May 24, 2022 - Economy

Industry argues how bitcoin drives demand for renewables

Illustration of a line of wind turbines in a field at night, with one glowing brightly.

Illustration: Aïda Amer/Axios

Renewable energy doesn't just need buyers, it needs buyers who want to buy at the right time.

Driving the news: Bitcoin and other proof-of-work blockchains are exactly those kinds of buyers and can help drive demand and, by extension, more renewable capacity, industry members argued in D.C. Tuesday.

What they're saying: "The only way we're going to build more renewable energy is if the energy providers have an incentive to do it," Fred Thiel, CEO of bitcoin mining company Marathon Digital said Tuesday at the DC Blockchain Summit.

  • "Outside of tax dollars, actual customers are the best incentive you can give a renewable energy company."

Context: Bitcoin is widely criticized for using too much energy, but members of the industry spoke in D.C. about how the technology drives demand for renewables, which should in theory bring down the cost of deploying them to everyone.

Be smart: It's not really that much energy, proportionally.

Zooming out: This year is likely to set a record for new renewable energy capacity, but it's still not growing fast enough.

The problem: Sun shines by day. Wind is intermittent, yet Americans demand the most energy at night, after work. So there's a mismatch between some of the most widely available renewable energy sources and when it's actually needed.

  • But, if solar or wind capacity gets built and there isn't demand for their power when it's ready to flow, bitcoin miners can buy it.
  • Thiel described this as a way that Bitcoin mining actually helps finance renewable energy infrastructure, because "they can get full sales on their power generation capacity," he said.
  • Another solution: batteries.

Yes, but: In a lot of ways, the panelists were basically arguing that Bitcoin makes it easier to put more capacity of all kinds of power online. That's obviously good for people in some ways (such as in energy emergencies), but it probably won't help lower consumption.

  • "The grid is really built for peak components," said Dave Perrill, CEO of Compute North. "It's similar to the highway system, it gets congested at certain periods of time."
  • Just like the highway system, though, building more roads never actually reduces traffic. Adding capacity is unlikely to make societies more frugal about power consumption.

Participants argued other ways the industry can help fund renewable energy expansion.

Data centers can co-locate with energy producers. This lowers the amount of energy needed because it doesn't have to travel as far. It also enables them to absorb excess power when the grid doesn't need it or can't handle it.

  • "Data transfers over large distances much better than power," said Bobby Kandaswamy, from the utility National Grid Partners. Energy losses from transmission can be up to 40% in some parts of the world.
  • Companies like Compute North which mine bitcoin and also do all kinds of other computing work that isn't very time sensitive (like machine learning or image processing), can locate on site with power generation. That way, there is no power transmission. The only transmission is their final product: processed data.
  • Meanwhile, data centers can also be on site for renewable power, like the Block and Blockstream solar mining site planned for Texas.
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