The Bitcoin Mining Council (BMC) is an association of Bitcoin mining companies. At the time of writing this article, approximately 45 mining companies on five continents are members of the Bitcoin Mining Council. The Bitcoin Mining Council is currently chaired by Michael J. Saylor, the former CEO of MicroStrategy, who launched this initiative officially in May 2021. The BMC’s mission is to promote transparency, share best practices, and educate the public about the benefits of Bitcoin and Bitcoin mining. Among other things, the BMC intends to hold a quarterly meeting …
- where trends in bitcoin mining will be presented,
- to collaborate with leading industry researchers,
- to collect data and educate the public about bitcoin mining,
- and to provide best practices from bitcoin miners to open source solutions in order to help grow the industry.
It is also important to note the BMC’s statement that they are not trying to change the decentralized nature of Bitcoin or its fundamental principles, but are working to raise awareness of Bitcoin and Bitcoin mining.
High energy consumption or waste? – Security and trust!
Bitcoin mining had to deal with the accusation of consuming a lot of energy. This is certainly true, but there is of course more to it. The reason for the energy consumption is network security. Since the P2P electronic cash system Bitcoin does not require trust between humans and a financial institution or other intermediaries, the role and function of network security is even more important.
It must be ensured when writing each individual block, which contains a lot of transaction information, that blocks are linked chronologically and stored securely on the blockchain. This requires a digital fingerprint of each block. This fingerprint is created by a mathematical task using a hash function (SHA256). It requires enormous computing power and energy in the form of electricity.
This process is part of the so-called proof-of-work consensus mechanism, which is currently the talk of the town because of its energy consumption. Since the Bitcoin blockchain delivers a stable, monetary value in the form of the eponymous, limited currency Bitcoin, we need to put the question of energy consumption into a different context. Therefore, the discussion should be less about whether mining consumes a lot of energy but much more about what resources are used to generate energy to enable the necessary security of an independent and decentralized monetary system. For this reason, it should be noted that energy consumption is necessary and leads to efficiency. The efficiency lies solely in the fact that an administrative apparatus, such as a bank, is no longer needed at all.
Then we should find out how the energy is generated. Is it fossil sources that provide the energy or even sustainable sources?
The BMC Report Q2/2022
Since its inception, the BMC has published a report every quarter. This report is the result of a corresponding survey addressed to all companies associated with mining. Participation is voluntary and the survey deals, for example, with what energy sources are used for mining, how high is the management of mining companies in Hashrate. The report is published about a month after every end of the quarter, so the next report can be expected around the end of October. But let’s look at the last report:
- more than 50% of the world’s mining network has joined the BMC.
- this network elaborates a hashrate of 107.7 exahash (EH) at the end of Q2
- 66.8% of the survey participants use a sustainable power mix (solar, hydro, wind, biogases).
- Based on this, it is estimated that 59.9% of the global mining industry is accessing a sustainable power mix in the process. This is an increase of about 6% compared to the previous year. According to the BMC report, this makes the industry globally one of the most sustainable.
- technological efficiency, or hashrate per gigawatt, increased 46% in one year, from 14.4 to 21.1 EH per gigawatt (GW). This shows that the network is growing, so the efficiency and also the security continues to increase.
- The mining hardware generates a lot of heat, so that district heating is created and provided by mining.
The publication of the report is always accompanied by a video in which all relevant people interpret and comment on the facts and figures.
The fact that an energy-hungry industry like bitcoin mining is becoming more sustainable at very short intervals, it also has an impact on the energy economy. It naturally creates more demand for sustainably produced energy, fuels the supply of such energy and sustainable sources needed. The energy economy also becomes more sustainable and can adjust its supply accordingly.
Once the Q3 Report 2022 is published, we’ll look at this again in a bit more detail. Let’s see if the 3rd quarter can once again step up in terms of sustainability.
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