For Bitcoin miners the motive to power their operations with renewables is clear–it’s economical.
Per data from MacroMicro, it costs $26,979 to mine a Bitcoin on average. With the price of the leading cryptocurrency hovering around $28,500, cutting costs is key to fattening miners’ margins.
Mining outfits that can tap cheaper energy powered by renewables, such as wind, hydro, or nuclear, are thus at a clear advantage over their competition.
What’s more, beyond heftier profits, these miners also claim to be using “excess” energy that might not otherwise be used to power their operations.
According to Marathon Digital Holdings’s corporate communications VP Charlie Schumacher, Bitcoin can be helpful for renewable energy grids, in particular, by offering a profitable use of energy in places where there is higher energy production than demand.
Marathon draws energy from more than 200 wind turbines to power its mining operation in McCamey, Texas.
“Renewables don’t always happen to be where we have large populations,” Schumacher told Decrypt. Such is the case at King Mountain Wind Farm which is hundreds of miles from the nearest large city.
“Because electricity can only travel about 500 miles before it’s fully wasted, you need to be close to the source,” he said. “If you’re further away, it’s less efficient.”
Miners also serve as ever-buying consumers for energy producers in these regions. Bitfarms’ chief mining officer Ben Gagnon makes a similar argument regarding his firm’s use of hydropower in Québec.
Gagnon told Decrypt that to reduce energy costs, Bitfarms ends up “seeking out energy sources that don’t have other customers’ demand.”
This has led the company toward a pattern of essentially filling in the gaps left behind by old manufacturing hubs.
“We took over former industrial buildings…paper mills and metal shops…[industries] that basically were outsourced to third world countries,” Gagnon said. “The dams are still there. They’ve been paid off. The water still falls from the sky. It still melts from the snow. It still flows through the rivers, but there’s just no demand for that electricity.”
Is it really ‘excess’ energy?
Whether the energy being used can actually be called excess, however, is still up for debate.
A representative from Hydro-Québec, the public utility company that provides energy for Bitfarm’s Canadian operations, told Decrypt that “there is no such thing as excess energy for Hydro-Québec. We manage our network in order to produce electricity in real time to answer the demand.”
Hydro-Québec is also expecting an energy demand increase of 14%, or 25 terawatt hours (TWh), over the next ten years.
But even if there isn’t an excess of energy, many firms claim that Bitcoin mining is nonetheless easier on the grid than other types of production such as heavy industry.
“Miners have the capacity to turn on and off very quickly, in a matter of minutes,” Marathon Digital’s Schumacher said. “That load can be turned on and soak up energy, or it can be shut off…faster than most other industries.”
He added that because wind and solar power are intermittent power sources–generating more or less power at different times throughout the day–it’s important to have more consumers, like miners, who can be flexible with how they consume energy as grids transition to these sources.
From Bitcoin to fuel cells
People working on renewable energy systems tend to look to other processes for using or storing surplus energy.
Green hydrogen production is one alternative solution because electricity is used to generate hydrogen fuel which can be stored and converted back to power when it’s needed.
“Hydrogen can make grids more efficient because it’s an energy storage material,” senior consultant of political affairs for the German Hydrogen and Fuel Cell Association Johannes Drijkoningen told Decrypt. “What’s stored in H2 are electrons.”
Electricity can be used to split water into hydrogen and oxygen in a process called electrolysis, and the resulting hydrogen can then be used to make clean fuels for vehicles, or stored and converted back into electricity via fuel cells when energy is needed later.
Other projects that commonly compete for renewable energy contracts include solar panel production or green-aluminum or steel production.
“We always have to think twice about where our energy is going,” Drijkoningen said. “When it comes to [Bitcoin] mining, I personally don’t see an added value for society or myself, compared to using electricity for heating, food production, or other basic human needs.”
Broader conversations about energy use and priorities on local and national levels will continue to develop into the future.
But for Bitfarm’s Gagnon, Bitcoin mining still offers an economically productive use of energy in the short term. He suggested that he understands the growing interest in projects related to battery manufacturing, hydrogen, and solar, but added that these types of projects can take decades to construct and launch.
He argues that in the shorter term, Bitcoin miners can create jobs and tax revenue with the energy that is available today.
“It’s a 20-year hypothetical versus a 12-month implementation schedule [for Bitcoin mining],” he said. “A Bitcoin miner could be promised, ‘You’ve got the power for the next 15 years, but after that, you’ve got to move on.’ And Bitcoin miners would take that–they’d absolutely do that.”
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Source: https://decrypt.co/125482/batteries-bitcoin-is-mining-best-use-excess-green-energy
