Are You In Or Out?

About a revolutionary technology that stores energy without actually storing it.

Created with Leonardo.Ai

Setting the scene

Imagine you are a jury member on the popular TV show “Shark Tank”. As an investor, you are looking for promising and profitable business ideas that also address trendy topics related to ESG.

Before you and the other jury members now stands a young man pitching his product. After the presentation, a jury member asks him to explain once again in simple terms and to a broad audience what the product is all about.

Let’s unpack the innovation

“I have developed a new storage technology,” he begins. “It’s revolutionary! Why, you may ask? Because it can be used anywhere in the world where energy is wasted or underutilized.”

A jury member shouts out, “I could just use batteries — what’s so special about this?”

“Yes, but batteries cost money, have a limited lifespan, and continuously lose performance.”

“Okay, how should energy be stored without any energy loss then?”

“The revolutionary aspect is that the energy isn’t stored conventionally but rather in monetary terms.”

“What? Now I’m completely confused. What does that mean?”

“I’ll explain briefly. Let’s assume we use solar energy to generate electricity. This electricity is almost entirely converted into heat. Wherever this heat is needed or wherever unused energy resources are available, the technology comes into play.”

“Okay, what you’re describing is just a kind of electric heating, isn’t it?”

“Not quite. A small portion of the power is used for computational operations. In this mining process — comparable to gold mining, a digital commodity is generated as a byproduct. It can be exchanged 24/7 into your national currency, such as USD or Euros, without needing a trusted third party.”

“And why should this commodity be worth anything?”

“The free market decides. It is a limited resource and can be sent digitally and globally across borders without relying on banks. Call it digital cash or digital gold. This kind of commodity represents an apolitical form of money and serves as a permissionless internet currency. It is available for everybody: no discrimination, no creditworthiness check, and no need for a bank account. However, no one can take it away from you or prevent you from proceeding transactions. It is a free and self-determined store of value.”

“But I can be hacked and have my shares stolen, can’t I?
You said it’s digital …”

“No, imagine you would be able to own a share of the internet. You are not just a user but also an owner and part of a global, decentralized network. Every participant has a vested interest in protecting this payment network and playing by the determined rules. Violations will cost you tremendous amounts of valuable energy resources. A potential attacker would need to expend more energy than the rest of the world. It is simply not possible for him to hack you the conventional way based on code logic. Therefore, it is very unlikely that he will try. The network provides more incentives to play by the rules than to break them.”

“Okay, that sounds interesting, even though I don’t understand everything. Show us some concrete examples where it would make sense to apply this technology.”

“As I said before, it can be used wherever there is an abundance of energy and no demand. If unused energy sources are detected it taps into them while generating income streams at a low cost. The same applies to heat utilization. Where heat from electricity is needed anyway, there now will be additional revenue. Both add up to more investable capital and expand the capacity of renewables. This creates a symbiotic closed-loop system that provides both economical and ecological benefits for society. Just give me a second, I will show you …”

Figure by Patrick Hoffmann

“So, did I get it right, the energy isn’t actually stored, even though you initially spoke of a revolutionary storage technology?”

“That’s exactly what I meant by ‘monetary’ storage of energy. Of course, it is not thermodynamically possible to store energy. It is more like converting electricity into thermal energy. The digital commodity acts as a vehicle for storing purposes. In this form, it can persist for an infinite amount of time without any loss of performance.”

“Tell us more!”

“One of the biggest challenges with renewable energy sources like solar and wind is their intermittent nature. The sun doesn’t always shine and the wind doesn’t always blow. This inconsistency makes it difficult for renewable energy sources to provide a stable supply of electricity. Here’s where the invention comes in. Mining operations can be strategically placed near renewable energy sources, such as wind farms or solar plants. When these plants produce more energy than the grid needs, the excess energy can be used to mine.

To function correctly, power grids need to maintain a balance between supply and demand. Too much or too little electricity can cause blackouts or damage infrastructure. Mining devices can help stabilize the grid by acting as a flexible load. This means they can turn their operations on or off quickly, depending on the grid’s needs. For instance, during periods of low electricity demand, miners can increase their energy consumption to absorb the surplus power. Conversely, during peak demand periods, miners can reduce or pause their operations to free up electricity for other users.”

“Okay, that was very high-level stuff. Are there any concrete real-world use cases you want to mention? Examples would make everything a lot easier to grasp.”

“Yes, definitely. The USA is currently threatened by an invisible menace: Methane! A highly potent greenhouse gas that is 80 times more harmful than carbon dioxide because of its being significantly more effective at trapping heat in the atmosphere. It’s often released during oil and gas production, particularly from flaring, where excess natural gas is burned off due to a lack of transportation infrastructure. This flaring process is wasteful and environmentally harmful. Mining offers an innovative solution to this problem. Instead of flaring the gas, it can be captured and used to generate electricity on-site for mining operations. This not only reduces methane emissions but also turns what would be a waste product into a valuable resource.”

“But the heat generated by mining devices also contributes to climate change, doesn’t it?”

“Mining generates a lot of heat. Traditionally, this heat is considered a waste product, but it doesn’t have to be. Innovative projects are now finding ways to capture and utilize this heat, contributing to energy efficiency and sustainability. The waste heat can be used for greenhouses, wellness facilities, private and commercial properties, or even industrial processes. The range of possible applications is almost infinite. Mining can be used wherever heat is needed anyway or where there is unused energy potential. Don’t be surprised if you soon earn money blow-drying your hair or while riding the ergometer.”

“Wow, you blew our minds. Thanks for sharing this.”

Back to reality

The narrative around Bitcoin and its energy consumption is evolving. While it’s true that Bitcoin mining requires substantial energy, it’s not just about the quantity of energy consumed but how and where that energy is sourced. As we’ve seen, Bitcoin mining can profitably increase the capacity of renewable energy, help stabilize the power grid, mitigate methane emissions, and recover wasted heat.

Source: https://pubs.acs.org/doi/10.1021/acssuschemeng.3c05445?fig=fig1&ref=pdf

By strategically aligning Bitcoin mining with clean energy initiatives, we can leverage this technology to drive the transition to a sustainable energy future. Rather than viewing Bitcoin solely as an energy hog, it’s time to recognize its potential as a powerful tool in the fight against climate change. This approach not only enhances the viability of renewable energy projects but also offers innovative solutions to some of our most pressing environmental challenges.

Bitcoin’s role in the clean energy transition is just beginning to unfold. As more projects explore these synergies, we may find that the world’s most famous cryptocurrency can be part of the solution to our global energy and environmental crises.

You’ve been so quiet all this time, but now it’s time to make a decision -
will you be part of the new movement and invest? Are you in or out?

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References & Deep Dive

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