1 Sneaky Trend That's Bullish for Bitcoin Through 2030 and Beyond
Alex Carchidi, The Motley Fool
5 min read
As the biggest and most popular cryptocurrency, it's a surprise to nobody that Bitcoin (CRYPTO: BTC) is subjected to all sorts of different trends, pressures, risks, and influences. It's easy to assume that all of the biggest factors that determine its price are already common knowledge.
But what might be surprising is that some of the coin's least-discussed risks are getting less scary instead of looming larger, particularly in one key area. In short, the future is looking even brighter for the coin, and, interestingly, it will probably also be easier on the conscience of some holders and future buyers. Here's why.
Mining's dirty reputation is becoming a thing of the past
Historically, Bitcoin has been criticized for its mining process.
Mining requires a lot of computing power, which means that it requires a lot of energy. At the same time, miners experience reducing returns for each unit of effort as a result of the coin's protocol. Every four years in a process that's called halving, the reward that miners get for each block that's mined is reduced by half, so it takes much more effort -- and energy -- to get the same quantity of coin.
Those factors put a strong pressure on miners to buy energy at the lowest cost they can, as every bit of money they save is more that they can throw into capital expenditures like buying more mining rigs or buying climate-controlled facilities to house them. So, in 2012, a few years after Bitcoin was launched, about 63% of the coin was mined using energy produced by coal power plants, according to a new report published by MiCa Crypto Alliance in collaboration with Nodiens, a data platform.
Aside from creating unwelcome headlines about the coin's environmental sustainability, relying so heavily on dirty coal power exposed Bitcoin to a galaxy of regulatory and policy risks across many different jurisdictions worldwide. After all, coal is a bigger environmental hazard than other fossil fuels, and it was in the process of being replaced with cleaner energy sources back when Bitcoin was just getting started -- a replacement process that some have rightfully alleged was interrupted by the pressure to mine cryptocurrency.
In fact, in China, during early 2021 Bitcoin mining was banned altogether as part of one province's plans to reduce emissions; in late 2021, the rest of the country followed suit as a result of a ban advanced by the government, though without explicitly citing the same rationale. So the precedent that dirty mining operations represent a threat to the coin's value is well-established.
But, in 2024, per the MiCa report, just 20% of the energy used for mining Bitcoin was produced using coal power. Nearly 41% of the energy was produced by renewable sources, up from 24% in 2014. That's a very bullish trend for Bitcoin, and practically nobody is talking about it. Nor is there any sign that the growth of renewable sources as a proportion of the total energy used is slowing.
Don't underestimate the upside here
Bitcoin using less energy from coal and more from renewables over time is favorable because it means the regulatory and policy risks of mining it are declining over time rather than increasing. If it becomes an asset that's produced primarily using renewable power, which it's on track to do in just a couple of years, the risk of it being banned or heavily restricted for environmental reasons will be well on its way toward zero. There would still be other policy-related risks, of course -- but fewer than before.
Aside from those declining risks, if Bitcoin fully sheds its reputation of being a burden on the environment in the coming years, it could also attract capital from investors who previously refused to buy it for environmental reasons. It's unclear if that would trigger rising prices, but it's hard to see how a larger pool of willing buyers could be a downside over the long run.
What should investors do about this trend? On the off chance that you weren't invested in Bitcoin because you thought it was bad for the environment, it's worth reevaluating your opinion now, at least preliminarily. For everyone else, consider this as another ancillary reason the coin is worth buying and holding forever. It probably shouldn't be the thing that makes you invest more than you were already planning, but it's certainly a reason to avoid selling it if you were concerned about the regulatory consequences for coal-powered mining operations.
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