BTC Mining Could Help Decarbonize Energy Grids, and more

08/15/2023 0 Comments

1. Bitcoin Mining Could Help Decarbonize Energy Grids, Researchers Say

Does Bitcoin mining help or hurt the environment? Blockchain experts sought an answer to that question in a newly released, first-of-its-kind academic paper on the matter. Their conclusion: It could help, with some key changes.

“Our findings show that renewable-based mining could potentially drive a net-decarbonizing effect on energy grids, although key adaptations in mining practices are needed to fully realize this potential,” reads the abstract of the paper, written by blockchain researchers Juan Ignacio Ibanez and Dr. Alexander Freier.

The analysis states that a series of “unique characteristics” set miners apart from other energy buyers, helping provide “additional income and ancillary services” to renewable energy grids. Some of these characteristics include flexibility of load, interruptibility, portability, and waste heat utilization.

For example, miners can help absorb excess power generated by wind and solar facilities, helping those firms become more profitable. They also could be used to monetize stranded natural gas and landfill gas that would otherwise be flared into the atmosphere as highly pollutive methane, using containerized mining and generator solutions.

Though mining’s impact on grid management and renewable power generation is already “visible,” the paper notes that it still isn’t large enough to impact the sector at large. “Should the adoption of PoW mining intensify, this scale could change,” it stated.

Some challenges on the industry’s road to decarbonization include the short-term price volatility of BTC itself –which directly impacts mining profitability – alongside external regulatory challenges. Furthermore, alternative technologies may “supplement Bitcoin mining in the process of grid decarbonization,” such as water desalination, CO2 removal, and batteries.

So far, estimates of Bitcoin’s CO2 emissions vary widely, depending on the measurements and sources used. On Wednesday, the Bitcoin Mining Council’s survey data suggested that the sector’s sustainable power mix is roughly 59.9%.

But there are issues with studies that ask miners to self report, because most overestimate how green their operation is.

“There may be a selection bias in the sample,” study author Ibanez told Decrypt. “Forty-three percent of the miners report their energy mix to the Bitcoin Mining Council, but probably the greener miners are the most willing to report.”

Even if the methods for measuring industry greenness at the moment leave some room for improvement, Ibanez said he’s sure of one thing: The industry will become more green over time.

2. BTC data centers: market forces and the drive for greater efficiency

Mining Bitcoin on a laptop is a great way to learn more about how decentralized cryptocurrencies work. But it won’t make you rich. Crypto hobbyists report Bitcoin earnings equivalent to just a few cents a day. And even if you scale this up by adding tens of GPUs to your home setup, you’ll still only push those takings into single dollar digits. The reality is that crypto mining has entered its industrial phase. And that begs the question – will market forces make BTC data centers more efficient?

Phil Harvey – CEO and founder of Sabre56, a hosting provider and digital asset project management consultant – remembers the early days of crypto when mining was done in the basement. And, as the sector has scaled up, he’s been working with clients to make their operations more efficient, applying lessons in project planning and implementation learned from a previous career in the military. Harvey remains intrigued by the possibilities of distributed ledger technology and appreciates that more needs to happen to bring the concept into the mainstream.

Enabling Bitcoin technology

Sabre56 sees itself as an enabler of Bitcoin technology, helping customers to build Bitcoin mining farms by bringing design, project, and cost management expertise to the table. And the company has delivered installations at sites across North America and in the Nordics.

What’s more, the Dubai headquartered firm has taken things a step further and is establishing hosting facilities of its own. “The plan was always to evolve from being a consultant to practicing what we preach,” Harvey explained.

Sabre56 is looking at ways of implementing benchmarks that both itself and others can follow – examining how operations can become more efficient with what they have. As mentioned, there are market forces to consider too, which could end up putting all but the most energy-efficient and well-optimized operations out of business.

Popularity of BTC data centers

The popularity of BTC data centers comes down to the odds of successfully mining Bitcoin. When miners solve the puzzle of finding a low-numbered hash of the next-in-line block of digital cryptocurrency transactions, they are rewarded with a few Bitcoin for their efforts. But the chances of success are incredibly low, so much so that winning the lottery feels like a done deal by comparison.

