Bitcoin Is Already Incentivizing Renewable Energy

Compass Mining is just the latest firm to show how bitcoin's economic incentives could spur a greener grid.

AccessTimeIconJul 14, 2021 at 6:02 p.m. UTC
Updated Sep 14, 2021 at 1:25 p.m. UTC
AccessTimeIconJul 14, 2021 at 6:02 p.m. UTCUpdated Sep 14, 2021 at 1:25 p.m. UTC
AccessTimeIconJul 14, 2021 at 6:02 p.m. UTCUpdated Sep 14, 2021 at 1:25 p.m. UTC

The idea that bitcoin mining could subsidize and catalyze a greener electricity grid is already playing out. It was announced today that Compass Mining, a startup that crowdsources hashrate, inked a 20-year deal with Oklo, a nuclear fission company that builds microreactors, to supply the crypto network with low-cost, carbon-neutral power. 

Set to go live in 2023 or 2024, the partnership is a “beacon” for the intersection of cryptocurrency and clean-energy development, Oklo CEO Jacob DeWitte told CoinDesk’s Nathan DiCamillo. The deal sees Compass sop up excess energy from various microreactors – with the potential for nuclear sites eventually to be dedicated to bitcoin mining. 

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“As demand might change by a few megawatts here and there, you can put that off into bitcoin mining,” DeWitte said. 

Climate activists and lawmakers have looked askance at crypto’s energy-heavy environmental footprint. The same qualities that make Bitcoin a secure, permissionless and tamper-proof payments network also make it an energy guzzler. 

But crypto industry advocates have argued that bitcoin and other cryptocurrencies are an essential part of developing a carbon-neutral grid. 

“Bitcoin miners are unique energy buyers in that they offer highly flexible and easily interruptible load, provide payout in a globally liquid cryptocurrency, and are completely location agnostic, requiring only an internet connection,” according to “Bitcoin Is Key to an Abundant, Clean Energy Future,” a 2021 white paper authored by Square and ARK Invest. 

This seems like a fanciful idea – and one that has rightfully received pushback – but it’s also happening in real time. Square is funding a solar-powered bitcoin mining facility with Blockstream, El Salvador is looking to tap into vast geothermal reserves as a mining experiment and several crypto firms are getting more involved in carbon offset programs. 

The economic incentives of bitcoin mining allow firms to “overbuild” renewable energy sources. Solar and wind are intermittent sources of power – the sun doesn’t always shine and wind doesn’t always blow – but bitcoin mining can easily be turned on or off during periods of peak demand or low supply. 

Of course, there are other environmental considerations of bitcoin mining. The dedicated computer chips for churning through cryptographic puzzles to secure the network are resource intensive and have a short shelf life (due to competitive pressure to upgrade and also burnout). And nuclear power is a whole other area of concern. 

But the theory is being put into practice: Bitcoin can complement renewable energy development, rather than solely be a drain. 

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