Opponents of cryptocurrency often cite its energy and polluting footprint as the main reasons against its adoption. However, the natural synergies between cryptocurrency mining and nuclear power could eliminate this problem entirely.
Cryptocurrencies are digital currencies secured by cryptography. Unlike physical money, like dollars, cryptocurrencies are not minted by domestic institutions. Instead, they are created through complex algorithms that take place on computer networks. While not all cryptocurrencies have a specific function, the most valuable ones, such as BTC and ETH, exist primarily for performing financial transactions embedded in the blockchain – crypto transaction recording.
Dr Florent Heidet is scientific director of a large public research establishment. He has worked on advanced nuclear technologies for over 15 years, contributing to many types of advanced nuclear reactor technologies. Dr Milos Atz is a nuclear engineer at a large public research institution where he works on a variety of advanced research projects on reactor analysis and waste management.
Recently, the values of many cryptocurrencies have skyrocketed, in part due to increased acceptance as well as speculation about future competition between a decentralized cryptocurrency-based financial system and the existing centralized financial system controlled by banks and governments.
The incredible increase in the value of cryptocurrency, coupled with the ease of contributing to the cryptocurrency mining process with common computer hardware, has resulted in an ever increasing number of miners joining cryptocurrency networks. . The increase in the number of miners benefits the system by further decentralizing, and therefore securing, cryptocurrency.
Most of the major cryptocurrencies operate under the Proof of Work (PoW) scheme. In PoW, miners compete with each other to mine computing resources to perform cryptocurrency transactions and in return receive a reward in the form of the cryptocurrency they activate. While there are energy efficient alternatives to the PoW scheme such as Proof of Stake (PoS) or Proof of Space schemes, these methods have not yet been widely adopted by major cryptocurrencies.
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The total energy consumption used by mining in major cryptocurrencies is tens of electrical gigawatts, or GWe, depending on the current size of the network and the average power of the mining equipment. This is about the same as the electricity demand of Sweden or Montana. New generations of computer hardware are more efficient and gradually reduce power consumption per hashrate, but the high profitability of mining attracts more participants, resulting in a net increase in the overall power used by the grid. This is because as long as the combined costs of electricity and hardware remain below the value of the generated cryptocurrency, networks and their power consumption will continue to grow and soon exceed that of most countries.
Although mining for cryptocurrency requires enormous amounts of energy, the process itself is not directly polluting. Natural resource requirements are limited to what is needed to manufacture computer hardware and generate electricity for mining operations. Cryptocurrency mining is a 24/7 process using constant power with minimal downtime. Additionally, large mining operations may require over 100 megawatts of power for facilities with the footprint of a mid-sized plant. Mining operations need a very reliable and dense power supply.
The environmental impact of electricity production largely depends on the source used. The main impacts include carbon emissions and air pollution from the combustion of fossil fuels. The mix of available power generation sources is highly dependent on the region and when cryptocurrency miners purchase electricity from the grid, and the environmental impact is linked to the local energy mix. The carbon footprint of cryptocurrency is greatest if the network is powered primarily by fossil fuels.
Headlines about the links between cryptocurrencies and the environmental impact associated with mining have become mainstream, and the resulting geopolitical decisions have hurt their valuations. This momentum should concern the crypto industry, and industry participants should seek cleaner sources of electricity to minimize its impact on the environment.
To ensure a share of carbon-free electricity, cryptocurrency mining operations can seek agreements with local grid operators or power producers. Some larger cryptocurrency mining operations may choose to own and operate their own power generation facilities.
Available sources of carbon-free electricity include renewables (mainly wind and solar), hydropower, and nuclear power. Hydropower is geographically limited and seasonally dependent, leaving renewables and nuclear power as the more technically mature options. The intermittency of renewables means they require large energy storage systems or fossil fuel backups to ensure the constant supply of electricity needed for mining. Due to their footprint, large-scale power generation from renewables in desired locations is much less flexible than other energy sources. These attributes make renewable sources a less attractive energy partner for cryptocurrency mining.
The energy demands of the cryptocurrency mining industry create a unique opportunity for synergy with nuclear power. Nuclear reactors harness the energy of fission elements such as uranium. Because it does not burn carbon-based fuels, the energy produced from nuclear reactors is carbon-free. In 2020, nuclear power accounted for 50% of all carbon-free electricity generation in the United States
The life cycle greenhouse gas emissions of nuclear energy – including uranium mining, enrichment and fuel fabrication – are comparable to those from other renewable electricity sources, shown in the graphic below. In addition to being carbon-free, nuclear power is now shifting from kilowatt to gigawatt and has two special characteristics that make it a partner of choice for cryptocurrency mining.
First, nuclear power is extremely reliable. Reliability is measured by the “capacity factor,” the ratio of a power plant’s actual power output to the amount of power it could produce if it were running at 100% power without interruption. Nuclear power in the United States has the highest capacity factor of any source of electricity. As such, nuclear is often described as “basic” electricity – always on, always on, reliably meeting the demand for electricity. For crypto mining operations requiring constant power, this is a huge advantage.
Second, nuclear power is incredibly energy dense. A single fission reaction produces over a million times more energy than a single combustion reaction. As such, the fuel and footprint requirements for nuclear reactors are very low. This pairs well with the compactness of crypto-mining facilities.
With nuclear energy comes the stigma of nuclear waste and nuclear accidents. Despite a few high-profile nuclear accidents in the past, nuclear power plants remain one of the safest human constructions, and nuclear power is one of the safest sources of electricity. While nuclear waste is inevitably generated by nuclear reactions, high use of resources leads to extremely compact forms of waste that can be safely managed with a minimal footprint. Around the world, the benefits of nuclear power have far outweighed its challenges.
Engaging in the booming cryptocurrency industry also benefits the nuclear industry. Despite producing carbon-free and reliable electricity, nuclear power plants struggle to compete with the cheap natural gas that dominates electricity markets. In contrast, the cryptocurrency industry specifically demands the unique advantages of nuclear power, making partnerships an ideal opportunity. The annual energy costs of crypto mining are in the tens of billions of dollars, based on total electricity consumption and average electricity costs in the United States. The growth of the cryptocurrency network will only further propel increases in energy costs. The fact that cryptocurrency valuations are likely to rise further underscores the importance of cryptocurrency clean energy partnerships.
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Intentional collaboration with nuclear power could lower the cost of electricity for crypto-mining operations. The cost of generating electricity is only a small fraction of the total, with various taxes, freight charges, and delivery charges making up the rest. Although nuclear power does not offer the lowest cost of generating electricity, crypto mining would take full advantage of its reliability, energy density, and geographic flexibility. Crypto-mining farms that use nuclear power, either in colocation with existing plants or by owning their own plants, would pay less for their carbon-free electricity than they would if they bought electricity. carbon-intensive network.
Partnerships between crypto mining and nuclear industries have already started to flourish. Recent reports have highlighted deals made between cryptocurrency mining operations and nuclear utilities and nuclear reactor suppliers. Given the synergies between energy demands for cryptocurrency and nuclear power, we hope that these industries will continue to engage with each other to explore opportunities for mutually beneficial growth and collaboration.
The opinions expressed in this article are those of the authors.