Bitcoin mining is often decried for its intensive energy demands. But Cathie Wood’s ARK Investment Management LLC has done new research that maintains it doesn’t need to be as environmentally damaging as feared.
The argument is that Bitcoin mining could be tied into power-producing systems, enabling renewables to fulfill a higher percentage of demand from the energy grid at a constant cost of electricity.
According to a post from ARK research director Brett Winton and co-authors Yassine Elmandjra and Sam Korus, by producing the largest cryptocurrency energy providers could play the arbitrage between electricity prices and Bitcoin prices, as well as sell surplus solar—and supply almost all grid power demands without lowering profitability.
“All else equal, with Bitcoin mining, we believe renewable energy should be able to provision a large percentage of any locality’s power economically,” the post said. “As a follow-on effect, cost declines associated with scaling renewables could accelerate, leaving them even more economically competitive at equilibrium.”
In a research collaboration with $SQ, @yassineARK, @wintonARK, and @skorusARK debunk the myth that #Bitcoin mining is damaging the environment. Instead, as crypto mining, energy storage, and AI technologies converge, the adoption of renewable energy is likely to accelerate! https://t.co/EmMy1jXGlL
—Cathie Wood (@CathieDWood) April 22, 2021
The assertions in the research run counter to many of the concerns over sustainability that dog cryptocurrencies. Citigroup Inc. recently said Bitcoin’s power consumption has jumped 66-fold since 2015, and BCA Research Inc. said environmental worries were likely to erode the token’s value over time.
ARK has invested actively in cryptocurrency-related stocks, the latest being via purchases of Coinbase Global Inc. shares after it listed on the Nasdaq. And Wood said in a panel discussion that Bitcoin’s market value could go much higher than $1 trillion, a milestone it reached just recently. Square Inc., which Wood cited in a Twitter post as collaborating on the research, has been buying Bitcoin and says crypto is a growing part of its business through the use of its Cash App for Bitcoin transactions.
Bitcoin has slumped since touching an all-time high of almost $65,000 ahead of the Coinbase listing, and was trading at about $53,400 as of 10:15 a.m. in London on Thursday.
Critics “assert that the computation required to secure Bitcoin, even if necessary, is environmentally damaging and ruining the planet,” the ARK research said. “We believe that the opposite is true: a world with Bitcoin is a world that, at equilibrium, generates more electricity from renewable carbon-free sources.”
This article was provided by Bloomberg News.