green technology

ECB assesses environmental footprint of cash, sees room for improvement

In Europe, the environmental footprint of banknotes is minuscule compared to crypto’s, but crypto has its own advantages.

The European Central Bank (ECB) has taken a look at the environmental impact of using banknotes and discovered 16 environmental impact categories. As with cryptocurrency, energy efficiency was a major issue.

Banknotes continue to be the most common form of payment at points of sale in the eurozone. The use of cash requires an elaborate physical infrastructure for production, distribution, and eventual retirement.

Energy use by ATMs was the biggest contributor to banknotes’ environmental footprint at 37%, followed by transportation (35%). The remainder was processing, paper manufacturing, authentication and many other steps. The ECB began efforts to reduce the environmental impact of banknotes in 2004. According to the ECB report:

Bitcoin’s water consumption: A new environmental threat?

New studies have examined the water consumption of Bitcoin, with alarming results.

Bitcoin, the world’s leading cryptocurrency, has long been under scrutiny for its environmental impact due to the energy-intensive nature of its mining process.

Since its inception in 2008, Bitcoin has never been hacked. Its tight security, provided by its proof-of-work (PoW) consensus mechanism, provides value to the cryptocurrency.

PoW, however, is energy-intensive and relies on complex cryptographic algorithms requiring vast computational power.

Carbon market gets a much-needed boost from blockchain technology — Web3 exec

An Allinfra Climate exec thinks digitizing carbon market processes via distributed ledger technology can bring about efficiency and predictability that hasn’t existed before.

Automated systems and blockchain technology are being increasingly utilized to improve the efficiency and accuracy of the carbon market, a critical component in the fight against climate change.

Cointelegraph spoke to Bill Kentrup about the role of blockchain technology in digitizing verifiable data in the carbon market. Kentrup is the head of origination and co-founder of enterprise software Allinfra Climate — a platform designed to help institutions achieve their sustainability goals. According to him, on-chain monitoring, reporting, verification, issuance, allocation and retirement of carbon credits and carbon claims could bring about efficiency and predictability that hasn’t existed in the past.

Kentrup said that by putting everything on “digital rails,” systems for detecting double-counting, corporate carbon accounting, ratings and reporting to government regulators can all go digital, saying:

“It’s far less efficient for a digital accounting system to process data from reports, non-digital sales, purchase agreements and from traditional registries that have limited info in terms of who the final owner of a retired asset is.”

Kentrup mentioned that historically, the challenges and inefficiencies associated with the carbon market have resulted in understandable frustration and significant pushback. According to him, this pushback contributed to the failure to extend the Kyoto Protocol beyond 2012.

The Kyoto Protocol is an international treaty aimed at reducing greenhouse gas emissions and addressing climate change. It established a system of emissions trading, allowing countries that have exceeded their emissions reduction targets to sell their surplus allowances to countries that have not met their targets.

Speaking on how the current manual process of collecting and verifying data in the carbon market falls short — and how blockchain technology can help address these limitations — Kentrup said, “Most traditional approaches used to monitor, report and verify (MRV) emissions reductions use intermittent manual processes to determine the environmental impact of projects. Data collection is often labor-intensive and time-consuming when the number of emission-reducing projects seeking environmental finance increases.”

“Historically, there tend to be significant bottlenecks in terms of the availability of validation and verification bodies required to do the work from start to finish — the process of getting a single issuance of carbon credits issued from a project takes months (sometimes over six months).”

He added:

“In order for organizations to truly reduce net emissions and accurately measure climate impact, it is critical that we have highly provenanced data tied to carbon offsets. A blockchain-based system can help us achieve this with real-time digital data capture that is verifiable and auditable.”

Explaining how the verifiability of data collected through blockchain technology improves the accuracy of reporting in the carbon market, Kentrup said “A blockchain-based system is a way of ensuring that data captured from devices and other carbon-relevant sources retains a high degree of provenance. […] This results in greater predictability, reduced time and cost, and vastly improved verifiability and audibility.”

