Bitcoin (BTC) may be the last thing one considers when thinking of ways to ensure a clean energy future. This is especially true after a Tweet published by tech entrepreneur Elon Musk in mid-May, in which he said that Tesla would stop accepting payments in BTC due to the increasing use of fossil fuels for cryptocurrency mining.
However, awareness of the high energy costs associated with Bitcoin mining has not had a negative impact on the crypto ecosystem, quite the opposite. Following Musk’s tweet, several cryptocurrency mining companies came out to explain how Bitcoin can be mined using renewable energy, such as wind, solar, and geothermal.
It’s also important to note that harnessing renewable energy to mine Bitcoin has been the case for some companies long before Musk voiced his concerns on Twitter. For instance, Peter Wall, CEO of Argo Blockchain (a company that is dedicated to large-scale cryptocurrency mining) told Cointelegraph that for him, cryptocurrency mining with renewable energy was necessary from the beginning: “Back in 2018, Argo was considering mining using natural gas in Alberta, and I felt uncomfortable about this. I said, ‘This was not right.’
Bitcoin Mining Helps Drive Clean Energy and Profits
Since then, Wall noted that Argo has pledged to become “climate positive,” which means that the miner’s operations will become carbon negative, instead of neutral. Although this may seem like a difficult task, Wall explained that Argo uses hydroelectric power to mine Bitcoin at its facility in Quebec, Canada. Additionally, Wall shared that Argo is currently building a 200 megawatt cryptocurrency mining facility in Texas which uses wind power from the Lone Star state power grid.
Wall believes that renewables and Bitcoin mining go hand in hand, noting that excess energy generated by renewables would be wasted if not harnessed:
“Cryptocurrency mining takes energy away from long transmission lines and uses it right at its source. It acts as this extra charge that can be on most of the time, and when there is a need for other peak loads. in cities, we can turn it off. “
While this shows that clean energy sources can be used to mine cryptocurrencies, Wall makes an even more important point regarding renewables and storage. According to Square’s report titled “Bitcoin is Key to an Abundant, Clean Energy Future” (lit, Bitcoin is the key to an abundant and clean energy future), solar and wind power have become the lowest renewable energy sources and scalable to date. Additionally, it is noted that these sources will continue to become more affordable over time. However, the report notes that solar and wind projects are typically built in rural areas where sunlight and wind are abundant, but lacking energy end uses (close loads). In turn, increasing transmission capacity and energy storage will be essential to solve these problems.
Cryptocurrency mining can not only act as a much-needed load balancer for renewables, but the process can also ensure profitability for clean energy providers. John Kotek, Senior Vice President of Policy Development and Public Affairs at the Nuclear Energy Institute, told Cointelegraph that nuclear power, for example, is the optimal electricity supplier for cryptocurrency mining:
“Nuclear power is capable of providing abundant energy, 24 hours a day, 7 days a week and without carbon emissions, allowing miners to expand their operations in a way that other energy sources cannot. This also helps for nuclear power plants to operate more flexibly and profitably. “
Specifically, Kotek mentioned that a key benefit achieved by nuclear operators, in this case, is the ability to leverage mining operations as a trusted customer providing stable income for long-term investments in the continuous operation of the plant. “It is a win-win for both parties”, Kotek said.
This has become apparent as the concept of using nuclear energy to mine cryptocurrencies is rapidly catching on. For instance, North American mining company Compass Mining announced in July that it had signed a 20-year agreement with nuclear fission startup Oklo. This partnership will provide Compass with 150 megawatts (MW) of power after its mini-reactors are deployed in the coming years.
More recently, Talen Energy Corporation (one of the largest competitive power generation and infrastructure companies in North America) announced a joint venture with American Bitcoin mining company TeraWulf to develop up to 300 MW of carbon-free Bitcoin mining capacity. Phase 1 of this project (called “Nautilus Cryptomine”) will include a 180 MW Bitcoin mining facility built on the Talen digital infrastructure campus, adjacent to its nuclear power generation station. This means that the Nautilus Cryptomine facility will be located “behind the counter” to provide the miner with very low electricity costs.
Renewable-sourced bitcoins become more accessible
As the concept of renewable energy cryptocurrency mining gains more relevance, it is also interesting to note that new developments are being implemented to ensure this process is more accessible.
For instance, Blockstream, a blockchain infrastructure company, recently launched a new service called “Blockstream Energy” that enables power producers, even in the most remote locations, to sell excess electricity to proof-of-work (PoW) miners.
Adam Back, Blockstream CEO, told Cointelegraph that Blockstream rents modular mining units, or MMUs, to power producers, along with a power purchase agreement that involves Blockstream purchasing power on demand. Back explained that MMUs are “autonomous data centers with integrated ASICs, power distribution, network, cooling, monitoring and management.” According to Back, MMUs are designed for rapid deployment and are scalable in 1 MW modules:
“Blockstream Energy’s goal is to better match available energy production to energy demand. Energy producers can be in control not only of the energy supply they produce, but also of demand. This enables energy producers to operate much more efficiently and accelerate renewable energy projects. “
Back emphasized that Blockstream views Bitcoin as a solution to climate change, noting that BTC mining allows power producers to monetize their renewable power generation assets without the need for subsidies: “The ability to sell excess energy, and avoid paying for outages to eliminate excess energy, helps renewable projects improve profitability.”
A work in progress
Although renewable energy cryptocurrency mining appears to be an ongoing trend, the industry still has a long way to go before it has a real impact on the environment. According to the “3rd Global Cryptoasset Benchmarking Study” by the University of Cambridge, 62% of cryptocurrency miners worldwide rely on hydroelectric power, while 38% use coal and 39% a combination of wind, solar or geothermal energy. In September of last year, the report estimated that only 39% of Bitcoin’s electricity consumption was carbon neutral.
And while progress continues towards carbon-neutral cryptocurrency mining, several challenges remain. For instance, Yaron Ben Nun, Founder and CTO of Nostromo Energy (a company focused on cold energy storage systems) told Cointelegraph that, While clean mining can certainly work alongside renewables, it is most likely not a simple thing.
For example, Ben Nun mentioned that Bitcoin mining via solar energy will likely require batteries to stabilize the electricity generated by the sun and store any surplus energy to be used overnight. In turn, Ben Nun mentioned that a large number of batteries will be needed. Second, he noted that These mining facilities will have to be isolated from the grid, or installed directly on a grid that supports remote solar plants, which is rare in regions that have low-cost electrical infrastructures.
On top of these problems, Wall pointed out that MMUs leveraged by Blockstream Energy will require a strong internet connection, which could be challenging in remote areas.
Despite the difficulties, Wall remains optimistic about the total elimination of carbon emissions. Back further shared that Blockstream is already seeing strong demand for its MMU product, adding: “This allows power producers to focus on what they do best: generating power.”