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Renewable energy and bitcoin mining

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Oliver Palasmith's picture
Lead Developer Equinor

Renewable energy professional with 8+ years experience in offshore wind market and project development. Has worked across European and Asian markets, primarily in commercial and strategic...

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  • Sep 7, 2021
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I'm quite interested in how renewable energy could support crypto mining, especially when you consider curtailed power or periods where there is going to be high renewables penetration and cannibalisation of price.

If you take cryptos with high intensity Proof of Work systems (e.g. Bitcoin), it seems miners would love to get their hands on low cost green power, especially given all the recent media attention on Bitcoin's carbon footprint.

I wonder whether entering into offtake agreements and profit sharing with miners could help improve the profitability of renewables assets by providing low cost power in times of oversupply/curtailment that can be converted into more profitable crypto rewards? You'd probably need a smart algo to work out when it makes sense to do it, but I would imagine that shouldn't be too hard to develop given all the latest tech in the power trading space at the moment. I've seen examples of these type of collaborations in O&G for waste gas emissions, but not so much in renewables. 

ARK Invest and Square wrote a high level white paper on this: https://bitcoin.energy and IAG Business School did a more in-depth analysis using the example of an onshore windfarm in Brazil: https://www.sciencedirect.com/science/article/pii/S1364032120308054 

Would quite like to find out what other renewables developers may be doing in this space at the moment and whether it's a potential partnership that could work in practice.

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Jim Stack's picture
Jim Stack on Sep 9, 2021

Bitcoin seems to be very energy intensive. It's just a form of on line banking so i don't know why it is so energy intensive? 

 

Quote=ARK Invest and Square wrote a high level white paper on this: https://bitcoin.energy and IAG Business School did a more in-depth analysis using the example .

Oliver Palasmith's picture
Oliver Palasmith on Sep 14, 2021

It's the Proof-of-Work consensus mechanism required to maintain the blockchain that causes the high energy demand. In order to mine a block on the blockchain (and therefore progress the overall transaction ledger), miners have to effectively solve an equation which gets increasingly difficult as the amount of miners increases. This requires a lot of computational power (hash rate) to solve. As far as I understand it, you're effectively converting energy into digital currency through successfully solving the equation and mining a block, for which you get Bitcoin block rewards. Not an expert on the technicalities, but that is why I think it requires so much power. 

 

 

Henry Craver's picture
Henry Craver on Sep 9, 2021

Here's an example of the recent media attention Bitcoin has gotten on this issue: https://www.nytimes.com/interactive/2021/09/03/climate/bitcoin-carbon-footprint-electricity.html

Julian Jackson's picture
Julian Jackson on Sep 16, 2021

There's a strong impetus to use renewables and/or "off-peak" electricity for bitcoin and other cryptos that use mining to generate the coins/tokens. Not just because it is the ethical thing to do, but also for financial reasons - every penny of electricity used cuts into profit, that's why places with cheap or clean sources (e.g. Iceland) have got into the crypto mining game big time. Miners were using a lot of coal generation in China but recently it was banned so they have gone elsewhere.

 

Here's a Cointelegraph article that explores this in more detail: https://cointelegraph.com/news/report-76-crypto-miners-use-renewables-as...

It claims that 76% of miners use some renewable energy.

Paul Korzeniowski's picture
Paul Korzeniowski on Sep 28, 2021

Interesting point but the devil seems to be in the details. Hydroelectricity (62%) is the renewable that the cryptominers use. Coal and natural gas sources take the second and third spots at 38% and 36%, respectively. So, it does seem like Bitcoin companies, like many others, are currently not big customers of wind or solar power.  

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