Automating the collection and verification of data in the carbon market faces myriad challenges, which Kentrup said include the availability of appropriate market-rational technology, as certain aspects don’t yet have suitable technology available to fully automate or digitize. In addition, the over-enthusiasm of “tech for climate” providers that don’t have much experience in climate finance will inadvertently fail and, in some cases, damage the market. This runs the risk of tainting the wider market’s view of “tech for climate.” Finally, resistance to adoption amo traditional market players is also a challenge for the sector.

Despite the challenges, Kentrup expressed his optimism, as new ideas and technology are being implemented and traditional players are shifting toward adopting digital solutions for climate finance.

Remarking on the role blockchain tech will play in the foreseeable future of the carbon market, Kentrup shared, “While potentially not the only solution available, a blockchain-based platform currently provides all stakeholders in the environmental financial product market with greater trust in underlying products, vastly reduced and more predictable time and costs, increased efficiency in allocating value to participating parties, and greater optionality and reporting — ultimately contributing to the acceleration of positive climate action.”

“Putting carbon-related data on ‘digital rails’ is a way of future-proofing a party’s decarbonization activities. In the near term, it allows for quicker, cheaper production of carbon offsets and for better-structured financing, insurance and professional services — all absolutely critical to strive for given the urgency with which we must combat climate change.”

The most eco-friendly blockchain networks in 2022

This year saw the realignment of the crypto industry toward greener, more energy-efficient blockchains.

2022 saw the continued advancement of green crypto projects as more industry companies focused on sustainability to reduce carbon emissions. A series of elemental forces drove the paradigm shift, including user demands for faster and more energy-efficient blockchains, growing climate change awareness among investors, and rising government concerns about energy consumption in the crypto sector.

Among the most notable eco-friendly crypto developments in 2022 was the transition of the Ethereum blockchain from a proof-of-work (PoW) to proof-of-stake (PoS) consensus layer. The Merge, completed in September, joined the original execution layer of Ethereum with its new PoS consensus layer, the Beacon Chain. It eliminated the need for energy-intensive mining by enabling the network to be secured using staked Ether (ETH). The conversion reduced the Ethereum network’s energy consumption by 99.9% immediately. Ethereum’s position as a leading programmable blockchain signaled industry-wide progression to low-carbon-emission solutions.

Mohammed AlKaff AlHashmi, the co-founder of the Islamic Coin cryptocurrency, spoke with Cointelegraph about how the sector was evolving to cater to emerging demands.

“In 2022, green projects follow three main vectors. The first is cutting their energy consumption and emissions — such as Ethereum reducing consumption by 99.9% and Polygon presenting itself as carbon-neutral. The second is ReFi — a new trend of regenerative finance that experiments with financial incentives to draw down carbon emissions.”

AlHashmi mentioned that his network had adopted a new emission-reduction model to achieve its eco-friendly objectives: “In the case of Haqq [the blockchain that issues Islamic Coin], the protocol automatically deposits 10% of the issued amount into a special Evergreen DAO, a nonprofit virtual foundation focused on long-term sustainability and community impact.”

Dimitry Mihaylov, chief scientific officer at blockchain gaming metaverse Farcana, told Cointelegraph that lowering emissions and on-chain transaction costs was good for the industry in the long term, as it would attract users, investors, and governments.

“Today, a regular banking transaction consumes an order of magnitude less electricity than a blockchain-based transaction, but we are betting on the development of more energy-efficient mining equipment and faster blockchain protocols. If successful, ‘green’ crypto projects are likely to receive strong support from both governments and potential users.”

That said, 2022 saw the rise of some unique, innovative, eco-friendly cryptocurrency projects contributing to a greener world.

Chia Network

Chia Network takes a unique approach to lower carbon emissions by using a proof-of-space-and-time protocol that differs greatly from early energy-intensive crypto-mining mechanisms that require powerful GPUs and processors. The network performs efficient transaction validations, also known as farming, and allocates users’ empty computer storage space into plots.

The process functions through a decentralized network of nodes acting as clients and servers connecting with their peers. The low processing power requirements allow anyone with a decent spec computer to farm Chia (XCH) tokens.

