Bitcoin and Green Energy Subsidies

[foggyb]

The often-discussed topic of Bitcoin's immense energy consumption misses the potential for Bitcoin mining to stabilize and support renewable energy sources. Bitcoin miners can take advantage of hydropower, solar, or wind installations that have under-utilized and / or intemittent power grids.

Can we do more on the development side to subsidize miners running on green energy? How could this be implemented from a technical standpoint?

[ranochigo]

Can we do more on the development side to subsidize miners running on green energy? How could this be implemented from a technical standpoint?

None. There is no provable way for Bitcoin to subsidize Bitcoin mining on green energy. In fact, it is already difficult for us to track the amount energy that each individual miner is using, much less being able to track the amount of "green" energy that a miner is using. We shouldn't be giving subsidy for miners to use green energy; it would be far too inefficient for little to no impact.

Now, the whole issue with green energy is far more complex than it seems. Rather than green energy, a better term for it would be renewable energy. Energy generation is never green and renewable energy is just better than fossil fuels but not free of pollutants. Regardless, the usage of renewable energy for Bitcoin mining is largely dictated by energy costs and accessibility. If the energy costs for renewable energy is lower than fossil fuels, miners would pivot if it makes sense.

[bitmover]

Can we do more on the development side to subsidize miners running on green energy? How could this be implemented from a technical standpoint?

If governments decide do subsidize renewable energies, or make investments in developing its technology to make it cheap, ok!

But miners or bitcoin community cant do much about it.

Bitcoin costs lots of energy because it is required to secure the network.

Bitcoin miners can take advantage of hydropower, solar, or wind installations that have under-utilized and / or intemittent power grids.

They already do use those sources of energy. Hydropower is one of the cheapest energy available, and there are many miners near hydro plant.

https://news.bitcoin.com/how-big-hydro-power-partners-with-bitcoin-miners-to-prevent-energy-waste/

[pooya87]

From a developing standpoint the only solution to energy consumption (regardless of it being "immense" or not as it is claimed) is to find an alternative mining algorithm that doesn't consume the same amount of energy but at the same time keeps the principles of Bitcoin such as decentralization intact.

So far the attempts made in the past with alternative algorithms (such as Proof of Stake) are introducing serious flaws into the system by changing the algorithm.

[un_rank]

From a developing standpoint the only solution to energy consumption (regardless of it being "immense" or not as it is claimed) is to find an alternative mining algorithm that doesn't consume the same amount of energy but at the same time keeps the principles of Bitcoin such as decentralization intact.

Would this be the only or the quickest solution? I have been reading about how a percentage of miners have been moving t renewable source of energy, plus the fact that globally, countries are looking to move to greener, renewable energy.

An alternative algorithm is almost like ripping up the sheet and doing it again a different way. Would it still be satoshi's invention or not? Would there be another change later on if something unsatisfactory pops up? And most importantly would it offer same level of security?

- Jay -

[pooya87]

Would this be the only or the quickest solution?

The only way through the code and from developers standpoint.

I have been reading about how a percentage of miners have been moving t renewable source of energy, plus the fact that globally, countries are looking to move to greener, renewable energy.

That's the non-developers way and the better way that is being used.

An alternative algorithm is almost like ripping up the sheet and doing it again a different way. Would it still be satoshi's invention or not? Would there be another change later on if something unsatisfactory pops up? And most importantly would it offer same level of security?

Well, the development has to continue and we should be open to changes, but also vigilant about the principles.

[JiiBs]

From a developing standpoint the only solution to energy consumption (regardless of it being "immense" or not as it is claimed) is to find an alternative mining algorithm that doesn't consume the same amount of energy but at the same time keeps the principles of Bitcoin such as decentralization intact.

So far the attempts made in the past with alternative algorithms (such as Proof of Stake) are introducing serious flaws into the system by changing the algorithm.

Still on the developers stand point,
I’ve come to understand that mining of Bitcoin have had a shift as per level of sophistication. From a time when all that was needed was just a device, a desktop was okay for the task and now, they’ve got sophisticated devices designed for the sole purpose of coming up with these calculations for block reward and confirmation of transactions.

This is largely due to the design by Satoshi Nakamoto as per difficulty level and block reward after the halving. With the fact that, these devices are the ones using up these energy, wouldn’t it make more sense for the company behind these devices design it in such a way that, it’s able to use less energy or perhaps have some backup energy source to switch to remotely, creating a time out for conventional energy source like the fossil fuel.

