Can Bitcoin be made green?

Abstract

This chapter examines solutions to making Bitcoin green. We review efforts to reduce mining’s use of fossil fuels. If Bitcoin mining transitions to renewable energy sources, then this reduces mining’s carbon footprint. Partly, this change may occur through geographical relocation, if mining were increasingly concentrated in regions with an abundance of renewable energy, especially if that energy cannot be stored or transmitted easily. Further, we review arguments that Bitcoin mining may serve as a large curtailable load to help stabilize electricity grids, and perhaps expand renewables. Bitcoin miners can also invest in more energy-efficient mining hardware. However, as other factors change including the Bitcoin price, the net effect of past efficiency gains has not reduced aggregate energy consumption. Importantly, the Bitcoin network could switch away from the energy-intensive PoW consensus mechanism. The Ethereum network has made the switch from PoW to proof-of-stake (PoS) and reduced its energy use by an estimated >99%. Given resistance to change, some voluntary market mechanisms have been suggested (carbon offsets), or recently emerged (renewable energy certificates) where newly minted Bitcoin are matched with verifiable information. But evidence on adoption is sparse. While pressure on Bitcoin mining is mounting, resistance to dropping PoW hasn’t diminished.