Why are Energy Suppliers now accepting Bitcoin?

Bitcoin this, Bitcoin that.

Cryptocurrency is still all over the news.

Most of us probably first heard about Bitcoin and other cryptocurrencies many years ago and brushed them aside as ‘overhyped nonsensical BS’ – or something roughly along those lines.

And yet, here we are today. The price keeps on rising, new cryptos are still being developed, and the hype has failed to dissipate.

Now, we are at a really interesting crossroads with crypto. More importantly, crypto and business.

 Cryptocurrency has most notably previously been used for transactions for illegal goods and services over the internet, but now it is on the verge of becoming used for more above-board products.

Or, so it seems…

From the small…

A small energy trading company in Portugal has announced that they will soon be accepting Bitcoin (BTC) as a form of payment for electricity. Luzboa may be small-time traders, but this is certainly a bold move – smaller businesses often find their voices drowned out from larger corporations, especially when it comes to handling cryptocurrency.

The announcement came directly from the company’s president, so the source is as reliable as it gets. The news was announced to a Portuguese publication, Expresso, back in February of this year.

The Bitcoin wallet was made soon after the announcement, allowing clients to pay for their electricity through a new payment system dubbed ‘Bit Spot’. The business plans to convert any received bitcoin into euros immediately in a bid to avoid any unnecessary risk from volatile Bitcoin prices. The president of the business announced that they are already aware of the risk that comes with price volatility.

The idea behind the initiative is to capture a niche market as opposed to a flat-out transition for their customers into bitcoin only payments. This represents an understanding of the changing interests of their customers, and it can only be a good thing to add another method of payment for all customers.

Luzboa is headquartered in Viseo (a city and municipality of the Centro Region of Portugal) and services around 5,000 residential customers. The majority stakeholder in Luzboa is Nexus Energía Group, which acquired a 51% stake in the company back in 2017.

To the medium….

Luzboa is not the only energy supplier to begin accepting bitcoin payments recently.

A green energy provider based in Belgium is now accepting bitcoin payments after various clients requested the service. Elegant (the supplier) supplies nearly 30,000 households and SMEs and has decided to partner with BitPay to set about accepting the digital currency as a form of payment. Once registered for payments in bitcoin, users will receive their BitPay link automatically – containing their monthly invoice for gas or electricity.

Although it is still relatively early days, the company has already registered two bitcoin payments.

To the big….

Enercity is another huge name that has made the announcement that they will begin to accept payments from their customers in Bitcoin. What makes this case so interesting, is the sheer scale of the business. Enercity provides both domestic and commercial customers with electricity, gas, district heating, and drinking water. It is one of the ten largest energy businesses in Germany, with approximately 2,500 employees currently working for them.

There is a particular focus with Enercity to provide services for residential customers in Hanover as well as the Hanover region itself. Most of their business customers come from all throughout Germany. All of this contributes to an annual turnover of around €2.3 billion.

The business currently supplies well over 650,000 people with their electricity, gas, heat, water and energy – and have begun to offer transactions in Bitcoin to act independently of central institutions, although the rising popularity of Bitcoin has definitely played a part in this decision.

According to an Enercity press release –

“Digital payment methods such as Bitcoin are becoming increasingly popular. Enercity therefore now allows bills to be paid with Bitcoin.” – Dr. Susanna Zapreva, Enercity CEO

It is clear to see the effect that modern technology has had on the entire world economy, and this is a much larger deal than many realise. It is not often that there will be such a large business breaking the mould in such fashion, citing a transition away from traditional central institutions that global economies have built their fortunes on for years.

This is almost certainly the first step towards a future full of decentralised transactions, with networks free from geographical limitations.

Digitization has transformed the entire economy and the energy sector, in particular, the company added. However, unlike traditional banking institutions, Enercity sees a future of decentralized transactions and networks, “not subject to geographical limitations.”

An exciting time.

How can one man send the price of Bitcoin into freefall?

The price volatility of Bitcoin is something that is often cited – and rightly so.

Economies and businesses thrive off of certainty, being able to forecast and budget with complete confidence allows decision-makers to prepare for both best and worst-case scenarios. Some believe that Bitcoin is far too price volatile to ever really predict and prepare for.

There have been two high profile events in this year alone that suggest this is quite a reasonable stance to have, both caused by one man.

In May of this year, Elon Musk made the announcement that Tesla would no longer be accepting payments in Bitcoin. The reasoning for this decision was that far too much fossil-fuel energy was used during the mining process for the coin. This created a difficult situation for Tesla and their founder (a renowned supporter of Crypto), who were torn between supporting Bitcoin or continuing the notion that they are an environmentally friendly business.

The price of the cryptocurrency then began to freefall – simply as a result of Elon’s statement.

Then, on the 21st of July, history repeated itself.

In a complete U-turn from the previous statement from Elon Musk and Tesla, an announcement was made that –

“Most likely that the answer is that Tesla would resume accepting bitcoin.”

This caused the price of Bitcoin to surge up 8%, an incredible increase in such a short space of time. Musk himself admits to owning a sizeable cryptocurrency portfolio – which poses a question to ponder.

Would you be comfortable conducting business in a currency that can see its value manipulated so easily by one man?

Cryptos and Renewable Energy

It is difficult to assess the true scale of fossil fuel usage in mining bitcoin, but the process itself is incredibly energy inefficient.

Bitcoin ‘mining’ is the process of capturing block rewards, mined by groups of miners. These Bitcoin minors plug machines into a wall that takes up electricity, then work away at the Bitcoins network, racing with other miners for the Bitcoin prize. This speed is measured by ‘hash rate’ and calculates the amount of computer power used.

The higher the hash rate, the more Bitcoin can be mined. With the global increase in Bitcoin popularity, we are seeing huge factories and warehouses crammed with mining rigs. There are also solo Bitcoin miners who work with these larger facilities to collaborate and gain a higher hash rate. These miners use a large amount of electricity as they are constantly working.

If you would like to read more about Bitcoin, you can do so here.

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