The network relies on farmers to provide storage space and then allocates mining privileges to each miner based on randomly generated numbers assigned to each space. The storage space whose stored numbers match closely with those generated by the network wins mining privileges.

This algorithmic formula rewards a greater allocation of random numbers to farmers with the most storage space, creating more winning chances.

XCH can be farmed using a range of infrastructures, including cloud computing and data storage platforms such as Amazon Web Services. Chia Network’s use cases include support for decentralized finance projects, asset tokenization platforms and decentralized exchanges.

On the energy front, Chia Network claims to use about 0.12% of the annualized energy used by the Bitcoin network. While the concept is inventive, it has drawbacks. Additional demand for hard disk and solid state drives has emerged in countries like China because mining XCH may wear out drives in as little as 40 days, in some instances.

Despite this downside, the network has presented money-making opportunities for data storage providers with unused space and companies with worn but operational data storage hardware that is no longer in active use.

Algorand

The Algorand blockchain network is built with an environmental focus and has made major strides toward becoming carbon-negative over the past two years.

In 2021, Algorand partnered with ClimateTrade, a a company that uses blockchain technology to help businesses offset their carbon footprint, enabling them to track their emissions in pursuit of broad sustainability goals.

The partnership enabled a portion of Algorand’s transaction fees to be put aside for purchasing the necessary carbon credits needed to offset the network’s carbon footprint. Algorand is a proof-of-stake blockchain, making it more energy efficient than Bitcoin’s (BTC) proof-of-work consensus mechanism.

For perspective, one Bitcoin transaction consumes approximately 1,206.52 kilowatt-hours of electricity, while Algorand claims one transaction only consumes about 0.000008 kWh of energy.

Solana

Solana is a blockchain platform designed to host decentralized applications. It uses the PoS consensus mechanism to validate transactions and embodies the tenets of green token generation. The platform can theoretically process over 60,000 transactions per second. This eclipses the Bitcoin network, which processes seven transactions per second.

On-chain transactions are settled using SOL (SOL) — the platform’s native cryptocurrency. The network has, since its inception, been working to achieve carbon neutrality, and it reached the milestone for the first time in 2021 by joining a carbon offset program.

Earlier this year, Solana received a favorable carbon rating from the Crypto Carbon Ratings Institute (CCRI) for consuming the lowest energy at a rate of 0.166 watt-hours per transaction.

While many blockchain networks use the energy-efficient PoS consensus mechanism, Solana’s efficiency is boosted by another novel mechanism called proof-of-history (PoH). With PoH, a timestamp creates a historical record to prove an event has occurred at a specific time. The nifty, pioneering solution allows the network to focus on validating current transactions without having to reference past temporal claims by nodes.

This enables consistency, as nodes must abide by set transaction ordering. The process allows the protocol to be fast and energy efficient.

Avalanche

Avalanche is a blockchain platform that aims to address the blockchain trilemma of scalability, efficiency, and security by using its unique proof-of-stake consensus mechanism. The platform uses its native AVAX (AVAX) token to facilitate transactions and distribute system rewards.

Avalanche has been lauded as one of the most energy-efficient chains in 2022. According to a research study by the CCRI, the Avalanche public blockchain consumed about 0.0005% of the amount of energy used by the Bitcoin network, which is pretty impressive.

These and other high-efficiency properties have made Avalanche the platform of choice for projects with environmental considerations.

The future of eco-friendly crypto projects

Eco-friendly cryptocurrency projects are here to stay. They are designed to be more environmentally sustainable and are becoming increasingly popular among users due to their scaling capabilities and lower gas fees.

The benefits they provide will likely lead to the development of more environmentally friendly blockchains while encouraging the enhancement of existing ones. That said, 2022 sits at the cusp of a new era where green crypto projects become more prevalent.

Decentralized solutions for climate change are key as COP disappoints

Climate change initiatives led by politicians and sponsored by some of the biggest polluters demand a change in initiatives — Decentralized tech could play a key role.

Climate change has become one of the most pressing issues in the modern world with mounting pressure on companies to develop and implement climate strategies. Politicians around the globe have also been actively involved, with several nations pledging to go carbon-neutral in the next couple of decades.

