The most popular and far most valued cryptocurrency is Bitcoin.
The world economy is undoubtedly approaching a digital ecosystem wherein everything is going paperless, from various investment methods to money transfer. Nonetheless, new digital technologies are constantly being introduced.
Among these technologies is cryptocurrency. It is one of the most promising additions to the digital payment sector, enabling the transfer of value anywhere without using a third party. The most popular and far most valued of which is Bitcoin. Created through a process known as “mining,” it is performed using sophisticated computers that solve highly complicated math problems to verify the transaction’s legitimacy. In return, miners receive Bitcoin as a reward for completing “blocks” of verified transactions.
Over the last couple of years, this type of digital currency has significantly been gaining public attention. As it consistently gains popularity, many companies acquire direct exposure and have built much-needed mining infrastructures around the globe. In the face of impending inflation concerns, corporate treasuries, particularly in the US and Europe, consider investing a portion of their liquid asset in cryptocurrencies. Countries like Iceland, Georgia, Canada, and Venezuela that have cheap, clean energy and cool temperatures, became famous destinations of Bitcoin mining companies. Consequently, other countries like Germany, Malaysia, and Malta are encouraged to implement friendlier legislation to attract foreign companies to do business in their state.
A major step was taken by El Salvador, the very first country in the world to adopt bitcoin as a legal tender. Under their law, firms must accept bitcoin when offered as payment for product offerings, and tax contributions can also be paid in cryptocurrency. According to Richard Galvin of crypto fund Digital Asset Capital Management, “The market will now focus on adoption through El Salvador and whether other nations follow.” He also added, “This could be a key catalyst for bitcoin over the next two to three years.”
The market will now focus on adoption through El Salvador and whether other nations follow. This could be a key catalyst for bitcoin over the next two to three years.
Richard Galvin, Co-Founder & CEO, Digital Asset Capital Management
Bitcoin mining promotes local economic activities by enabling the transformation of rural areas into industrial centers.
Economic Benefits
Bitcoin mining is gaining popularity across the globe as an increasing number of countries are adopting and benefiting from it. This sector promotes local economic activities by enabling the transformation of rural areas into industrial centers. Kevin Brendle, Dickens county’s top elected official, allows bitcoin mining companies to operate in his jurisdiction. Dickens county is located in the U.S. state of Texas, which Brendle describes as a cattle county with little farming and doesn’t have a lot of economic development. He and other government officials have been vocal about their support of cryptocurrency mining coming to their state. They believe that it could stimulate the economy, give some residents stable jobs, and improve the tax base.
By allowing Bitcoin mining operators in the country, it can get access to the latest financing tools, technologies, and operational practices. Over time, the introduction of enhanced technologies results in their diffusion into the local economy. For example, the establishment of Bitcoin mining enterprises in rural areas can encourage local communities to more openly explore, embrace, and adopt new technologies and innovations into their daily lives. Particularly in the area of using digital currencies and assets.
Bitcoin miners can also help develop existing infrastructures in the countryside. A remarkable example is Cleanspark which partners with a utility company to invest in new transmission lines, benefitting the company and everyone who lives along the improved lines. Existing infrastructures like large empty buildings, airplane hangars, and aluminum smelters are also being utilized by Bitcoin miner operations, making the properties useful and productive. This practice is considered more cost-effective and less carbon emission than building new mining facilities. For instance, Lefda Mine Data Center retrofitted an ancient mine in a Norwegian fjord that now houses a 1.3 million-square-foot data center powered by hydro and wind energy.
While bitcoin mining may not create as many jobs compared with other sectors, the sector may still help in creating employment opportunities for people with various skills. Through training and experience gained in blockchain technology, the sector may develop the country’s human capital quotient. Indirectly, it can also provide employment opportunities to other related businesses in the crypto and blockchain sector.
State officials and cryptocurrency advocates also believe in the economic potential of the industries created through blockchain technology. The core properties of blockchain and other Distributed Ledger Technologies (DLT) can enable deeper technological integration, standardization, and the possibility of new business models that could have profound implications for traditional infrastructure services. It can also open research into new types of energy that could use in Bitcoin mining, like the integration of hydrogen energy.
Bitcoin operators can also play an important role in building educational facilities and educating people about crypto and blockchain technology.
Social Benefits
Funding and supporting environmental conservation, healthcare, and education development programs is another significant impact of Bitcoin mining operations. Bitcoin operators can also play an important role in building educational facilities and educating people about crypto and blockchain technology.
A notable example is Nicolas Cary, CEO of the Bitcoin wallet Blockchain, who has donated 14.5 Bitcoins worth $10,000 to the University of Puget Sound, a private university located in Tacoma, Washington. His donation will support financial aid, academic programs, research facilities, and other initiatives for the institution. Furthermore, organizations like the giving block are created to make Bitcoin and other cryptocurrencies fundraising easy for nonprofits. It empowers charities, organizations, universities, and faith-based organizations of all sizes to leverage crypto technology. As a result, an increasing number of institutions like Cape Cod Healthcare have started receiving cryptocurrency donations, opening a new channel to raise funds for social-related programs and activities.
Companies are adapting their business model to create earth-friendly mining operations that align with compliance requirements and ESG mandates of stakeholders.
Environmental Benefits
Satoshi Nakamoto, the inventor of bitcoin, compared bitcoin mining to mining gold and other resources that require energy. However, unlike many other resources, the power to mine bitcoin can be sourced from renewable resources and waste streams from conventional energy sources like oil and gas production operations and even unused baseload from utility operations. Hence, bitcoin miners are positioned to use stranded energy, feed off waste energy, and co-locate and buy operating reserves from power plants.
Different bitcoin mining companies are also taking various initiatives to accelerate the shift into a sustainable blockchain sector. They are increasingly expressing their support to the Crypto Climate Accord (CCA), a private sector that helps lay the groundwork for decarbonizing the cryptocurrency sector. Following the CCA, Bitcoin mining operators are increasingly adopting more energy-efficient protocols, using renewable energy (wind, solar, hydroelectricity), and offsetting their carbon emissions through carbon credit purchase.
One of the leading players in this effort is Bitfarms, with five industrial-scale mining facilities in Quebec that use 100% hydroelectricity.
Greenidge Generation Holdings is also moving forward to becoming more ESG compliant by acquiring more energy-efficient bitcoin mining rigs, diversifying its energy sources, and counteract emissions from rigs with carbon offset credit purchase. Meanwhile, energy services provider Crusoe is moving away from its previous practice of burning natural gas. Instead, it deployed 45 shipping containers stuffed with bitcoin mining computers powered using natural gas that otherwise would have been burned off or flared.
Taking the more aggressive approach is Gryphon Digital Mining, which has entered into an agreement with Sphere 3D to purchase 250,000 Certified Emission Reductions to support ESG commitment and achieve net-zero emissions for the parties, allowing Gryphon to become the first carbon-negative crypto miner. Concurrently, Cleanspark is actively participating in a local program that will enable them to purchase renewable energy credits. The funds will be used to increase investment in solar energy production that would benefit the local community.
Companies are adapting their business model to create earth-friendly mining operations that align with compliance requirements and ESG mandates of stakeholders. By doing so, the sector can be the key to an abundant, clean energy future, enabling society to deploy substantially more solar and wind generation capacity, facilitating the transition to a cleaner and the more resilient electricity grid.
Bitcoin mining has created a paradigm shift in the way we look at money. The growth of digital currencies and blockchain technology will undoubtedly open many opportunities and benefits for the companies, investors, and countries adopting this revolutionary technology.
