2021-4-23 15:02 |
According to a study by Cathie Wood’s ARK Investment Management LLC, and Jack Dorsey’s Square Inc., bitcoin (BTC) mining could incentivize renewable energy development.
The study purports that cryptocurrency mining could drive investment in renewable energy, while making more available to the grid. “A world with bitcoin is a world that, at equilibrium, generates more electricity from renewable carbon-free sources,” the study says.
Although solar and wind power produce energy cheaper than fossil fuels, they produce too much energy when demand is low and not enough when it’s high. During times when there is an energy surplus and low demand, a renewable energy developer could make money mining cryptocurrencies. Potentially, this could incentivize more development of renewable energy, increasing efficiency, lowering prices, and encouraging the transition to sustainable sources.
Vested interestsARK Invest CEO Wood says the research ideas “debunk the myth” that bitcoin mining is damaging the environment. Jack Dorsey’s Square also collaborated on the research. Dorsey said that bitcoin “incentivizes renewable energy.” However, they both have deeply vested interests in bitcoin’s success, making the validity of the study somewhat questionable.
ARK has invested actively in cryptocurrency-related stocks, including large holdings in Coinbase Global Inc. and bitcoin. ARK’s portfolio also includes Elon Musk’s Tesla, which made a splash buying $1.5 billion of bitcoin in February.
Meanwhile Dorsey’s Square bought $50 million in bitcoin in October last year, and another $170 million in February. Cryptocurrencies have also become a growing part of its business, through the use of its Cash App for bitcoin transactions.
Better use for renewable energyBesides the skepticism behind the research motives, others say that renewable energy is already seeing more investment. A larger share of energy is increasingly being supplied by electricity, while the cost of renewable power is plummeting. According to the International Energy Agency, wind and solar will account for around 12% of electricity demand by 2030. This is over double the amount in 2019.
Additionally, some argue that there are more appropriate uses for renewable power than making bitcoin. For instance, decarbonizing existing energy demand that relies on burning fossil fuels. Electricity demand is also increasing, as electric vehicles see wider adoption.
As Ripple executive Chris Larsen put it, mining bitcoin “is in direct competition with more urgent energy needs that must make the switch to renewables; industries like concrete and steel, air travel, and agriculture.” He calls the argument put forward by the study “spurious.”
In an opinion piece, he asserts that cryptocurrencies must make the switch from the energy intensive proof-of-work validation method. This is the consensus model behind bitcoin mining. If cryptocurrencies do not migrate to more efficient validation methods like proof-of-stake or federated consensus, he says the further adoption of cryptocurrencies could be jeopardized.
The post ARK Invest, Square: Bitcoin Mining Could Incentivize Renewable Energy Development appeared first on BeInCrypto.
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