This is an opinion editorial by Heritage Falodun, a software developer and co-host of the Bitcoin In Nigeria podcast.
The aim of this work is to provide a short, concise, but insightful explanation of the economic collapse and environmental degradation in Nigeria while proposing Bitcoin mining through renewable energy sources as a solution to these problems.
This document analyzes and demonstrates the complexity of the explored electrical energy sources and the impact of such exploration on the country’s ecosystem.
Observed available renewable energy sources should be explored for mining Bitcoin in Nigeria to fuel the nation’s economic growth while serving as a reference point for curbing environmental degradation and climate damage caused by carbon emissions from fossil fuels and gas.
introduction
Bitcoin mining is the process of creating new digital tokens and adding previous transaction records to a public blockchain ledger.
Bitcoin mining requires sophisticated hardware, specialized computers called ASIC miners to solve complex mathematical problems, and as a reward, miners earn new bitcoins and charge transaction fees for every valid transaction in the block, which has been instrumental in keeping the bitcoin network active to keep . Miners can be curious individuals or professional mining companies. The bitcoin mining process is ultimately a proof-of-work consensus mechanism.
The first miner to solve a cryptographic puzzle receives bitcoin for consuming computational power and validating the transaction “block”. Bitcoin’s pseudonymous founder, Satoshi Nakamoto, originally implemented a limit of one megabyte of transaction data per block.
The inventor of bitcoin has also limited the supply of bitcoin to 21 million bitcoin. Miners have mined more than 90% of the available Bitcoins. Every four years, the number of bitcoins awarded for solving new blocks is halved, a process known as bitcoin halving.
This is a feature that is widely believed to affirm the principles of economy and scarcity. Based on this schedule, it could be a few decades before the last bitcoin is mined. However, these hardware devices that enable bitcoin mining must be powered by electricity, and the way to generate this electrical energy from various energy sources without causing environmental damage and climate destruction is of paramount importance. Generating electrical energy from green and renewable energy sources has been the best option for the bitcoin mining ecosystem around the world.
A study by CoinShares estimates that in 2019 at least 74% of the cryptocurrency’s global energy consumption came from renewable energy, mostly in the form of relatively cheap Chinese hydroelectric power.
Bitcoin is a global, decentralized currency that is a censorship-resistant, deflationary asset, in contrast to the inflationary Nigerian naira, which means that when considering Bitcoin mining investments, Bitcoin will be the best choice for reviving Nigeria’s economy to initiate bitcoin-powered various unexplored renewable and green energy sources available in Nigeria, one of the leading countries in global bitcoin adoption.
An overview of Nigeria’s economy
The Nigerian economy remains the largest in Africa despite challenges that have stunted its growth over the years.
According to Heritage.org:
“Nigeria’s economic freedom score is 54.4, making its economy the 124th freest in the 2022 index. Nigeria ranks 23rd out of 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, according to our econometric models, Nigerian GDP is projected to be around USD 445.00 billion in 2022 and USD 450.00 billion in 2023. Gross Domestic Product (GDP) measures national income and output for a given country’s economy. Nigerian GDP for 2020 was US$432.29 billion, down 3.53% from 2019. Nigerian GDP for 2017 was US$375.75 billion, down 7.14% from 2016.”
However, inflation has eaten deep into Nigeria’s economic market, driving up the cost of food there by almost 26% in the last year.
Nigeria has a CO2 emission problem
Reducing CO2 emissions has not yet emerged as a priority on the government agenda in Nigeria, as evidenced by rising CO2 emissions there. Carbon dioxide emissions come from burning fossil fuels. These include carbon dioxide produced from the consumption of solid, liquid and gaseous fuels and from gas flaring. Nigeria’s carbon (CO2) emissions for 2018 were 130,670 kilotons (kt), a 15.72% increase from 2017.
Can Nigeria benefit from renewable energy sources?
Nigeria has the necessary infrastructure, climate, expertise and human capital to harness renewable energy sources.