Amid all the initiatives and conferences led by politicians and billion-dollar companies over the years, the threat of global warming and the carbon emissions spilling into the atmosphere have only risen.

The 2022 United Nations Climate Change Conference, or Conference of the Parties of the UNFCCC, was the 27th United Nations climate change conference. More commonly referred to as COP, the conference is one of the largest of its kind that sees attendance from top policymakers and tech CEOs.

COP27 ultimately resulted in minimal progress on loss and damage, with high-emission countries agreeing to compensate those countries enduring the brunt of the climate mayhem that they played a negligible role in causing. But, once again, no promise was made to stop the emissions fueling this disaster.

Politician-led conferences such as COP27 have become a glaring example of everything that is wrong with such initiatives. COP27 was host to more than 600 representatives of fossil fuel companies and many others who were there to prevent rather than support progress and action. Above all, the event was sponsored by the largest polluter of plastic in the world — Coca-Cola.

The annual climate carnival concept was probably not the best way to encourage meaningful action on global warming. The presence of the fossil fuel industry and continued failure to fulfill their intended purpose means the problem of climate change needs a modern solution, and for many, decentralized tech is the key that can benefit climate initiatives in the long run.

Decentralized solutions

Decentralized tech has proven revolutionary in data management for many industries apart from the financial sector. Climate change initiatives are already integrating blockchain tech to their benefit including an increasing number of projects at COP held yearly conferences.

KPMG U.S. climate data and technology principal Arun Ghosh told Cointelegraph:

“One of the major outcomes of COP27 was landing on the loss and damage set of agreements enabling wealthier nations to help provision and plan for the recovery of people and livelihoods in under-resourced nations. Blockchain not only provides the trust and transparency set of enablers but with the introduction of CBDC pilots as well as the adoption of BTC as a recognized medium of exchange in countries like El Salvador, there are accelerated investments and plans emerging to integrate and transact between organizations, countries and citizens.”

Blockchain tech can be implemented in many ways to make climate change-related initiatives more efficient.

Recycling is one sector where blockchain can encourage participation by giving a financial reward for depositing recyclables like plastic containers, cans, or bottles. Similar setups already exist in several places around the world.

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Plastiks is a nonfungible token (NFT) marketplace that sponsors initiatives to cut down on plastic waste. Plastiks partners with recycling firms and certifies their plastic recycling using NFTs that can become an additional source of income for the recycling firms. The project claims that recycling data, once recorded on the blockchain, also becomes a hard receipt of how much plastic has been removed.

Due to its ability to transparently track crucial environmental data and demonstrate whether obligations were reached, blockchain technology can also deter businesses and governments from breaking their environmental commitments or falsely claiming progress.

For example, Regen Network offers blockchain-based fintech solutions for ecological claims and data. Some of their offerings include a public ecological accounting system and the Regen Registry, which allows land stewards to sell their ecosystem services directly to buyers around the world.

EarthFund DAO is another environmental initiative that organizes a decentralized community looking to tackle humanity’s environmental problems. The platform enables tokenholders to vote for and crowdfund “world-changing projects” such as the EarthFund Carbon capture project.

Crypto Climate Accord is a private sector-led initiative focused on decarbonizing the cryptocurrency and blockchain industry. To date, more than 250 companies and individuals in crypto, finance, NGOs and more have joined the movement.

Amid all the major use cases of blockchain tech, its progression in aiding the very complex carbon credit market has been most talked about — for both good and bad reasons.

Carbon markets and how they work

A carbon credit represents one metric ton of carbon dioxide, which can be bought, sold or retired. If a business is subject to cap-and-trade regulation (such as the California Cap and Trade Program), it probably has a set number of credits that it can apply to its cap. The company may trade, sell or store the extra carbon credits if it emits fewer tons of carbon dioxide than it is allowed.

An emission allowance from the seller is bought when a credit is sold. Despite the fact that emissions reduction is the result of an action, a credit becomes tradeable as a result of a genuine reduction in emissions.

