Lumerin Blog
Published in

Lumerin Blog

Bitcoin mining and energy

3 revolutionary ways Bitcoin can change the energy industry forever

The dynamic between Bitcoin mining and energy can advance the industry to the next level

Photo by NASA on Unsplash

Energy is an essential aspect of Bitcoin. Powering the ASICs that ensure the network’s performance and security requires tremendous amounts of it, which has earned Bitcoin a good share of criticism.

The general public often perceives that the dynamic between Bitcoin miners and the energy industry is a one-way dependency. However, Bitcoin has much to offer to the energy industry too.

Here’s 3 ways Bitcoin can revolutionize the energy industry.

#1: Capturing and repurposing methane

As other fossil fuel technologies, the oil and gas industry suffers from the same environmentalist criticism as Bitcoin. Its high greenhouse gas emissions is the main reason behind the backlash. In that regard, the case of methane in particular is worth highlighting.

Methane is a frequent byproduct obtained from oil and natural gas extraction processes. It is also both a pollutant greenhouse gas and more than 25 times as potent as carbon dioxide at trapping heat in the atmosphere.

Although useful as fuel, methane is cumbersome to capture and transfer efficiently. If oil and gas producers don’t have the necessary infrastructure — namely pipelines, gasoduct networks, and such — then methane is vented into the atmosphere, causing great harm to the environment.

Flaring.

To avoid this, many producers have turned to a methane treatment method called “flaring.” This process consists of burning the methane, transforming it into CO2.

Of course, CO2 is also harmful for the atmosphere, but not as much as methane.

Bitcoin provides an efficient alternative for methane treatment

Bitcoin mining offers the oil and gas industry the opportunity to turn the toxic waste that is methane into energy and, more importantly, hard money.

How? By providing consistent demand for methane-derived energy.

Bitcoin mining is a location-agnostic activity. Miners can install ASICs wherever they see fit as long as they have access to electricity and an internet connection, including an oil and gas energy facility.

By installing ASIC miners on-site, oil and gas companies can sell cheap energy to miners without requiring sizable infrastructure and avoiding the risk of methane leaks into the atmosphere. They only require a gas engine and a generator to start mining Bitcoin within their facilities.

A collaboration between Bitcoin miners and oil and gas companies leads to a win-win situation:

  • Bitcoin miners reduce their operating costs, gaining access to cheap energy.
  • Oil and gas companies profit from selling what would otherwise be wasted methane.
  • They both reduce their greenhouse gas emissions, discrediting their critics.

#2: Scaling renewable energy technologies

Energy is one of the most complex commodities. Proximity and time play a critical role in electricity production that they don’t do in any other process.

As a consequence, power generation consists of finding and exploiting energetic resources and transferring them to when and where demand for that power exists.

Photo by Andreas Gücklhorn on Unsplash

This poses a particular challenge for renewable energy technologies, since their energy generation is often inconsistent: wind turbines don’t work without wind, solar panels don’t produce as much power on rainy days, and hydroelectric dams often have to be shut down because the river levels are too low.

In addition, all power grids need to find and maintain balance between load and consumption.

If demand overweighs electricity load, people are consuming more power than what the grid can provide. The divergence between load and demand causes frequency to drop, leading to power shortages. Furthermore, if the situation doesn’t improve, the grid collapses and a blackout occurs.

If load is higher than consumption, the grid can overload, increasing the electric frequency. As a result, power plants — designed to operate within a certain frequency range — can disconnect from the grid after a period of time.

What does this have to do with renewable energy? Since renewable power generation is inconsistent, it’s cumbersome to balance the grid and match consumption to load.

Bitcoin enables renewable energy scalability through consistent demand

Renewable energy is unpredictable and rarely operates at full performance, as weather conditions greatly affect output. Thus, we would need to install excess capacity to meet power demand on days when output is low.

However, this would also be a problem, as high-performance days would lead to excess energy and grid overloads. This is where Bitcoin mining comes in.

Bitcoin mining provides consistent, scalable demand for any excess energy, as well as a revenue stream to mitigate losses.

What happens when output drops? When renewable energy technologies can’t produce enough power to meet demand, miners simply turn off their ASICs, allowing for the electricity they require to be redirected and supporting the grid as a result.

Interested in this topic? Read more about Bitcoin and renewable energy:

#3: Supporting nuclear energy

Nuclear power is among the cleanest energy sources there is. It uses uranium instead of fossil fuels and it doesn’t involve any direct carbon emissions into the environment. Only the plant and reactor construction processes involve pollutants.

Additionally, nuclear plants never sleep. They are built to withstand extreme weather and run non-stop, constantly supporting the grid and shutting down only for scheduled maintenance.

Despite that, nuclear plants’ popularity has done nothing but plunge in the last few years. The causes behind it are the increasing use of renewable energy and their declining costs. Moreover, natural gas prices are also trending down, which makes it another fierce competitor to nuclear energy.

To top it all up, the general public doesn’t feel comfortable with nuclear plants, fearing the possibility of an accident — even if those are extremely rare.

Bitcoin can support and maintain dying nuclear plants

Miners are constantly looking for cheaper energy sources to cut costs, as energy is the most significant operating cost of mining.

Large-scale mining operations with tens of thousands ASIC miners can provide the much needed demand for nuclear energy to keep reactors in business.

While Bitcoin miners obtain cheap, clean, and reliable energy; nuclear facilities gain a large sector of the market and a constant, loyal customer for their electricity.

Conclusion

As we stated here, the fact that Bitcoin consumes such a significant amount of energy is neither good nor bad, but rather what we make of it.

While many choose to criticize it citing environmental concerns and stating that it’s “wasted” electricity, others focus on taking advantage of this solid demand for electricity to develop, scale, and balance the power grid.

Truth is, Bitcoin is not going anywhere anytime soon, and that’s a good thing. Therefore, it’s important that we keep striving to integrate Bitcoin into the energy infrastructure to make sure not only that it adapts efficiently, but that it actually improves it for long-term sustainability.

About Titan

Titan provides powerful services for crypto mining at scale, including the first enterprise-grade mining pool. Titan is also the builder of the Lumerin Protocol, a peer-to-peer, open-source solution that makes crypto mining hashpower a tradable, liquid financial asset, unlocking mining profitability and providing greater access to capital.

Follow Titan

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store