Bitcoin miners can boost their odds of receiving a reward by running multiple machines and taking trillions of guesses. However, while the chance of success goes up, so does the electricity bill. And when Bitcoin miners shop for hosting facilities for their rigs, one of the major items on their wish list is cheap power.

In fact, there’s an argument to be made that mining farms motivate energy suppliers to upgrade infrastructure, with everyone benefiting from a more stable power grid. Texas Governor Greg Abbott has reportedly been thinking along these lines, but it’d be wide of the mark to say that everyone is happy to open their arms to crypto miners.

Longer term, excess power could be used to drive electrolyzers and create green hydrogen rather than support blockchain calculations that have less tangible benefits for society. Also, crypto mining is noisy and unpopular with residents looking for peace and quiet. And the objections don’t stop there.

But when it comes to the energy mix consumed by BTC data centers and other crypto mining operations, there’s evidence that facilities are ahead of the curve compared with local averages. For example, the Bitcoin Mining Council – which claims to represent 43% of the cryptocurrency’s global mining network – writes that the electricity being used comprises a 63.1% sustainable power mix, according to its H1 2023 member survey.

Using Electricity Maps, which visualizes the carbon intensity of electricity being used worldwide, it’s possible to compare crypto mining to electricity consumption in general. For example, at the time of writing, 51% of electricity being consumed in the UK is from renewable sources. In the US, the Electric Reliability Council of Texas is providing 28% renewable power. And the only regions with a sustainable power mix above crypto mining’s 63.1% are Austria; the Nordic countries of Norway, Sweden, and Iceland; Germany; Canada; Brazil; Uruguay; plus pockets of the US, such as the City of Tacoma, and sources of Federal Hydropower.

Given the importance of cheap power to the economics of crypto mining and noting that the falling cost of wind and solar are fueling the rise of renewables as the world’s cheapest source of energy, Electricity Maps could just as easily function as a guide on where to site your next BTC data center.

3. TeraWulf increases self-mined BTC in Q2, while Hut 8 looks to USBTC merger

Bitcoin (BTC) mining firm TeraWulf has seen a drastic increase in BTC rewards since increasing its mining capacity in the first half of 2023.

According to the company’s latest quarterly filing with the United States Securities and Exchange Commission, TeraWulf mined a total of 1,441 BTC through the first half of the year. 508 BTC was mined in Q1, while the firm added another 375 self-mined BTC to its balance sheet in Q2.

The increase in hash rate and mined BTC also led to an uptick in quarterly revenue for the company, up from $11.5 million to $15.5 million in Q2. The company pointed to its increased hash rate and the recovering market value of Bitcoin as primary reasons for its improved quarterly financials.

TeraWulf estimated that its additional capacity at Lake Mariner will increase its self-mining hash rate by a further 58%, from 5.0 EH/s to 7.9 EH/s.

Meanwhile, Hut8 announced that it had seen a decrease in hash rate and self-mined Bitcoin in Q2 of 2023, as reflected in its mid-year results. The company mined 399 BTC in Q2, noting a 58% decrease compared with Q2 2022.

Hut 8 attributed the drop in mined BTC to three factors: the overall increase in Bitcoin mining difficulty, the suspension of operations at the firm’s North Bay Facility and ongoing electrical issues at its Drumheller site.

Hut 8 is also diversifying the use of its infrastructure away from solely mining Bitcoin. Its high-performance computing operation continues to generate an average of $4 million per quarter, with this number expected to grow once its five-year deal as a computing infrastructure provider to Interior Health begins toward the end of 2023.

Hut 8 added that its Drumheller site had been hamstrung by high energy input levels that had led some of its mining equipment to fail. The firm said 20% of its installed hash rate had been affected as a result.

The firm’s self-mined Bitcoin balance sits at 9,136 BTC, currently valued at $368.7 million. The company sold 396 of the 399 BTC it mined through Q2, resulting in $14.7 million in revenue. Hut 8 expects to increase its hash rate capacity once a planned merger with US Bitcoin is complete.