Carbon markets aim to reduce greenhouse gas emissions, enabling the trading of emission units (carbon credits), which are certificates representing emission reductions. Trading enables entities that can reduce emissions at a lower cost to be paid to do so by higher-cost emitters. By putting a price on carbon emissions, carbon market mechanisms raise awareness of the environmental and social costs of carbon pollution, encouraging investors and consumers to choose lower-carbon paths.

There are two main categories of carbon markets: cap-and-trade and voluntary. Cap-and-trade sets a mandatory limit (cap) on greenhouse gas emissions and organizations that exceed these limits can purchase excess allowances to fill the gap or pay a fine. As its name suggests, the mandatory market is used by companies and governments that are legally mandated to offset their emissions. The voluntary carbon market, on the other hand, operates outside the compliance markets but in parallel, allowing private companies and individuals to purchase carbon credits on a voluntary basis.

Problems with carbon credits

Carbon credits have been touted as a market-based fix to help curb carbon emissions, but they come with a slew of problems. Carbon credit markets are ridden by poor offset quality, where certain credits might not be of the same quality as marketed and some are outdated and no longer meet the standards of top carbon offset certification organizations.

Some organizations offering such carbon offsets don’t do what they say they will. Voluntary carbon markets are largely unregulated and companies often get away with false advertising called greenwashing. These businesses either invest in non-verified credits or double-count the same credit. All of these actions trick buyers into believing they are reducing their emissions when they are actually not.

For example, according to Yale Environmental 360, a total of one billion tons of CO2 worth of credits have been made available for purchase so far on the voluntary carbon market. However, there are roughly 600–700 million tons more sellers than purchasers. Consequently, only roughly 300–400 million tons of CO2 offsets are actually achieved. This indicates that somewhere between 600 and 700 million tons of CO2 are produced without being offset.

How blockchain can help

There have been significant advances in computational technology within the blockchain realm that can enhance the efficiency of these carbon markets. Blockchain tech can aid in the process of credit creation and validation. R.A. Wilson, chief technology officer at digital carbon offset trading platform 1GCX, told Cointelegraph:

“Blockchain can vastly improve existing bottlenecks within the current carbon credits market, including issues surrounding fraud and misrepresentation and duplication of credits. While these improvements will be key to scaling the carbon credits market and building greater trust within the industry, blockchain is only one part of the solution. To scale the tokenized carbon credits market to its full potential, the industry will also require participation by trusted and established carbon credit providers, as well as collaboration with regulators and government agencies.”

KLIMA DAO is driving the development of the voluntary carbon market by building a decentralized infrastructure that makes the market more transparent and accessible. It sells bonds and distributes rewards to KLIMA tokenholders. Every bond sale adds to an ever-growing green treasury or improves liquidity for key environmental assets.

Nori is another blockchain-based carbon credit market built with farmers in focus. This project supports farmers adopting regenerative agriculture projects to remove CO2 from the atmosphere.

Tegan Keele, KPMG U.S. climate data and technology leader, told Cointelegraph that blockchain, along with other technologies, certainly has the ability to help carbon credit markets in terms of traceability:

“A credit can be traceable but not high quality — blockchain won’t inherently solve the quality problem, but it can help validate when a credited producer makes statements regarding origin or quality.”

Still, not everyone is convinced. Dan Stein, director of the Giving Green earth climate initiative, believes the problem is much bigger than double counting or traceability.

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Stein told Cointelegraph that blockchain-based climate solutions are hot air and that the real problem with carbon credits is offset quality:

“If anything, chain-based carbon credits exacerbate this problem by creating a credit as a commodity when it is instead a differentiated product. In fact, I’ve heard stories of companies ‘laundering’ old offsets that they couldn’t sell any other way onto these chain-based solutions.”

He added that by making transactions easier, “it turns credits into more of a commodity, and everyone treats them as the same. What has happened in practice is that project developers have taken old low-additionality credits that they can’t sell in a normal market and loaded them ‘on-chain,’ where suddenly they have found new buyers.”