[mikeywith]

Can we do more on the development side to subsidize miners running on green energy?

We can't, and if we had a way to do so -- we shouldn't. I mean why would you subsidize a miner over another miner just based on how they generate energy? As far as Bitcoin is concerned, every hash is worth exactly the same, to me as well, it doesn't matter if a miner generated that hash by burning coal, using a wind turbine, or a pen and paper, what difference does that make to BTC and everyone else involved in the Bitcoin ecosystem?

If this has to do with making the world a" better place" then that should go to the P&S board because this green energy discussion is rather political, you talk to a bird rights activist and they would tell you how bad fossil fuel is for birds, then you read another study that shows nearly 1 million birds are killed every year by wind turbines in the U.S alone, they say driving conventional cars causes health issue to children but then you read amnesty international reports on how many dozen kids die or face serious deadly health issues while mining cobalt make you doubt which source of energy is actually better for "everyone".

All those climate activists who campaign against BTC for its Carbon footprint are just fool creatures, they don't understand how the real economy works, besides, if climate really matters, BTC has a great potential to help the climate by utilizing flare gas which would otherwise be burned in the air adding more pollution, which by the way is already being done.

Furthermore and most importantly, Bitcoin was built in a way that miners would compete in a free market, whereby honest players with the best resources are rewarded the most, for the security and usability of your BTC, someone who mines 10 blocks using fossil fuel is better than someone who mines only 1 block using "green or whatever you wanna call it" energy, changing the concept will rekt the foundation of a decade long heavily tested algorithm that proved to work perfectly under all conditions.

They already do use those sources of energy. Hydropower is one of the cheapest energy available, and there are many miners near hydro plant.
https://news.bitcoin.com/how-big-hydro-power-partners-with-bitcoin-miners-to-prevent-energy-waste/

This is outdated, this was true when China was the biggest mining hub, this isn't the case now, it changed a few years ago, Chinese miners would move their mining gears to Sichuan and other provinces that had hydropower available during the rainy season, usually between May and Sep, but right after the water levels drop they go back to burning coal, miners don't care about any of that green stuff, they would use the cheapest source of energy whenever they find it.

[ranochigo]

Still on the developers stand point,
I’ve come to understand that mining of Bitcoin have had a shift as per level of sophistication. From a time when all that was needed was just a device, a desktop was okay for the task and now, they’ve got sophisticated devices designed for the sole purpose of coming up with these calculations for block reward and confirmation of transactions. This is largely due to the design by Satoshi Nakamoto as per difficulty level and block reward after the halving.

It would be contributed by the competition as opposed to protocol design. Difficulty only rose when more miners with more resources entered the market. The market could've stayed in the CPU mining era, but GPUs, FPGAs and ASICs are just better. This is just a product of capitalism.

With the fact that, these devices are the ones using up these energy, wouldn’t it make more sense for the company behind these devices design it in such a way that, it’s able to use less energy or perhaps have some backup energy source to switch to remotely, creating a time out for conventional energy source like the fossil fuel.

Why would any miner want to buy a miner which performs less efficiently? There is no way to reduce energy without reducing hashrate, assuming each of them are performing at optimal efficiency. In addition, it is impossible for anyone to dictate what the miners should do.

[Yamane_Keto]

Can we do more on the development side to subsidize miners running on green energy? How could this be implemented from a technical standpoint?

Without modifying the mining algorithm, not much can be done, and in the case of Bitcoin, it can either be made by making the cost of obtaining energy from renewable sources cheap, available, and with the same efficiency as sources that pollute the environment, or by imposing global legal legislation.

It does not mean that nothing can be done. From a technical standpoint, instead of focusing on Power, performance and area (PPA) as key metrics in evaluating and designing ASICs, improving energy efficiency may reduce Bitcoin's energy consumption while maintaining the same hashrate.

I believe that sometimes the harm caused by batteries, lithium mining, or electronic waste is much greater than the energy consumption.

[pooya87]

Still on the developers stand point,
I’ve come to understand that mining of Bitcoin have had a shift as per level of sophistication. From a time when all that was needed was just a device, a desktop was okay for the task and now, they’ve got sophisticated devices designed for the sole purpose of coming up with these calculations for block reward and confirmation of transactions.

This is largely due to the design by Satoshi Nakamoto as per difficulty level and block reward after the halving. With the fact that, these devices are the ones using up these energy, wouldn’t it make more sense for the company behind these devices design it in such a way that, it’s able to use less energy or perhaps have some backup energy source to switch to remotely, creating a time out for conventional energy source like the fossil fuel.

