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Mining consumes too much energy, El Salvador wants to use geothermal heat to mine Bitcoin

By: jack Nov. 19,2021
The Central American country of El Salvador is tackling the issue of how to "produce" bitcoin after officially recognizing it as legal tender.

  The country's president, Nayib Bukele, said on June 9 that he has instructed state-owned geothermal power company LaGeo to develop a plan to use geothermal energy from the country's volcanoes to power bitcoin mining facilities.

  Bukele tweeted that engineers had just dug a new well capable of obtaining about 95 megawatts of affordable, 100 percent clean, 100 percent renewable, zero-emission geothermal energy from the volcano, around which LaGeo would design a complete bitcoin mining center. The country of only 6.7 million people is expected to become one of the largest bitcoin mining sites in the world.

  Geothermal energy is natural thermal energy that comes from beneath the earth's crust and is a renewable energy source. The world's geothermal energy is concentrated along the edges of tectonic plates, which are also volcanic and earthquake prone.

  High-temperature lava heats nearby groundwater, turning it into superheated steam that drives turbines to generate electricity. Unlike wind and solar power, geothermal energy is harnessed with little or no waste, with an average utilization factor of 80 to 90 percent, and because there are no fuel costs, the power plant is cheaper to run.

  Less than a day before Buechler's tweet, El Salvador just voted by an "absolute majority" to pass the Bitcoin Law, becoming the first country in the world to give digital currency legal status, since then the country's commodity prices can be displayed in bitcoin, taxes can be paid in digital currency, and bitcoin transactions will not be subject to capital gains tax.

  But bitcoin mining is an energy-intensive industry. Data from the University of Cambridge shows that the entire Bitcoin network consumes 0.51% of the world's total energy, and uses more electricity in a year than the entire country of the Netherlands, 85% of which is used for mining. If you consider the Bitcoin network as a country, its total energy consumption ranks 33rd in the world.

  According to a report released by Bank of America in March, the global bitcoin industry's overall CO2 emissions have risen to 60 million tons, equivalent to the tailpipe emissions of 9 million cars. Tesla CEO Musk announced last month that Tesla would suspend accepting Bitcoin as a form of payment, citing excessive energy consumption and high carbon emissions.

  The process of mining bitcoins is actually a mathematical calculation process that requires the use of computers working around the clock to solve 64-bit hexadecimal math problems, also known as hash functions. Whoever's mining machine calculates the correct answer and submits it first is rewarded with the corresponding bitcoin.

  As the price of bitcoin soars and more people join the mining bandwagon, the calculations involved are becoming increasingly difficult and energy consumption levels are rising. at the beginning of 2017, the bitcoin network consumed 6.6 terawatt hours of electricity a year, a figure that has now increased to 111.5 terawatt hours.

  Energy has therefore also become one of the most important guiding factors in the Bitcoin industry. A report from Cambridge University last year noted that only 39% of the Bitcoin network's total energy consumption comes from renewable sources, with hydroelectricity accounting for the majority of that.

  El Salvador, which is scarce in fossil fuels but rich in geothermal resources, has the highest geothermal resource potential in Central America. However, a large amount of energy is wasted due to poor access and poor infrastructure. By the end of 2019, more than 20% of El Salvador's electricity was generated from geothermal power, but this uses only one-third of the country's total geothermal resource generation potential, and the country's installed geothermal capacity has not changed significantly over the past decade. El Salvador is expected to have 644 MW of power generation potential from geothermal resources.

  The president has therefore proposed the establishment of an industrial park near the crater to improve the efficiency of geothermal energy use and solve the problem of electricity use for the Bitcoin factory.

  Some analysts believe that the introduction of renewable energy into bitcoin mining will not only solve the problem of excess power generation, but will also encourage governments to invest more money in developing renewable energy.

  Iceland, which is also rich in geothermal energy, is also a hot spot for bitcoin mining. Previously Iceland's excess geothermal energy was often used for aluminum smelting, and the addition of the bitcoin industry provides a way for the region to use energy efficiently. There are currently about 60 companies in Iceland that specialize in bitcoin mining.


  But as the bitcoin "gold rush" heats up, and traditional industries like metal smelting begin to transition to renewable energy, the original surplus of geothermal energy potential is saturated, and Iceland's energy advantage in the bitcoin mining industry is gradually disappearing. According to the Icelandic Blockchain Foundation, 8% of global bitcoin was mined in the country before 2018, and today that number has dropped to less than 2%.

  Other Nordic countries such as Norway and Sweden are becoming "up-and-comers" in the bitcoin mining industry. Bitcoin mining company Genesis Genesis plans to build two huge mining plants in the Swedish town of Boden and the nearby port city of Lulea within a decade.
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