The use of blockchain technology in the climate change fight has faced appreciation and criticism alike. On one hand, decentralized tech is being actively integrated for new solutions at a global level to make certain aspects more transparent and streamlined. On the other, climate activists believe that current blockchain solutions aren’t as helpful and only focus on tokenization.

Looking ahead, it will be interesting to see which projects catch on and scale to meet the challenges of climate change.

Climate Chain Coalition releases report on blockchain and emerging technologies at COP 27

Cointelegraph is a member of the network of organizations committed to using blockchain technology for climate action.

The Climate Chain Coalition (CCC), a network of organizations dedicated to leveraging blockchain technology for effective climate action that includes Cointelegraph as a member, delivered its stock take report on Nov. 11 at the 27th United Nations Climate Change Conference, or COP 27, in Sharm El-Sheikh, Egypt.

Founded five years ago, the coalition has been working on initiatives related to the consumption accounting system and greenhouse gas emissions accounting. Tom Baumann, chair and founder of the Climate Chain Coalition, stated:

“During those years, the coalition has grown from 12 founding organizations to over 360 organizations in 69 countries. The coalition was founded on the ethos of blockchain and emerging technologies as an open distributed network where members self-organize into member-driven initiatives.”

*Climate Chain Coalition members at COP 27 in Egypt.*

The coalition’s mission is to resolve issues and challenges needed to advance transformative digital climate innovations by creating resources to support a shared data and digital infrastructure, supporting networking and capacity building, and partnering between digital and climate communities.

*Cointelegraph editor-in-chief Kristina Lucrezia Cornèr speaking at COP 27 on blockchain’s relevance in fighting climate change.*

Speaking at the panel, Cointelegraph editor-in-chief Kristina Lucrezia Cornèr commented:

“Education is key here, and media responsibility is incredibly high. We consider it our biggest mission to talk not only about what is intrinsic to the blockchain industry but what’s going on beyond. And because it’s out of the box that things are uniting us because this conference is about climate action, and climate is so much more [than] just climate change. It’s about sustainability, and it’s about our future.”

Also participating in the panel, Alexey Shadrin, co-founder and CEO of Evercity — a platform for the management, issuance and monitoring of sustainable finance — highlighted how the coalition’s efforts are supporting organizations with use cases of implementing blockchain technology, as well as guidance to the new projects that are rapidly emerging right now in the markets. “We want to make sure that those projects are not only innovative and cool but also aligned with core UN values and standards that currently exist there and that were developed by many, many experts within the UN process and beyond.”

Even though digital assets have been criticized for their high energy consumption, such an accusation is inaccurate, as there is a distinction between cryptocurrencies and the underlying blockchain platforms that can energy efficient and support climate initiatives.

Filecoin launches Web3 data-storage solution for carbon offsets

This free storage utility aims to address the shortcomings of traditional storage solutions for all types of digital environmental assets, said the company.

Filecoin Green, a Protocol Labs initiative designed to reduce the environmental impact of FIlecoin (FIL) and make it verifiably sustainable, has spearheaded an initiative to power Web3 technology with verifiably clean energy.

According to the announcement, the company is set to address the shortcomings of traditional carbon storage solutions by “marrying blockchain’s granular tracking functionality with the information-sharing infrastructure of Web3.”

Filecoin Green launched CO2.Storage, a Web3 data storage solution that intends to enable transparency for carbon offsets and address traditional storage solutions for all types of digital environmental assets, including renewable energy credits.

As part of the initiative, Filecoin Green said it has partnered with several companies involved with tokenizing carbon offsets, such as Toucan, Thallo, Ripple, the HBAR Foundation, Envision Blockchain, Return Protocol and Gainforest. The data storage solution will enable carbon credit providers to define their own data schemas and store this data through content-addressing on Filecoin and the InterPlanetary File System, thereby creating a transparent system for carbon credits.

Carbon emissions and carbon credits have become a prominent topic, as traditional organizations and governing bodies are beginning to look to blockchain technology as a viable path to reducing carbon emissions.

In 2021, the United Nations Environment Programme and other governing bodies convened at Middle East and North Africa Climate Week to examine blockchain’s potential for tackling climate change.

