ARK: Bitcoin can create a better green energy system

According to a bitcoin research report published by ARK Investment Management on Wednesday, ARK opposes the current mainstream view that bitcoin is not environmentally friendly. One of the main criticisms of bitcoin at present is its negative impact on the entire planet. For example, mining bitcoin requires huge electricity resources. According to the Cambridge Center for Alternative Finance, Bitcoin's electricity consumption is estimated to be about 113.88 terawatt hours per year. In other words, Bitcoin consumes 0.5% of the world's total electricity demand. These data, coupled with growing concerns about climate change, give critics plenty of firepower to attack Bitcoin.

Investment firm ARK Investments on Wednesday offered its take on those criticisms. In a recent report titled “Solar + Batteries + Bitcoin Mining,” ARK researchers wrote: “A world with Bitcoin, in equilibrium, is one that generates more electricity from renewable, carbon-free resources.”

ARK has been quite active in the crypto market recently. The company has been actively investing in Grayscale's Bitcoin Trust and became a large buyer of Coinbase shares shortly after its listing. The innovative ETF also provides investors with exposure to companies such as Tesla and Square, both of which hold Bitcoin on their balance sheets.

ARK’s research team describes Bitcoin as an “economic battery.” In the report, it wrote, “Imagine two identical solar farms. During the day, they both generate excess energy. At night, the demand for energy surges, and no more solar energy can be generated.

Farm 1’s solution is to store excess energy in batteries during the day and then redistribute the energy in the evening when demand rises.

Farm 2’s solution is to use this excess energy during the day to operate a Bitcoin mining facility. By selling the rewards from their mining, they can still profit from the excess energy collected during the day without having to purchase expensive energy batteries. These profits can then be reinvested in expanding the solar farm facility by purchasing more land or more solar panels. Alternatively, Bitcoin can also be transferred to places where it is difficult to create cheap green energy, helping to reduce energy costs in the area.”

The core concept of the team is that renewable energy sources tend to have excess energy production at certain times. This excess energy can be used to mine cryptocurrencies and generate profits. This will generate additional income and drive investment and development in more renewable energy.

A similar system is already in place in Norway, where energy giant Aker has used green energy to mine bitcoin for profit. ARK researchers and others believe that in this way, bitcoin could become a vehicle for the value of green energy.

Despite this, there are still a large number of scholars who have criticized this view, most notably Elad Verbin of the holding investment company Lunar Ventures. He wrote, "If Bitcoin is a battery, then the more electricity you put in, the more 'power' (that is, Bitcoin) you should get. But this is not the case: in the Bitcoin system, more electricity cannot be exchanged for 'more Bitcoin', it just guarantees that you have the opportunity to get more Bitcoin than others can get, which is the consensus of the entire Bitcoin system. And this guarantee is not an asset and cannot be traded in the future."

The ARK research team also added in the report, "While this model is interesting and illustrative, it is by no means a complete and convincing model." And emphasized that further research on this issue is the future development direction.