Bitcoin & Energy, Part 3: An opportunity for renewables
This is the third part of the Bitcoin & Energy series, four articles dedicated to Bitcoin and its electricity consumption. The goal: that you can make up your own mind on its environmental impact, and on Bitcoin’s potential for society’s future.
Good reading 👇
In part 2, we discovered the source of the electricity that Bitcoin miners consume in priority: surplus energy with an imbalance between supply, real or potential, and demand.
This third article looks at how Bitcoin mining can help harness more renewable energy sources, one of the main challenger of our society right now.
Untapped renewable energy
There is a significant amount of untapped renewable energy on the planet. The difficulty in exploiting it notably comes from the geographical constraints mentioned previously.
These renewable energy sources are located in specific places, and produce a certain amount of energy. However, the local demand for electricity is not always aligned with this production, and therefore the scale of the exploitation projects. This prevents the realization of a large number of renewable projects, especially in developing countries where electricity is still not widely used.
Another even more common constraint is the interval between the construction of the infrastructure of production and that of the distribution. The construction of the distribution network can take 3 to 4 times longer than that of the production infrastructure. This delay between the investment cost and the first income is often too high to make these projects financially profitable.
These constraints form a vicious circle: without demand, no financing, without financing no infrastructure, without infrastructure no demand…
Bitcoin as a financial support
It turns out that Bitcoin mining can bring the demand needed for the realization of these projects. Its delocalized aspect and continuous consumption make it a demand buffer available anywhere on the planet.
This additional demand brings the necessary income to the projects in the situations mentioned above, making their realization possible and financially viable.
Once the infrastructure has been completed, the population’s demand for electricity can be satisfied. The miners can then supplement the local demand if it is not sufficient, or easily relocate to another project with available electricity demand.
This is particularly relevant for all renewable projects whose location is determined by the energy sources: hydraulic, geothermal, solar, wind, …
To sum it up:
- Many renewable projects lack short-term demand to be feasible.
- Mining can bring additional income to these projects by consuming any electricity surplus anywhere on the planet.
- Used intelligently and under certain conditions (legal and/or contractual), mining can be a very effective accelerator for the development of renewable energies.
Hydraulic power station at Virunga Park, east DRC
Currently, people around the park use its wood for their energy needs faster than it grows. At the same time, there is a great hydraulic potential in the park which is very difficult to exploit for the reasons mentioned above: population not accustomed to electricity, and no distribution network.
Right after starting the project, the park managers faced financial difficulties and looked for alternatives.
They realized that they could mine Bitcoin with their surplus energy while waiting for the construction of the distribution network and the local demand for electricity. With the help of a French company, Big Block Data Center, they put a mining system in place. This allows them to start paying back their costs with the mining revenues, without any additional environmental impact on the Park.
Today, the park’s power plants produce 35MW for a demand of 10MW, and Bitcoin consumes and generates revenue from this surplus.
Geothermal energy on the Volcanoes of El Salvador
In El Salvador for example, a large amount of untapped geothermal energy is present at the foot of volcanoes. The Salvadoran government has therefore developed a bitcoin mining activity on these sites, bringing additional revenue to the government in the form of bitcoin.
Another example of mining that is done from renewable energy and with a very limited carbon impact. Part of this electricity production could be redistributed to the populations after the construction of a distribution network.
Besides, mining bitcoin is a significant advantage for a government. It is a question of creating your own bitcoin, and therefore of finding a certain form of monetary sovereignty in a decentralized network open to all.
Bitcoin mining does not only tend to consume excess energy. It can also provide financial support for energy projects, often renewable, which are not financially feasible otherwise. This activity is therefore a real opportunity to develop low-carbon energy infrastructure across the planet.
In the fourth and last part, we will see that Bitcoin goes far beyond its electricity consumption. It is a vast subject that must be tackled as a whole to grasp all its positive aspects for society and the challenges we face.
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