On Aug. 10, Cointelegraph reported that organizations in the crypto space are also looking to improve the ecosystem through blockchain-tracked donations to carbon removal projects, tokenized carbon credits and carbon-neutral blockchains.

A few blockchain companies are also taking a stand. In April 2022, Algorand announced that its blockchain was entirely carbon-neutral, while in September 2022, Ethereum cut down its energy consumption by 99.9% by transitioning to the energy-efficient proof-of-stake protocol.

Texas a Bitcoin ‘hot spot’ even as heat waves affect crypto miners

Extreme heat won’t stop miners from setting up operations in Texas, but more sustainable practices may be required.

Record-breaking heat waves are being documented across the world as extreme weather is worsening due to climate change. States throughout America are continuing to see temperatures rise above 100 degrees Fahrenheit (38 degrees Celsius), while the United Kingdom recently saw temperatures reach 104 degrees Fahrenheit (40 degrees Celsius).

While hot climates may be unusual for many of these regions, Texas — a state notorious for its boiling summers — is experiencing hotter-than-usual temperatures. The Electric Reliability Council of Texas (ERCOT) recently stated that Texas’ power load demand has been breaking records consistently this month.

Unsurprisingly, Texas’ continuous heat wave is having a major impact on crypto miners located throughout the Lone Star State. As Cointelegraph recently reported, a number of miners in Texas had to cease operations entirely earlier this month in order to accommodate Texas’ energy grid load.

Lee Bratcher, president of the Texas Blockchain Council, told Cointelegraph that there are about 10 industrial-scale crypto miners and 20 smaller-scale miners currently located in the region.

Earlier this month, ERCOT asked businesses and residents to voluntarily conserve electricity during the Texas heat wave. A Riot Blockchain spokesperson told Cointelegraph that its Whinstone facility in Rockdale is now participating in ERCOT’s Four Coincident Peak program, noting that the facility will curtail all power to help stabilize the grid during peak hours of demand. “As part of Riot’s participation in the program, in June the company curtailed energy consumption for a total of 8,648 megawatt hours,” the spokesperson said.

Peter Wall, CEO of Argo Blockchain — a crypto mining company that recently opened a data center in West Texas — also told Cointelegraph that the company curtails mining operations when ERCOT sends out a conservation alert. On July 19, 2022, he said that Agro had to undergo this, along with many other mining operators in the area.

As a result, Bitcoin (BTC) miners saw the biggest drop in computing power on July 21, 2022, since China banned crypto mining in May 2021. This came as a surprise to industry experts who would have expected the Bitcoin hash rate difficulty to increase based on current trends. Frank Holmes, CEO of Hive Blockchain Technology — a publicly traded crypto mining company with operations in Canada and Europe — told Cointelegraph that Bitcoin’s hash rate difficulty was supposed to rise 3% each month based on financial models, but that this hasn’t been the case due to a number of reasons. He said:

“As the price of Bitcoin fell, many S9 mining machines went off, or electricity surged and miners had to stop operations. But more importantly, many machines that were going to be plugged in are now unable to be utilized, which has also made the difficulty go down.”

Holmes noted that the drop in Bitcoin computing power has been beneficial for Hive since their facilities have not been impacted by climate change or other factors. He added that new mining machines are being delivered to Hive each month and that slots are being filled to accommodate growth. Yet, Holmes shared that Hive continues to scout out locations to establish its next mining facility in Texas, which will serve as the company’s first U.S. establishment.

Despite Texas’ extreme weather conditions on miners, Holmes explained that Hive’s method of using 100% green energy to mine both Bitcoin and Ether (ETH) will not disrupt the state’s power grid. Holmes elaborated that Hive’s future Texas facility will operate as a solar wind farm, which will not be subject to ERCOT’s regulations. “There are various locations in Texas that have the infrastructure we require for this. There are also credits to ensure that we build a solar farm.”

