Bitcoin's Carbon Footprint Revisited: Proof of Work Mining for Renewable Energy Expansion

TL;DR

This paper reviews how Bitcoin mining's energy use can potentially support renewable energy expansion and grid decarbonization through flexible load response, despite criticisms of its energy intensity.

Contribution

It systematically analyzes the potential of PoW mining to provide grid services that promote decarbonization and renewable energy integration, addressing a research gap.

Findings

Renewable-based mining can plausibly support net decarbonization.

Flexible load response through PoW mining offers grid stability benefits.

The potential for mining to drive renewable penetration is underexplored.

Abstract

Despite their potential in many respects, blockchain and distributed ledger technology (DLT) technology have been the target of criticism for the energy intensity of the proof-of-work (PoW) consensus algorithm in general and of Bitcoin mining in particular. However, mining is also believed to have the potential to drive net decarbonization and renewable penetration in the energy grid by providing ancillary and other services. In this paper, we systematize the state of the art in this regard. Although not completely absent from the literature, the extent to which flexible load response (FLR) through PoW mining may support grid decarbonization remains insufficiently studied and hence contested. We approach this research gap by systematizing both the strengths and the limitations of mining to provide FLR services for energy grids. We find that a net-decarbonizing effect led by renewable-based mining is indeed plausible.