Here's how blockchains help build a global energy network

Here’s how blockchains help build a global energy network – Mail Bonus

The impact of the blockchain industry on the energy sector has been a major source of controversy for the past five years. Governments and environmental advocates have regularly expressed concern about the amount of energy needed to keep the Bitcoin network safe. Data show that the energy consumption of the grid is now competitive with the annual energy consumed by some small countries.

Historical electricity demand for Bitcoin networks. Source: CCAF

While much of the discussion has revolved around the negative environmental impact of Bitcoin (BTC) mining, the move to maximize mining revenue and integrate blockchain technology with the energy grid has also introduced new developments that tend to be beneficial in the long run. .

Here we look at some 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.

To restore energy waste

One of the fastest growing parts of the cryptocurrency mining industry is generating revenue from the historic waste of energy sources such as natural gas fired at oil rigs.

The discovery of natural gas pockets is a common feature of the oil drilling industry and until recently this gas was usually burned in a process called “flaking” because the infrastructure needed to collect it did not exist or there was not enough demand for LNG.

As the value of Bitcoin rose over time, the search for cheap energy sources led to the installation of transport containers filled with mining equipment at drilling sites that can use the energy generated by flares to reach BTC.

Although the process still translates into carbon dioxide emissions, revenue is generated during the process and these funds could be diverted to reduce environmental concerns.

Most recently, several companies have been exploring the integration of flaming gas mining in the Middle East, which accounted for over 38% of global flares in 2020 and provided one of the biggest opportunities to turn energy waste into value.

Blockchain technology can make energy production more efficient

Another side benefit of the offensive to maximize the profits of cryptocurrency is the improvement of energy infrastructure and the increased emphasis on developing sustainable energy production.

Bitcoin Mining Council research has shown that there has been a marked increase in the amount of energy coming 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 benefit from energy efficiency improvements from sustainable sources such as geothermal power plants, which have provided their economies with an increased source of income.

Whether it is the utilization of excess energy generated by hydropower plants or the increase in the use of wind and solar energy, cryptocurrency mining provides financial incentives to help further optimize energy efficiency and production.

Connected: Marathon Digital moves the Montana BTC mine to pursue carbon neutrality

Smart grid technology

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

Inefficiency in electricity distribution has largely been attributed to the retail stage, as smaller companies that have very little of the infrastructure of the electricity system mainly provide simple services such as billing and monitoring of meter usage.

These types of services can be easily handled with blockchain technology and Internet-of-Things (IoT) devices that help consumers bypass retailers and connect directly with wholesale distributors, which could potentially reduce electricity bills by up to 40%.

Connecting consumers to smart grids also allows them to shop with different providers for the best possible prices. This could help to level the playing field in an industry that has traditionally been dominated by one local energy company.

Projects such as Grid + and Energy Web Token are helping to lead the way in this field, replacing old network design of physical substations and monitoring equipment with networks of distributed energy resources (DERs) that include battery storage systems, solar radiation and natural gas generators.

Although the sector is still in its infancy, it is a development worth following because in the coming years, blockchain technology will be further integrated into the energy sector.

Want more information on trading and investing in cryptocurrencies?

The views and opinions expressed herein are those of the authors only and do not necessarily reflect the views of Every investment and trading business involves risk, you should conduct your own research when making a decision.