Renewable energy potential, wide adoption and deflationary fiat make Nigeria the perfect home for extensive bitcoin mining operations.
This is an opinion editorial by Heritage Falodun, a software engineer and co-host of the “Bitcoin In Nigeria” podcast.
The aim of this work is to give a brief, concise but insightful elucidation around the economic meltdown and environmental degradation in Nigeria, while also proposing Bitcoin mining through renewable energy sources as a solution to those problems.
This document analyzes and showcases the complexity around electrical energy sources that have been explored, and the impact of such exploration to the country’s ecosystem.
Observed available renewable energy sources should be explored for mining Bitcoin in Nigeria in order to spur the nation’s growth economically, and concurrently to serve as a reference point for curbing environmental degradation and climatic havoc caused by carbon emissions from fossil fuels and gas.
Bitcoin mining is the process of creating new digital tokens and adding past transaction records to a public blockchain ledger.
Bitcoin mining requires sophisticated hardware, specialized computers called ASIC miners for solving complex math problems, and as a reward, miners earn new bitcoin and collect transaction fees on every valid transaction in the block, which is what has been instrumental in keeping the Bitcoin network active. Miners can be curious individuals or professional mining firms. The bitcoin mining process is ultimately a proof-of-work consensus mechanism.
This is a feature that is widely believed to corroborate the principles of economics and scarcity. Based on this schedule, it could be a few decades before the final bitcoin is mined. However, these hardware devices that enable Bitcoin mining must be powered by electricity and the mode of generating this electrical energy from different energy sources without causing environmental havoc and climatic degradation is of utmost importance. Generating electrical energy from green and renewable energy sources has been the best option for the Bitcoin mining ecosystem globally.
“Nigeria’s economic freedom score is 54.4, making its economy the 124th freest in the 2022 Index. Nigeria is ranked 23rd among 47 countries in the Sub-Saharan Africa region, and its overall score is above the regional average but below the world average. In the long-term, Nigeria GDP is projected to trend around 445.00 USD Billion in 2022 and 450.00 USD Billion in 2023, according to our econometric models. The gross domestic product (GDP) measures national income and output for a given country’s economy. Nigeria gdp for 2020 was $432.29B, a 3.53% decline from 2019. Nigeria gdp for 2017 was $375.75B, a 7.14% decline from 2016.”
Nigeria has the required infrastructure, climate, expertise, as well as human capital to take advantage of renewable energy sources.
“Solar panels are known to work(although dependent on the design) with an average peak sunlight hour of 3.5 hrs,” per Solynta, thus indicating that solar power would be a feasible energy source in a Nigerian city like Laos.
A consistent increase in carbon emissions in Nigeria is likely.
With the abundance of renewable energy sources in Nigeria, as explained above, Nigeria should consider mining Bitcoin with these energy sources.
The mining data shows that a new hybrid model for Bitcoin mining has emerged. Bitcoin miners can easily buy energy from renewable energy providers when energy is abundant, or create a private structure and capital around generating electrical energy from green and renewable energies as part of their setup costs and implementation capital. In so doing, the miners are monetizing renewable assets that would have otherwise been dumped or ignored, while maintaining a generally high uptime and safe environment and contributing to the country’s economy.
Bitcoin being a deflationary currency which serves as the reward for mining makes it an investment source capable of boosting Nigeria’s internally-generated revenue with about $2.84 billion per year (based on the $712 million assumption from above, multiplied across four quarters), assuming the government taxed privately-owned Bitcoin mining farms.
But the mining farms must be powered by renewable and green energy sources such as solar energy and hydroelectric energy sources. This will be a perfect way of utilizing the possible electricity that could be generated from an average of 1,885 hours of sunlight per year in places like Laos. Hydroelectric power plants very frequently substitute power generation from fossil fuels, thus reducing issues like acid rain, carbon emissions and smog.
The unexplored, possible electrical energy that can be generated from hydro sources in Nigeria should be developed, and nation states with government-owned and privately-owned Bitcoin mining infrastructure, such as El Salvador, Canada and some parts of the United States, should be considered as reference points in this context.
This is a guest post by Heritage Falodun. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.