Plan from El Salvador Bitcoin mining with volcanic energy?

Status: 10.06.2021 12:45 p.m.

Completely clean, completely renewable: El Salvador’s President Nayib Bukele plans to mine Bitcoins with the help of energy from volcanoes. This is how the country wants to get its high energy consumption under control. El Salvador wants to use geothermal energy from volcanoes for the energy-intensive mining of the crypto currency Bitcoin. President Nayib Bukele tweeted that he had commissioned the state-run geothermal electricity company LaGeo to work out a corresponding plan. The President is convinced that this is very cheap, 100 percent clean and renewable, does not generate any emissions and will develop quickly. There are more than a dozen volcanoes in El Salvador, many of which are still active.

Huge energy requirements

The immensely high energy requirement of Bitcoin mining has been discussed critically in public for a long time. The Cambridge Center for Alternative Finance (CCAF) is working on this topic and has created an index on it . The Cambridge Bitcoin Electricity Consumption Index is supposed to estimate in real time how much electricity is currently being used for mining. The data is then extrapolated to the year. The calculated value is currently around 111 terawatt hours. This corresponds roughly to the annual electricity consumption in the Netherlands. According to the Federal Environment Agency, Germany consumed around 553 terawatt hours in 2020. According to a study by Bank of America, the global Bitcoin industry emits a total of 60 million tons of CO2 annually, which corresponds to the emissions of around nine million cars.

Bitcoin as a means of payment …

A few days ago, Bukele announced that El Salvador would be the first country to introduce Bitcoin as legal tender . He expects the move to create thousands of new jobs in the Central American country. Among other things, taxes should be able to be paid in Bitcoin. Bitcoin is the most popular digital currency. It is not issued by a central bank, but created using a decentralized computer process known as mining. It is by no means clear whether it is even suitable as a means of payment.

… or as an object of speculation?

Because so far, cryptocurrencies have mainly attracted attention as speculative objects, the value of which is subject to extreme fluctuations: Bitcoin was quoted at more than $ 55,000 around May 10, and is currently around $ 36,000. If the value of part of the income is exposed to such strong fluctuations within a very short period of time, this poses a number of problems for a state budget policy. The high volatility of cryptocurrencies is also an incalculable risk for companies. The US electric car maker Tesla, for example, started in March of this year To accept Bitcoin as a means of payment for its vehicles and reversed this step a little later . As a justification, Tesla boss Elon Musk referred to the “insane” energy consumption of prospecting. But it is likely that Musk, as a businessman, at least had these price fluctuations in mind.