That's a good point. The mining is growing so it is best if it grows using more efficient hardware that consumes less energy compared to the computing power it provides. But it only increases the efficiency while the power consumption still grows.

[mindrust]

Why would do the gov subsidize miners? They ain’t doing no public service. Miners are private entities. Actually the gov should stay away from everything. It is for the best. They shouldn’t provide any education or healthcare. Let the private companies handle everything. The smaller the gov is, the better is. Government are inefficient and they cause inflation because of their inefficiency. Corporations are efficient because if they aren’t, they go bankrupt unlike the gubbermints.

[ranochigo]

Why would do the gov subsidize miners? They ain’t doing no public service. Miners are private entities. Actually the gov should stay away from everything. It is for the best. They shouldn’t provide any education or healthcare. Let the private companies handle everything. The smaller the gov is, the better is. Government are inefficient and they cause inflation because of their inefficiency. Corporations are efficient because if they aren’t, they go bankrupt unlike the gubbermints.

I agree with not providing miners with subsidies but I disagree with this point. Corporations are overly focused on being profit making, and profits only. If we didn't have government regulations and controls over certain parts of our society, I'm convinced that capitalism would make us worse off. While it is true that governments aren't the most efficient, they are needed for the social aspects. That is besides the topic.

With regards to government's role, I would argue that they could limit the amount of fossil fuel that they are using rather than providing subsidies. Subsidies doesn't make sense, especially if the society doesn't exactly need it. Either taxing it or regulating it would be more efficient and effective.

[promise444c5]

The often-discussed topic of Bitcoin's immense energy consumption misses the potential for Bitcoin mining to stabilize and support renewable energy sources. Bitcoin miners can take advantage of hydropower, solar, or wind installations that have under-utilized and / or intemittent power grids.

Can we do more on the development side to subsidize miners running on green energy? How could this be implemented from a technical standpoint?

How do you qualify the word "green" "grey" interm of energy, simple just their level of pollution  to our ozone layers

Over the years, miners have been faced with the challenge of promoting the usage of clean energy  and they have been doing great without any influence from government or any help as they choose to stay decentralized.
Any form of subsidy could change the whole system so called a decentralized system only if they are willing not to interfere  with how the activities are being carried out then subsidy is a good idea

[Alphakilo]

Now, the whole issue with green energy is far more complex than it seems. Rather than green energy, a better term for it would be renewable energy. Energy generation is never green and renewable energy is just better than fossil fuels but not free of pollutants. Regardless, the usage of renewable energy for Bitcoin mining is largely dictated by energy costs and accessibility. If the energy costs for renewable energy is lower than fossil fuels, miners would pivot if it makes sense.

I'm new to mining, but it seems like this is a bit of an insider's perspective on miners here. It appears that regardless of whether the energy source is fossil fuels, renewable energy, or even energy from outside the earth, their primary concern is cost rather than environmental impact. Essentially, if fossil fuels are cheaper than renewable energy, miners will continue using them because profit matters more to them than the environment.

[d5000]

I'd argue that there are some possibilities to influence the incentives for green mining at the technical level. But I would say that the current Bitcoin algorithm already does this almost in a perfect way, in contrast to some altcoins with other difficulty adjustment settings, so there is no potential to optimize that further. In other words: Bitcoin already does it well, some other PoW altcoins don't.

My argumentation is as follows:

"Green mining" will be moving gradually from hydropower to wind and solar which are more unstable sources of electricity. In countries with lots of wind and solar power, wholesale energy prices tend to decrease a lot when there are windy and/or sunny conditions. Thus, I could imagine a business model becoming more common where miners don't mine at full power all the time but increase their power in times where cheap renewable energy is available. This business model would be "greener" than the alternative to mine full power even when mainly coal or gas are sources of energy.

So if there was a way to increase incentives for that behavior it would "subsidize green mining" in some way.

The algorithm should thus benefit them when they increase the hashrate temporarily. Bitcoin's algorithm where the difficulty is only changed roughly every two weeks does fulfill that condition: If you mine more, you're getting probably more rewards too. You don't risk that the difficulty is increased just because you and other miners in your region mined more.

In contrast, altcoins with more "flexible" difficulty curves, with difficulty adjustment periods closer to a day or even a single block, do not fulfill that condition. If a region has many miners and these increase their hashrate because cheap renewable energy is available, they are likely to increase the difficulty and would not benefit that much from the cheap energy (the advantage would be a more stable block "production").

