Can bitcoin power the transition to renewable energy?

by | Sep 12, 2022

As the move to renewables gathers pace the power grid is struggling to manage the intermittent electricity supply profile from solar and wind powered sources.  While fossil fuel sources are unquestionably bad for the environment, they do provide a very reliable and easily managed source of power.

Most people appreciate electricity demand fluctuates throughout the day typically peaking from 3pm to 9pm, but don’t appreciate that supply needs to be maintained within a narrow band between 49.85 and 50.15Hz to meet demand, there is no spare or excess capacity stored within the grid, i.e. excess energy is just as big a problem as insufficient energy.  Solar power can and is starting to overload the grid during sunny days and wind can cause an issue anytime, this puts pressure on the other sources to ramp up and down at short notice.

Batteries will eventually solve the excess capacity issue supporting the move to greater wind and solar use, but in the meantime bitcoin mining can also support this transition.

Arcane Research has published a detailed paper supporting this concept and other environmental benefits of the industry such as improving the economics of renewables energy production, mitigating natural gas flares and repurposing wasted heat from bitcoin mining rigs.


Improving economics

The growing share of wind and solar will lead to more wasted energy due to the variable nature of renewable energy production. Energy waste is a challenge that, if left unmitigated, can threaten the economics of renewable energy and thus limit its growth.

Bitcoin mining’s combination of location agnosticism, interruptibility, and modularity makes it the perfect purchaser of stranded renewable energy. Bitcoin miners can seek out areas with excess wind and solar and build a data centre of the exact size needed to consume the surplus energy.

Natural gas flares

Natural gas is produced as a by-product of oil drilling. Harnessing this gas for consumption is not always economically viable for oil producers. In these cases, the oil producer ends up burning the gas on-site in a process called flaring.

Gas flaring creates emissions without deriving any utility. In addition, the flaring process releases higher amounts of the potent greenhouse gas methane than burning the gas inside the controlled environment of an electrical generator.

Numbers show that mitigating gas flaring by mining bitcoin is by far the most cost-efficient way of reducing emissions. Per $1,000 investment, a bitcoin mining system reduces emissions of 6.32 tons of CO2 equivalents per year, compared to 1.3 for wind and 0.98 for solar.

Wasted heat

Providing heating for homes, industries, and other applications is the world’s largest energy end-use, accounting for almost half of global final energy consumption in 2021. 

Repurposing heat from bitcoin mining has three main advantages. First, the income from bitcoin mining subsidizes the cost of the electricity used to produce the heat. In addition to lowering heating costs, using bitcoin mining for district heating can reduce carbon emissions if the machines are powered by renewable electricity. 

Thirdly, repurposing the heat from bitcoin mining is essentially using the same energy twice. This offsets energy used by the bitcoin mining industry since it outcompetes other miners that are not repurposing their heat. 

Captured methane from Landfill (not covered in the Arcane report) 

According to the EPA Landfill Gas (LFG) is a natural by-product of the decomposition of organic material in landfills. LFG is composed of roughly 50 percent methane (the primary component of natural gas), 50 percent carbon dioxide (CO2) and a small amount of non-methane organic compounds. Methane is a potent greenhouse gas 28 to 36 times more effective than CO2 at trapping heat in the atmosphere over a 100-year period. 

Capturing this methane is common but due to the high costs and long lead times associated with building grid-connected landfill energy projects, over 70% of the US’s roughly 2,600 municipal landfills do not have a viable use for the methane they produce. 

Vespene Energy, a Berkeley, Calif.-based company converts this stranded methane gas into power for bitcoin mining, one Vespene module will take about four to six months to establish. Each module will have a power capacity of about 1.5 megawatts (MW) and eliminate 270,000 metric tons of CO2-equivalent per year.