“In 2018, the share of energy from renewable energy sources in primary energy consumption in Nigeria was around 75.4 percent,” according to Statista. “It is projected that the share of renewable energy in total final energy consumption in Nigeria will reach 86.4 percent by 2025.”
Unexplored energy sources for Nigeria
Solar Energy: According to Solynta Energy, there is an average of 1,885 hours of sunshine per year, with an average of five hours and nine minutes of sunlight per day in Lagos. There it is sunny 43% of the daylight hours.
“Solar panels are known to operate (although depending on the design) with an average maximum insolation hour of 3.5 hours,” Solynta said, suggesting that solar energy would be a viable energy source in a Nigerian city like Laos.
Hydropower: To my knowledge, the only major rivers being explored for hydropower in Nigeria are the Kanji, Shiroro, Niger and Benue. According to the latest research, 32 viable hydroelectric power sites with a total installed capacity of 12.22 gigawatts (GW) have been observed in Nigeria.
But Nigeria is endowed with many rivers and natural waterfalls that could encourage the introduction of more hydroelectric systems.
Explored Energy Sources for Nigeria
Electricity in Nigeria is generated by thermal and hydroelectric sources. Most of Nigeria’s electricity generation comes from fossil fuels, particularly gas, which accounts for 86% of Nigeria’s capacity, with the remainder being generated from hydroelectric sources.
A steady increase in CO2 emissions in Nigeria is likely.
| SOCIETY | PERFORMANCE TYPE | CAPACITY |
|---|---|---|
|
Kanji Jebba Power Plc |
hydro |
1,330 MW |
|
Ugheli Power Plc |
gas |
942 MW |
|
Sapele Power Plc |
gas |
1,020 MW |
|
Shiroro Power Plc |
hydro |
600 MW |
|
Afam Power Plc |
gas |
987.2MW |
|
Niger Delta Power holding company |
gas |
5,455 MW |
|
IPP’s |
gas |
1,392 MW |
|
Egbin Power Plc |
gas |
1,020 MW |
Renewable energy bitcoin mining is the future of Nigeria
Given the abundance of renewable energy sources in Nigeria as discussed above, Nigeria should consider mining Bitcoin using these energy sources.
A Bitcoin ecosystem study published by the Bitcoin Mining Council in January found that around 58.5% of the global bitcoin mining sector was powered by renewable energy in the fourth quarter of 2021. I believe Nigeria should not be excluded from this emerging market as it has a chance to boost its economy.
The mining data shows that a new hybrid model for bitcoin mining has emerged. Bitcoin miners can easily purchase energy from renewable energy providers when energy is in abundance, or create a private structure and capital to generate electric power from green and renewable sources as part of their setup costs and implementation capital. In this way, miners monetize renewable assets that would otherwise have been discarded or ignored, while maintaining a generally high uptime and safe environment and contributing to the country’s economy.
A look at an existing mining farm in Alberta, Canada operated by Hut 8 Mining, for example: Bitcoin generated from mining rewards in Q1 2022 was 942 BTC. If similar mining farms were implemented in 36 locations in Nigeria – a reasonable number based on my research on locations where this would be possible – all things being equal, it could yield about 33,912 BTC in one quarter, which was worth about 712 at the time Millions of dollars would have written that.
Conclusion
Because bitcoin is a deflationary currency that serves as a reward for mining, it is a source of investment that can increase Nigeria’s internally generated revenue by approximately $2.84 billion per year (based on $712 million assumption by above, multiplied over four quarters), according to the government taxed private bitcoin mining farms.
But the mining farms must be powered by renewable and green energy sources such as solar and hydroelectric power. In this way, the possible electricity that could be obtained in places like Laos from an average of 1,885 hours of sunshine per year is used perfectly. Hydroelectric power plants are very often replacing fossil fuel power generation, reducing problems such as acid rain, carbon emissions and smog.
The unexplored, possible electrical energy that can be generated from water sources in Nigeria should be developed, and nation-states with government and private bitcoin mining infrastructure, such as El Salvador, Canada and some parts of the United States should apply in this relationship as reference points.
This is a guest post by Heritage Falodun. The opinions expressed are solely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
