Bitcoin Mining Could Be The Answer To Nigeria’s Inflationary Crisis

Bitcoin Mining Could Be The Answer To Nigeria’s Inflationary Crisis thumbnail

This is Heritage Falodun’s opinion editorial. Heritage Falodun is a software engineer and cohost of “Bitcoin In Nigeria”. This work aims to provide a concise, yet insightful explanation of the economic meltdown in Nigeria and the environmental degradation that has occurred. It also proposes Bitcoin mining using renewable energy sources as a way to solve these problems. This document examines and highlights the complexity surrounding electrical energy sources and the effects of such exploration on the country’s ecosystem. The available renewable energy sources that have been observed should be explored in Nigeria for mining Bitcoin. This will help to boost the country’s economic growth and also serve as a reference point to curb environmental degradation and climatic havoc resulting from carbon emissions from fossil fuels.

Introduction

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 and specialized computers called ASIC miner for solving complex math problems. As a reward, miners receive new bitcoin and transaction fees on each valid transaction in a block. This is what has been crucial in keeping the Bitcoin network alive. Mining can be done by either curious individuals or professionals. The proof-of-work consensus mechanism that powers bitcoin mining is the final result.

The first miner to solve a cryptographic puzzle receives bitcoin for expending computing energy 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 also set a hard limit on bitcoin’s supply at 21 million bitcoin. Miners have mined more than 90% of the available bitcoin. The number of bitcoins that are awarded to solve new blocks is halved every four years. This process is known as Bitcoin halving.

This feature is widely believed to support the principles of economics, scarcity, and scarcity. This schedule suggests that it could take several decades before the last bitcoin is mined. These hardware devices that allow Bitcoin mining must be powered with electricity. It is important to know how to generate this electrical energy from different sources without causing any environmental havoc or climatic degradation. The best option for Bitcoin mining is to generate electricity from renewable and green energy sources.

A study by CoinShares estimated that, as of 2019, at least 74% of cryptocurrency’s global energy consumption came from renewables, mostly in the form of relatively cheap, Chinese hydropower.

Bitcoin being a global, decentralized currency which is a censorship-resistant, deflationary asset, as opposed to the inflationary Nigerian naira, means Bitcoin will be the best bet for revitalizing Nigeria’s economy if consideration are put in place to initiate Bitcoin mining investment powered by the 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

Nigeria’s economy remains the biggest economy in Africa, despite the challenges that have been dwindling 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 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. Gross domestic product (GDP), measures the country’s income and output. 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.”

However, inflation has been eating deep into the Nigeria economic market, driving the cost of food there up by nearly 26% over the last year.

Nigeria Has A Carbon Emission Problem

Fixing carbon emission hasn’t played out as a priority for the government agenda in Nigeria yet, as demonstrated by the increasing levels of carbon emissions there. Carbon dioxide emissions result from the burning fossil fuels. These include carbon dioxide emitted from the burning of fossil fuels. Nigeria’s carbon (CO2) emissions for 2018 was 130,670 kilotons (kt), a 15. 72% increase from 2017.

Can Nigeria Take Advantage Of Renewable Energy Sources? Nigeria has all the infrastructure, climate expertise, and human capital required to harness renewable energy sources.

“In 2018, the share of energy derived from renewable energy sources in primary energy consumption amounted to around 75.4 percent in Nigeria,” according to Statista. “It is projected that the renewable energy share of 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 sunlight per year, with an average of five hours and nine minutes of sunlight per day in Lagos. It is sunny for 43% of daylight hours there.

“Solar panel are known to work (depending on the design), with an average peak sunlight hours of 3.5 hours,” per Solynta. This indicates that solar power could be a viable energy source in a city like Laos.

Hydroelectric Energy: To my knowledge, the only major rivers that are being explored for hydroelectric power in Nigeria are the Kanji, Shiroro, Niger and Benue. According to recent research, 32 exploitable hydropower sites have been observed in Nigeria with a total installed capacity of 12. 22 gigawatts (GW).

But Nigeria is bestowed with many rivers and natural falls that could favor the initiation of more hydropower systems.

Explored Energy Sources For Nigeria

Electricity in Nigeria is generated through thermal and hydropower sources. Most electricity generation in Nigeria comes from fossil fuels, particularly gas, which makes up 86% of the capacity in Nigeria, with the remainder generated from hydropower sources. A steady increase in carbon emissions is possible in Nigeria.

COMPANY POWER 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

987.2 MW

Niger Delta Power Holding Company

Gas

5,455 MW

IPPs

Gas

1,392 MW

Egbin Power Plc

Gas

1,020 MW

Bitcoin Mining Powered By Renewable Energy Is The Future Of Nigeria

With the abundance of renewable energy sources in Nigeria, as explained above, Nigeria should consider mining Bitcoin with these energy sources.

Bitcoin ecosystem research released in January by the Bitcoin Mining Council stated that, in the fourth quarter of 2021, the worldwide Bitcoin mining sector was being powered by about 58.5% renewable energy. Nigeria should not be excluded from this emerging market, as it has the potential to boost its economy.

The mining data shows that there is a new model for Bitcoin mining. When energy is scarce, Bitcoin miners can either buy energy from renewable energy providers or create a private structure with capital to generate electricity from green and renewable energies. This will reduce their setup costs and capital. Miners are monetizing renewable assets that would otherwise be ignored or dumped. They also contribute to the country’s economy by creating a private structure and capital around generating electricity from green and renewable energies.

Taking a look at an existing mining farm in Alberta, Canada, run by Hut 8 Mining, for example: The bitcoin generated from its first quarter 2022 mining rewards was 942 BTC. If similar mining farms were implemented across 36 locations in Nigeria — a reasonable number based on my research into locations where this would be feasible — that could yield some 33,912 BTC in one quarter if conditions were the same, worth about $712 million at the time of writing this.

Conclusion

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 from renewable and green energy sources like solar energy and hydroelectric power 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 are a great alternative to fossil fuels. This reduces issues such as acid rain, carbon emissions, and smog.

It is important to explore the potential electrical energy that can come from hydro sources in Nigeria. This should include nation states with both government-owned and private Bitcoin mining infrastructures, such as El Salvador, Canada, and some parts of the United States.

This guest post is by Heritage Falodun. These opinions are not necessarily those of BTC Inc or Bitcoin Magazine ..

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