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While Holmes is confident that Hive will soon operate in Texas, he explained that the company has big ambitions for the facility, noting that it would require 300 megawatts of power. Given this, Holmes explained that Hive is being cautious about setting up in Texas too quickly, noting that a large-scale mining operation is risky when it comes to delivering on time. “We don’t want to scare communities or disappoint our shareholders,” he remarked.

Issac Holyoak, chief communications officer of CleanSpark — a sustainable Bitcoin mining and technology company — also told Cointelegraph that the firm is planning to open a mining facility in West Texas. While the bulk of CleanSpark’s miners is located in Georgia, Holyoak explained that the company has a co-location agreement in West Texas with the energy company, Lancium. He said:

“Lancium performs controlled load response, so they build large data centers that can power up or down based on the power supply curve. If there is a lot of energy required due to a hot afternoon, they can power down to compensate for this. Alternatively, if there is a low demand for energy, they can power up and mine Bitcoin.”

According to Holyoak, CleanSpark and Lancium’s Texas-based mining facility will launch in December of this year. Like Hive, Holyoak noted that CleanSpark has been benefiting from miners in Texas shutting down since there is less network competition. But, he believes it’s beneficial for the company to have operations in Texas due to the abundance of renewable energy in the region, along with the welcoming nature of counties looking to bring in additional commerce from mining operations.

“It’s a very unique market and it does have renewable resources that are extremely important to sustainable miners,” he said. With locations in Georgia and a few in upstate New York, Holyoak added that it’s important for CleanSpark and other miners to diversify their locations, noting that climate change and other extreme weather events can happen anywhere.

Will sustainable mining help Texas miners?

Even though Texas-based miners are being impacted by severe heat, Holmes believes that many of them are handling the situation well by powering off when needed. However, as more sustainable miners enter the state, already established operators may want to reconsider their mining techniques.

For example, Holmes explained that Hive educates authorities in the regions where they are based to help them understand their long-term environmental, social and governance targets. He said:

“In Quebec, we have a 40,000 square foot building with 30 megawatts of electricity, and we send the heat generated from our ASIC mining machines to heat 200 square feet of the building. The energy is recycled and is meant to accommodate the unique building structures in New Brunswick.”

This being the case, Holmes noted that having a long-term sustainable vision when it comes to mining can be very beneficial. He added that Hive’s Sweden location has software that ensures the company’s mining operations are down between the hours of 7–9 a.m. and 5–7 p.m., five days a week. “These are sensitive, peak demand times. We have a strategic relationship with the region to ensure our operations stop when needed,” said Holmes. He further shared that Hive mines about 9.8 BTC and 100 ETH per day.

Taking a different approach, CleanSpark uses immersion cooling to mine Bitcoin. Matthew Schultz, executive chairman of CleanSpark, told Cointelegraph that the company is among the first large-scale data centers of its type in North America to purchase immersion cooling infrastructure for their Norcross mining facility. He explained:

“Immersion cooling is a technique that we use for Bitcoin mining. The mining machines are prepared via the removal of their fans and submerged in tanks of biodegradable mineral oil. This increases mining efficiency by an estimated 20%. The oil is recycled through the facility and re-used while running through a heat exchanger that keeps the temperature around 125 degrees F.”

Holyoak added that most fan-based mining operations are kept cold by using ambient air, so hotter climates will impact the performance of machines, but immersion cooling can help mitigate this factor.

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He noted that immersion cooling will not be impacted by excessive heat. However, heat waves can spike energy prices which in turn may make it uneconomical to run machines. According to Holyoak, this is likely the case with Riot, as the company announced last year the use of immersion cooling at their Whinstone facility.

All things considered, industry experts believe that utilizing clean energy sources will help miners prevail against climate change. Elliot David, carbon management specialist at Sustainable Bitcoin Protocol — a company that verifies sustainable Bitcoin mining practices — told Cointelegraph that based on recent events, every mining company will have to think about climate resilience, whether they are based in a hot climate like Texas or cold climates like Norway:

“Utilizing clean energy sources is also an important solution because while they are intermittent, energy systems are all really exercises in balance. The grid has to meet demand with supply, and flexible loads such as Bitcoin make those balancing acts much easier.”