Bitcoin miners made the case for their industry as a driver of clean energy adoption, rather than the ecological disaster depicted by critics, at Fidelity’s Mining Summit Friday.
The venue for the daylong event was as notable as the talks. The Fidelity Center for Applied Technology, an R&D division that has dabbled in bitcoin mining, hosted the conference at the financial services giant’s global headquarters in Boston. Fidelity has embraced the crypto markets more than most incumbents; this year it launched Fidelity Digital Asset Services, which handles custody of bitcoin for institutional clients and is expected to roll out trading in the coming weeks.
But aside from welcoming the 300 or so attendees and a brief overview of mining history by Jurica Bulovic, innovation manager at Fidelity Labs (a different R&D unit), Fidelity mostly ceded the stage to guest speakers. In their presentations, these miners and others sought to disprove the popular perception that the copious amount of electricity devoted to securing the bitcoin network – 0.26% of world consumption, according to Digiconomist – is an environmental threat.
Miners are constantly searching for cheaper energy, and this is why they will be a catalyst for renewable power development in the near future, said John Belizaire, CEO of Soluna. His company is building a large wind power generating farm in Morocco: the primary consumer of that energy will be Soluna’s miners, but the rest will go to the country’s electricity grid, Belizaire said.
“Bitcoin is at the center of the next great infrastructure that we’ve never seen before. We’re going to go to places that have incredible renewable energy sites,” he said, predicting that the industry’s image will change as a result:
“In a decade we will start referring to bitcoin completely [differently].”
Mining will help monetize the building of global computation networks around the globe, as well as new renewable power sites, he said, and, unlike in the past, it will not require government subsidies.
Rivers, not coal
The widespread notion that “bitcoin is mainly mined with dirty Chinese coal” is not true, said Chris Bendiksen, the head of CoinShares research department. His team has recently conducted research on the main regions and energy sources for mining.
Miners are located mostly in mountainous regions with big rivers and a high share of renewable power in the overall energy mix, CoinShares found: 48 percent of all global mining happens in the Chinese province of Sichuan where renewable energy is prevalent (90 percent of the overall energy mix), and 12 percent takes in other parts of China that together get around half of their energy from renewables.
Another 35 percent of mining is done in various parts of the Western world including British Columbia and Quebec in Canada, Washington State in the U.S., and Iceland. The rest of the world is producing the remaining 5 percent, the report says. Most of these places have high shares of renewable, especially hydro-generated energy in their power generation mix.
In addition, a lot of hydropower in the world is “heavily underutilized,” Bendiksen says, as hydropower dams are built the regions that have suitable landscapes and big rivers, but are not necessarily heavily populated. Miners can put this capacity to good use, he said.
Asked how the data about miners’ concentration was gathered, Bendiksen acknowledged that it mostly comes from miners themselves.
“We just trawled the entire internet, including forums of miners, we talked to miners themselves, read news articles,” he told CoinDesk.
While miners’ communities, for example, in China, might be very “insular” and uninterested in what the West thinks and knows of them, they still willingly answered questions, Bendiksen said.
Catching the waste
Another source of readily available, cheap energy can be the natural gas released during oil mining (so-called associated gas), said Stephen Barbour, president of Upstream Data. Oil companies need to get rid of the gas, which they aren’t using, so they burn it. As a result, 140 billion cubic meters of gas are wasted every year, according to General Electric’s data.
Barbour said his company developed a system that captures gas at an oil drilling site, transforms it into energy and then uses it for bitcoin mining. According to him, a prototype set up on one such site in Canada, has already helped to reduce carbon emissions there by over 10,000 tons in a year.
“It’s been mining since 2017 and it’s been running on vent gas,” Barbour told CoinDesk. In the prototype phase, using a 45-kilowatt power plant and Antminer S9 mining machines manufactured by Bitmain, the system mined around 20 bitcoins over two years.
Upstream focuses mostly on oil producers in the Canadian provinces of Alberta and Saskatchewan, which are rich in oil. There are also plans for Texas, Barbour said: a small oil drilling company, the name of which he said he couldn’t disclose, purchased a mining data center for an unfruitful drilling site.
“A company was searching for oil, it didn’t find any. They did find a lot of gas, but the gas is worthless, you can’t sell it to anyone in Texas right now. So they can either abandon the well and lose money or they can invest in bitcoin mining,” Barbour said.
But more often, “oil companies are a bit shy of buying bitcoin mining facilities,” he added. However, associated gas is a liability for them, so helping them get rid of it by mining is actually a service, for which oil companies might let miners on their territory for free, he said.
None of this is to say protecting the environment is bitcoin miners’ top motivation. “They probably don’t care at all,” Bendiksen said. However, mining bitcoin on fossil fuels is just too expensive, he added, concluding:
“Mining is a relentless driver to lowest global energy prices.”
Image of the Fidelity Mining Summit courtesy of Fidelity