[odolvlobo]

One aspect of "green" mining that is largely overlooked is that there is a limited amount of renewable energy, so using renewable energy for Bitcoin mining prevents its use by others. So generally speaking, a Bitcoin miner switching to renewable energy doesn't really help anyone.

In the end, it is the producers of electricity who are responsible for the use of renewable energy, and not the consumers.

There are exceptions:

• A miner who produces their own electricity from renewable sources.
• A miner who pays a premium or uses excess electricity from renewable sources.
• A miner who burns oil field gas to generate their electricity (because it reduces the amount of methane released into the atmosphere).
  

[ranochigo]

I'm new to mining, but it seems like this is a bit of an insider's perspective on miners here. It appears that regardless of whether the energy source is fossil fuels, renewable energy, or even energy from outside the earth, their primary concern is cost rather than environmental impact. Essentially, if fossil fuels are cheaper than renewable energy, miners will continue using them because profit matters more to them than the environment.

It's just simple economics. Environmental damage has no costs to the miners, or at least they are negative externalities that are not paid for.

"Green mining" will be moving gradually from hydropower to wind and solar which are more unstable sources of electricity. In countries with lots of wind and solar power, wholesale energy prices tend to decrease a lot when there are windy and/or sunny conditions. Thus, I could imagine a business model becoming more common where miners don't mine at full power all the time but increase their power in times where cheap renewable energy is available. This business model would be "greener" than the alternative to mine full power even when mainly coal or gas are sources of energy.

Not possible. If a miner doesn't run their ASICs at full power, aka. being shut down, then it would be running at less than efficient which has the same marginal utility as running at full efficiency. This is considering that wholesale electricity doesn't have tiers and it is likely that the difference between the tiers are not big enough to account for any difference. As such, it wouldn't make sense for miners to shut down or tune their ASICs to run at lower power.

The algorithm should thus benefit them when they increase the hashrate temporarily. Bitcoin's algorithm where the difficulty is only changed roughly every two weeks does fulfill that condition: If you mine more, you're getting probably more rewards too. You don't risk that the difficulty is increased just because you and other miners in your region mined more.

In contrast, altcoins with more "flexible" difficulty curves, with difficulty adjustment periods closer to a day or even a single block, do not fulfill that condition. If a region has many miners and these increase their hashrate because cheap renewable energy is available, they are likely to increase the difficulty and would not benefit that much from the cheap energy (the advantage would be a more stable block "production").

In the long run, the benefits will be the exact same. It is unlikely for miners to increase their margin significantly between the cycles. Note that the variability during the hashrate is possibly leveled out in the long run by the fluctuation in the difficulty. Mining with a higher hashrate within the period makes more a higher difficulty in the next.

[d5000]

If a miner doesn't run their ASICs at full power, aka. being shut down, then it would be running at less than efficient which has the same marginal utility as running at full efficiency. This is considering that wholesale electricity doesn't have tiers and it is likely that the difference between the tiers are not big enough to account for any difference.

Maybe I should have been clearer: I meant if the miner has access to the electricity spot price at an energy exchange, which is possible for bigger companies in some countries, and in a select few also for small companies and individuals (for example, in Germany there's a company called 1komma5 which offers this for individuals). I guess there are other countries where this isn't possible or where you have only access to a "day tier" and a "night tier" for example, but that's not what I meant.

If you have access to the spot price, then the differences can be enormous, above all if the country where you are located has lots of wind and solar energy.

Let's see the case of Spain for example:


Source: Energy Charts Spain (Fraunhofer Institute)

The red line is the price, which fluctuates between 0-4 EUR/MWh in windy phases like last week (this means 0 to 0.004 EUR per kWh!), and 175 EUR/MWh (17.5 cents per kWh), but the low price phases are actually quite common, and even if we let out the extremes and look only to the most common variations, this "common range" is between 25-30€ and 100€.

Electricity cost is crucial for miners, so if they can shut down part of their ASICs, let's say leaving their operations off entirely if the price is above 100 EUR, and mine full power only below 40-50EUR (always considering the graph above) then they can save a lot. Marginal utility doesn't seem important in this equation to me, because it varies with the electricity price.

In the long run, the benefits will be the exact same. It is unlikely for miners to increase their margin significantly between the cycles. Note that the variability during the hashrate is possibly leveled out in the long run by the fluctuation in the difficulty. Mining with a higher hashrate within the period makes more a higher difficulty in the next.

From my understanding this depends on how evenly distributed the miners are in the world.

