while miners engage in vertical integration to enhance competitiveness. In the foreseeable future, the most efficient miners themselves may become energy producers, potentially revolutionizing traditional grid models.

Disclaimer：

1. This article is reprinted from [BitCoin]. All copyrights belong to the original author [KUDZAI KUTUKWA]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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