MINING BITCOIN
ON TO ECO-FRIENDLY AND CLEAN
Cryptocurrency. Did your eyeballs just glaze over?
Just because SBF is in jail and we’ve been in a crypto winter doesn’t mean the digital currency is dead. The concept is sound and spring is springing. The issues lie in doubts, regrets, and refusal by regulators to wrap their minds around it and provide what the industry itself is screaming for.
But that’s not what I want to talk about.
If you haven’t been keeping up with Kal Penn, actor (Kumar in the Harold & Kumar franchise) and former White House aide, get yourself over to the Bloomberg app for Getting Warmer.
Among the assortment of episodes on topics like methane, carbon offsets, and the challenge of staying cool, is a surprising look at a way to turn an energy-devouring industry into an asset; along the lines of, “If you can’t beat ‘em, join ‘em.’
How much energy does coin mining take? The Digiconomist's Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,449 kWh to complete, or the equivalent of approximately 50 days of power for the average US household.
Penn went to West Texas to meet a man with a plan. No spoiler alert, because you’ll want to watch the whole episode to wrap your mind around it, and hear Penn explain the proof of work system and blockchain.
“Bitcoin cowboy,” Justin Ballard believes crypto can be a powerful tool to help people on a global scale. His company, JAI Energy, no longer exists, but his idea lingers.
The pair rode through miles of desert and solar panel arrays that stretched to the horizon, collecting so much excess energy, power substations are sending it into the ground (stranded energy). And in the resource-rich state, natural gas wells are burning off the excess (flare stacks). Yes, there are some painful moments.
It’s a classic dilemma. It’s easy to capture loads of energy in places where few want to live or work ... except for those with warehouses filled with thousands of servers.
But here’s the catch; renewables are intermittent power sources. Bitcoin miners still need to buy power. That means buying directly from the grid, which relies heavily on natural gas and coal. It also means sucking up power residents might need. During unusual demands, like heat waves, mining operations are required to shut down, not ideal for them.
You might remember the 2021 deadly ice storm when demand overwhelmed the state’s power grid. Millions had no heat, power, or water for nearly a week. That was purely a grid issue.
Ballard’s plan is more of a scientific approach; a win-win of accommodating bitcoin mining demand while stabilizing the grid.
As he explains, power grids require a balance, with a very small operational tolerance determined by the baseload that is set. When that baseload is maintained at higher levels – now you see where he’s going with this – there’s plenty of readily available electricity to divert from Bitcoin operations to residential uses.
Penn sought the opinion of Doug Lewin, independent energy consultant and president of Stoic Energy, who offered a “firm maybe,” around the viability of supporting growing crypto demand with large, flexible power loads. Basically, it needs good regulation aimed at balancing supply and demand every second and use of clean energy sources.
We all saw that coming.
But Lewin does believe that a template can evolve here, as the basis for widespread mitigation of the more than 70 million tons of annual emissions.