If miners are mostly allocated in a few regions, like it is the case now, then my theory should be valid, because there will be always "room" for some miners to make extra profit if they increase their hashrate in some phases, and the other regions should not be able to reduce this additional benefit too much.

If you add a group of "green flexible spot price miners" like I outlined above, which has an average hashrate x but a maximum hashrate 2x and a minimum hashrate of 0 (because they will shut down entirely if the prices are too high) then the influence on difficulty is the same than if you add a "traditional" miner group of the same average hashrate, only the variation (which translates in block times) is higher. But it is just this variation where this miner group is able to extract higher profits because it corresponds to a higher benefit/cost equation.

If the "green flexible spot price miners" were distributed perfectly evenly in the world, and in all regions they are using the same model, then in theory it should level out mostly, because climatic events are also distributed relatively evenly (with some differences due to climate, obviously), and so their hashrate even with all of them using this model should be relatively constant. However I think this still will not happen for a long time as there will be different conditions in terms of miner competitiveness by region, and even with "relatively widely distributed" miners of this kind, it would still perhaps be benefitted by Bitcoin's relatively static difficulty model.

[ranochigo]

Electricity cost is crucial for miners, so if they can shut down part of their ASICs, let's say leaving their operations off entirely if the price is above 100 EUR, and mine full power only below 40-50EUR (always considering the graph above) then they can save a lot. Marginal utility doesn't seem important in this equation to me, because it varies with the electricity price.

Spot prices are generally the price for the generation of the electricity, which doesn't account for the delivery of the electricity, maintenance of grid, substations, etc and they usually add up. That is the reason why prices for the electricity is usually signed on a term basis, instead of bidding for the electricity itself. I'd say that the electrical fees aren't going to vary unless you are the supplier yourself, and you are having the full control of the grid. This wouldn't be possible even for the largest miner out there. CMMIW though, this is how the energy market works for my country.

The marginal utility is absolutely important, because the sunk cost would be the cost of equipment, normal maintenance, facilities, and all of its upkeep. It would make sense if the only marginal cost is the electricity but that is hardly the case. Hence, every miner runs their equipment at its fullest.

From my understanding this depends on how evenly distributed the miners are in the world.

If miners are mostly allocated in a few regions, like it is the case now, then my theory should be valid, because there will be always "room" for some miners to make extra profit if they increase their hashrate in some phases, and the other regions should not be able to reduce this additional benefit too much.

If you add a group of "green flexible spot price miners" like I outlined above, which has an average hashrate x but a maximum hashrate 2x and a minimum hashrate of 0 (because they will shut down entirely if the prices are too high) then the influence on difficulty is the same than if you add a "traditional" miner group of the same average hashrate, only the variation (which translates in block times) is higher. But it is just this variation where this miner group is able to extract higher profits because it corresponds to a higher benefit/cost equation.

If the "green flexible spot price miners" were distributed perfectly evenly in the world, and in all regions they are using the same model, then in theory it should level out mostly, because climatic events are also distributed relatively evenly (with some differences due to climate, obviously), and so their hashrate even with all of them using this model should be relatively constant. However I think this still will not happen for a long time as there will be different conditions in terms of miner competitiveness by region, and even with "relatively widely distributed" miners of this kind, it would still perhaps be benefitted by Bitcoin's relatively static difficulty model.

Not exactly.

With climate change, you have vastly different weather conditions and it becomes very unpredictable. It isn't like the change in the seasons, where you can roughly gauge the period where the seasons change. Weather is very difficult to predict and is definitely not periodic for any given region. Solar and wind power are not very efficient for the costs and the space that they require, and that probably puts it out of the question given how unreliable they can be. Miners are not distributed evenly around the world, because labour costs, land costs are not the same throughout the world. This is why we saw a high concentration of miners in China and nowhere else.

Let's demonstrate with a given scenario:

Let's include the computation of the miscellaneous and running costs. From the on-start, miners wouldn't purchase the latest and the most efficient equipment for this operation; because that negates the benefits of having cheap electricity. Let's say they require a month to setup everything, that would be a month of labour cost with the land costs, electricity costs  and the opportunity costs of the equipment already.

If the region experiences a favorable weather, the miner turns them on and run them at the fullest power. Once the electricity gets too expensive, it gets shut down and is dormant again. All this while, you have the different running costs being incurred with no certainty whatsoever when the next favorable weather will be. In addition, you have other competing miners who are continually mining and are increasing their operations at the same time. The next time you switch it on, it'll get far, far less profitable. You'll find it difficult to breakeven.