How Bitcoin Mining Might Help Nations With Domestic Energy Production
- "Bitcoin mining allows for a faster payback on renewable energy projects such as solar, wind or hydro projects."
- Miners are already raising capital to finance and build their own power plants.
- "Bitcoin mining facilities can participate in demand response programs to improve the health of the grid around them."
Much has been written about Bitcoin(BTC) and its voracious appetite for energy. However, even if the cryptocurrency consumes nearly as much electricity each year as the Netherlands, there are a number of people within the Bitcoin industry who are arguing that it could end up being a net positive for the energy sector.
Most recently, analyst and Adamant Capital founder Tuur Demeester claimed (in a private Twitter account) that “Bitcoin mining can increase countries' total electricity production capacity, such that in times of peak domestic demand the market has more spare electricity to divert to households who need it.” While this claim wasn’t backed up by much in the way of hard data, Demeester predicted that as Bitcoin mining continues to grow, more power plants will be constructed, with excess energy from these plants being used for domestic consumption (in addition to mining).
According to researchers and industry figures speaking with Cryptonews.com, such claims have some merit to them, insofar as Bitcoin mining has generally resulted in an increase in overall energy capacity and production. However, commenters are split on the question of whether Bitcoin will contribute to national power grids, with some researchers suggesting that plants built for mining are used exclusively for mining (and nothing else).
Is Bitcoin mining increasing national energy production?
According to people operating within the cryptocurrency mining industry, there do appear to be some isolated examples of mining plants being connected to domestic energy grids. This is what Cryptonews.com is told by Zach Bradford, the CEO & President of CleanSpark, a Nevada-based energy technology and clean Bitcoin mining company.
“For example, for a new mining facility we are getting off the ground near Atlanta, Georgia, we partnered with the utility company to invest in new transmission lines -- benefitting not just our own facility but everyone who lives along those improved lines,” he said.
Per the CEO, they will also be participating in a local program sponsored by the utility that will allow them to purchase renewable energy credits to offset any fossil fuels in the local energy mix.
Bradford adds that the funds flowing into the program will be used to increase investment in solar energy production in the local area, thereby benefiting other consumers of energy. He also notes that other firms within the mining industry have refurbished coal-based fossil fuel plants and converted them to natural gas plants, something which isn’t particularly environmentally friendly, but does at least increase overall capacity.
This is an observation made by other individuals, both within and without the mining industry.
“Bitcoin mining allows for a faster payback on renewable energy projects such as solar, wind or hydro projects, which means more of them can be built faster in regions where it would not be economically attractive otherwise,” explained Igor Runets, the founder and CEO of BitRiver, a provider of colocation services for green cryptocurrency mining.
That said, others note that most of this new capacity is used pretty much entirely by the cryptocurrency mining industry itself, with little (or no) excess energy being distributed elsewhere.
“I am aware of examples of miners who have raised capital to finance and build their own power plant. However typically their output is wholly consumed by mining machines, and not redistributed to the grid,” said Bitcoin researcher and investor Marc Bevand.
Likewise, China Network Chief Operating Officer and President Gene Hoffman says that new energy capacity often tends to be isolated, particularly in the United States.
“It is certain that Bitcoin mining in the US has led to the building of new power plants and the re-opening of coal-fired power plants. However, this new generation capacity is generally very rural and thus adds to the trapped electrical capacity in the various regions like upstate NY and the Columbia River Valley,” he told Cryptonews.com.
Hoffman adds that, in both of the above places, the Bitcoin mining facilities are rivalrous with other consumers, such as Amazon’s data center in Oregon.