The impact of the blockchain industry on the energy sector has been a major source of controversy over the past five years. Governments and environmentalists regularly raise concerns about the amount of energy. required to secure the Bitcoin network. The data shows that grid energy consumption currently rivals annual energy consumption in some smaller countries.

The historical need for Bitcoin network power. Source: CCAF.
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While much of the debate has centered around the negative environmental impact of bitcoin (BTC) mining, the drive to maximize mining profits and integrate blockchain technology with the power grid has also introduced new developments that could be beneficial in the long term. .

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Here is a look at several developments that have arisen due to the demand for energy to operate blockchain networks and the positive impact of cryptocurrency mining on the energy industry.

Return of spent energy

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One of the fastest growing segments of the cryptocurrency mining industry is the monetization of historically useless energy sources such as natural gas burned on oil rigs.

Finding pockets of natural gas is a common part of the oil drilling industry and until recently this gas was commonly flared in a process called “flaring” because the infrastructure needed to collect it did not exist or there was not enough demand for it. LNG.

As the value of Bitcoin has risen over time, the search for low-cost energy sources has led to the installation of shipping containers filled with mining equipment at drilling sites that can use the energy generated by flaring to mine BTC.

While the process still results in carbon emissions, revenue is generated during the process and these funds can be redirected to mitigate environmental issues.

More recently, several companies have been exploring the integration of gas flaring production in the Middle East, which accounted for more than 38% of global gas flaring in 2020, and this represents one of the biggest opportunities to turn wasted energy into value.

Blockchain technology could make energy production more efficient

The second side benefit of trying to maximize profits from cryptocurrency mining is the improvement of energy infrastructure and increased attention to the development of sustainable forms of energy production.

Bitcoin Mining Council Research shown that there has been a marked increase in the amount of energy available from sustainable sources, as opposed to sources such as oil and coal.

Less developed countries such as Kenya and El Salvador have also been able to take advantage of improvements in energy production from sustainable sources such as geothermal power plants, which have given their economies an additional source of income.

Whether it’s harnessing the excess energy generated by hydroelectric power plants or increasing the use of wind and solar energy, crypto mining provides a financial incentive to further optimize energy efficiency and generation.

Marathon Digital Moves Montana BTC Mine to Be Carbon Neutral

Smart grid technology

Another blockchain development related to energy is the formation of blockchain-based smart grids, which aim to improve the distribution of energy on a large scale.

Inefficiency in electricity distribution is mainly can be traced to the retail level, where smaller firms owning a very small part of the grid infrastructure mainly provide simple services such as billing and meter usage monitoring.

These types of services can be easily processed with blockchain technology and Internet of Things (IoT) devices that help consumers bypass retailers and connect directly with wholesale distributors, potentially reducing energy bills by up to 40%.

Connecting consumers to the smart grid also allows them to shop from different vendors to get the best possible rates. This could help level the playing field in an industry that has historically been dominated by a single local energy company.

Projects such as Grid+ and the Energy Web Token are helping to pave the way in this area as the old network design of physical substations and monitoring equipment is being replaced by a Distributed Energy Resource (DER) network that includes battery-powered energy storage systems, solar panels and natural sources. energy. gas generators.

While the sector is still in its infancy, this trend is worth keeping an eye on because blockchain technology is bound to be even more integrated into the energy sector in the coming years.

Want more information about trading and investing in cryptocurrencies?

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  • Earth Day analysts say bitcoin mining naturally gravitates towards green energy
  • Twitter Discusses Role of Renewable Energy in Bitcoin Mining

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