Hydroelectric Power Is the Biggest Source of Energy for Bitcoin Mining

Bitcoin is often criticized for its high energy use, which contributes to planet-warming pollution. However, as The Crypto Times reported, one climate tech investor wants to get the word out that bitcoin derives the biggest share of its energy from a potentially unexpected source: hydroelectric power.

Bitcoin has often been criticized for its high energy use, which contributes to planet-warming pollution. However, as The Crypto Times reported, one climate tech investor wants to get the word out that bitcoin derives the biggest share of its energy from a potentially unexpected source: hydroelectric power.

According to a report by The Crypto Times, Daniel Batten, an advisor at Mara Holdings and host of the Food Chain Tech podcast, found that the bitcoin network gets 23.12% of its energy from hydroelectric sources, with coal and gas sources following at 22.92% and 21.14%, respectively.

This updates findings from the Cambridge Centre for Alternative Finance, which previously identified coal as bitcoin's largest energy source. However, the CCAF report confirmed that the estimate was limited, at least in part, by limited real-world data. According to The Crypto Times, Batten's difference comes from including off-grid mining operations using renewable energy.

"The study by Daniel shows that the future of Bitcoin mining indeed belongs to hydro power,” the Crypto Times said.

While bitcoin operations don't directly produce pollution, their computing processes require massive amounts of electricity. That means when bitcoin data centers are connected to power grids relying mostly on dirty energy (such as coal, gas, and oil), it increases local air pollution, in addition to putting a strain on those grids.

That problem is beginning to subside as more bitcoin mining operations strike deals to gain their own dedicated power sources — as Mara Holdings, whose advisory board includes Batten, recently did with a Texas wind farm — or to operate exclusively on excess energy from plants that have a habit of overproducing. Looking forward, it's crucial for the industry to continue to mitigate these environmental effects and get those coal and gas percentages down into the single digits.

According to the North American Electric Reliability Corporation, reporting in late 2024, its estimates for electricity demand are rising faster than at any point in the last 20 years, and crypto and artificial intelligence data centers are complicating demand forecasts. Their ability to scale also strains energy grids and can make them less stable. Plus, higher demand generally means higher electricity bills for consumers.

The good news is it benefits crypto miners to seek the lowest electricity prices, since their profit margins depend on it. Renewable energy is typically cheaper, and it's much cheaper once built, so increasing renewables is a win-win for crypto and the environment.

Energy innovation is essential for this transition. For example, methane pollution from landfills — the third-largest source of human-related methane pollution in the U.S. — can be used for energy. So Vespene Energy developed technology that converts landfill gas on-site to power data processing centers, which offsets gas pollution and generates revenue at the same time. Inspiring such efforts is one example of how these energy-intensive industries can be part of the solution.

Bitcoin mining can also support the transition to green energy with financial incentives, according to sources. A study in ACS Sustainable Chemistry & Engineering found that 32 planned renewable sites could generate $47 million in profit by supporting bitcoin mining before going commercial.

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We've seen some crypto investors prioritizing clean energy for mining facilities. However, as the world's largest crypto asset, bitcoin must make more progress for the industry to become sustainable.

"Bitcoin relies on miners using powerful computational power to solve complex puzzles, consuming massive amounts of energy. The crypto mining industry's future relies on embracing sustainable and ethical practices to ensure it's not just green but genuinely clean," Tin Pei Ling, co-president of digital asset platform MetaComp, told Financial News.

"It is in the industry's interest to reduce energy usage and its environmental impact as it evolves," added David Lenigas, chair of Vinanz, a London Stock Exchange-listed bitcoin mining firm.

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