Shortly after announcing bitcoin as a legal tender, the President of El Salvador, Nayib Bukele, proposed a new idea of using geothermal energy to power clean crypto-mining. While media outlets around the world are going a bit wild on this news, we wanted to see how the story plays out.
While the concept of “Volcanic mining” is fascinating, it doesn’t seem to have a larger impact on the energy-intensive bitcoin network. The country currently derives energy majorly from solar, hydropower, and geothermal, so it would be incorrect to assume that they will direct all the energy resources to support bitcoin mining. As the energy comes from Earth’s surface, it will only be more challenging to extract steam for a full bitcoin mining hub.
Last year, in the month of Jan, the country administration announced plans to develop geothermal power plants in Berlin and make necessary improvements at San Vicente and Chinameca. This was proven to increase the capacity by 87MW, but the president has reported on Twitter that they can possibly get 95MW from recent developments.
In the video posted by the president, we can see the water vapour coming out of the well, and this is what is used to power the bitcoin power grid. But it is also important to note that it takes additional energy to drive temperature-conducting fluid through an underground loop of pipes. So the entire energy generated using this geothermal method is not 100% used for bitcoin mining.
Geothermal energy source development is not something new in El Salvador; it has been a part of the five-year Economic Takeoff Plan, and the company emphasizing its transparent management is LaGeo SA de CV, a subsidiary of the Executive Hydroelectric Commission of the Lempa River (CEL). The company put out a statement last year mentioning that they averaged 1373 GWh, which is likely going to increase from now on, as they have increased the capacity for each volcanic system.
If we look at the bitcoin energy consumption index, we can see that it is increasing rapidly and as of today, it reached 127.22 TWh. For a single bitcoin transaction, we would require 1576 kWh, which is a lot higher than the average power generated from geothermal plans and volcanos.
Even if they are able to scale and double the energy generated through geothermal plants, it will still not be sufficient to take a global stance in bitcoin mining. With the country consuming a third of total renewable energy, its contribution will not be greater than 1% to the global bitcoin network.
It is no doubt that El Salvador is pushing the envelope to incorporate bitcoin and pursue legal bitcoin mining, but the idea of geothermal energy and volcanic mining is likely not going to be replicated on a large scale. The challenge of using renewable energy for mining will always be present, but when countries like El Salvador take such bold steps, it gives hope for other nations suffering from similar economic problems. That is what we need to see, and we will, as bitcoin fixes everything.
Born and brought up in India, Karthikeya Gutta is a crypto journalist and freelance contributor for ItsBlockchain. He covers various aspects of the industry with in-depth analysis and research. His passion towards blockchain and crypto ecosystem is mainly because he believes it can really change the world and help millions of people.
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