Batteries or Bitcoin: Is Mining the Best Use for “Excess” Green Energy?

For Bitcoin miners, the motive for running their business with renewable energy is clear – it’s financial.

Per data from MacroMicro, it costs an average of $26,979 to mine a Bitcoin. With the price of the leading cryptocurrency hovering around $28,500, cutting costs is key to fattening miners’ margins.

Mining equipment that can utilize cheaper energy powered by renewable energy, such as wind power, hydropower or nuclear power, thus has a clear advantage over its competitors.

In addition, these miners claim that they use “excess” energy that would otherwise not be used to run their operations, beyond greater profits.

According to Marathon Digital Holdings’ director of corporate communications Charlie Schumacher, Bitcoin could be useful for renewable energy grids, especially by offering a profitable use of energy in places where energy production is higher than demand.

Marathon draws energy from more than 200 wind turbines to power its mining operations in McCamey, Texas.

“Renewable energy is not always where we have large populations,” Schumacher said Decrypt. This is the case at King Mountain Wind Farm, which is located hundreds of miles from the nearest big city.

“Because electricity can only travel about 500 miles before it’s completely wasted, you have to be close to the source,” he said. “If you’re farther away, it’s less effective.”

Miners also act as ever-buying consumers for energy producers in these regions. Bitfarms mining manager Ben Gagnon makes a similar argument regarding the firm’s use of hydropower in Québec.

Gagnon told Decrypt that to reduce energy costs, Bitfarms ends up “searching for energy sources that don’t have other customers’ demand.”

This has led the company towards a pattern of essentially filling the gaps left by old production hubs.

“We took over former industrial buildings … paper mills and metal shops …[industries] which were basically outsourced to third world countries,” Gagnon said. “The dams are still there. They have been paid off. The water is still falling from the sky. The snow is still melting. It’s still flowing through the rivers, but there’s just no demand for that flow.”

Is it really “excess” energy?

However, whether the energy used can actually be called excess is still up for debate.

A representative from Hydro-Québec, the public utility that supplies energy to Bitfarm’s Canadian operations, said Decrypt that “there is no such thing as excess energy for Hydro-Québec. We manage our network to produce power in real time to respond to demand.”

Hydro-Québec also expects a 14% increase in energy demand, or 25 terawatt hours (TWh), over the next ten years.

But even if there isn’t an excess of energy, many firms claim that Bitcoin mining is still easier online than other types of production such as heavy industry.

“Miners have the capacity to turn off and on very quickly, within minutes,” said Schumacher of Marathon Digital. “This load can be turned on and soak up energy, or it can be turned off … faster than most other industries.”

He added that because wind and solar are intermittent sources of power – generating more or less electricity at different times of the day – it’s important to have more consumers, such as miners, who can be flexible with how they use energy when the grid goes down over to these sources. .

From Bitcoin to fuel cells

People working with renewable energy systems tend to look to other processes to use or store excess energy.

Green hydrogen production is an alternative solution because electricity is used to generate hydrogen fuel that can be stored and converted back to electricity when needed.

“Hydrogen can make grids more efficient because it is an energy storage material,” said senior political affairs adviser for the German Hydrogen and Fuel Cell Association Johannes Drijkoningen Decrypt. “What is stored in H2 is electrons.”

Electricity can be used to split water into hydrogen and oxygen in a process called electrolysis, and the resulting hydrogen can then be used to make clean fuel for vehicles, or stored and converted back into electricity via fuel cells when energy is needed later.

Other projects that often compete for renewable energy contracts include solar panel production or green aluminum or steel production.

“We always have to think twice about where our energy goes,” Drijkoningen said. “When it comes to [Bitcoin] mining, I personally do not see an added value for society or myself, compared to using electricity for heating, food production or other basic human needs.”

Broader conversations about energy use and priorities at local and national level will continue to develop into the future.

But for Bitfarm’s Gagnon, Bitcoin mining still offers an economically productive use of energy in the short term. He suggested he understands the growing interest in projects related to battery production, hydrogen and solar energy, but added that these types of projects could take decades to build and launch.

He argues that in the shorter term, Bitcoin miners can create jobs and tax revenue with the energy available today.

“It’s a 20-year hypothetical versus a 12-month implementation plan [for Bitcoin mining],” he said. “A Bitcoin miner might be promised, ‘You have the power for the next 15 years, but after that you have to move on.’ And Bitcoin miners would take it — they absolutely would.”