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Bitcoin firms Argo Blockchain and DMG sign 'green mining' deal

Oscar Williams-Grut
·Senior City Correspondent, Yahoo Finance UK
·2-min read
Banks of bitcoin mining computers in Russia. Photo: Olga Maltseva/AFP via Getty Images
Banks of bitcoin mining computers in Russia. Photo: Olga Maltseva/AFP via Getty Images

Two publicly listed cryptocurrency companies have announced what they say will be the world's first "green" bitcoin (BTC-USD) mining pool.

London-listed Argo Blockchain (ARB.L) on Friday said it had signed a preliminary deal with Canada's DMG Blockchain Solutions (DMGI.V) to launch "the first bitcoin mining pool powered exclusively by clean energy."

Argo and DMG will combine their computational power to create the Terra Pool, a new bitcoin mining pool powered solely by green hydroelectric power.

The move comes amid growing scrutiny of the environmental impact of bitcoin and other cryptocurrencies.

Bitcoin's network is powered by a decentralised network of computers. Users are encouraged to contribute computing power through the promise of awards of newly minted bitcoin in return for completing essential operation tasks — a process known as "mining." The power needed to "mine" one bitcoin increases automatically as the network grows, meaning more and more electricity — and therefore power — is needed to run the network and "mine" new coins.

WATCH: What is bitcoin?

A recent Bank of America report highlighted the "enormous environmental costs" of bitcoin. Analysts found the bitcoin network currently has the same annual energy usage as countries like Greece, the Netherlands, and the Czech Republic. Bitcoin's energy consumption has grown by an estimated 200% over the last two years.

READ MORE: Tesla's bitcoin investment has carbon footprint of 1.8 million cars

"Addressing climate change is a priority for Argo and partnering with DMG to create the first 'green' Bitcoin mining pool is an important step towards protecting our planet now and for generations to come," Argo's chief executive Peter Wall said in a statement.

Argo Blockchain shares rose sharply on Friday's announcement. Photo: Yahoo Finance UK
Argo Blockchain shares rose sharply on Friday's announcement. Photo: Yahoo Finance UK

"We are hopeful other companies within the bitcoin mining industry follow in our footsteps to demonstrate broader climate consciousness."

Dan Reitzik, chief executive of DMG, said: "We believe this is an opportunity for continued growth as we develop a better understanding of climate-friendly operations while simultaneously integrating the newest and most innovative blockchain technologies."

Shares in Argo jumped 13% in London but remain down across the week.

WATCH: What are the risks of investing in cryptocurrency?