Cryptocurrency miners mull renewable energy hookups
HELENA, Mont. — For the past year a company that “mines” cryptocurrency had what seemed the ideal location for its thousands of power-thirsty computers working around the clock to verify bitcoin transactions: the grounds of a coalfired power plant in rural Montana.
But with the cryptocurrency industry under increasing pressure to rein in the environmental impact of its massive electricity consumption, Marathon Digital Holdings made the decision to pack up its computers and relocate to a wind farm in Texas.
“For us, it just came down to the fact that we don’t want to be operating on fossil fuels,” said company CEO Fred Thiel.
In the world of bitcoin mining, access to cheap and reliable electricity is everything. But many economists and environmentalists have warned that as the still widely misunderstood digital currency grows in price — and with it popularity — the process of mining that is central to its existence and value is becoming increasingly energy intensive and potentially unsustainable.
Bitcoin was created in 2009 as a new way of paying for things that would not be subject to central banks or government oversight. While it has yet to widely catch on as a method of payment, it has seen its popularity as a speculative investment surge despite volatility that can cause its price to swing wildly. In March 2020, one bitcoin was worth just over $5,000. That surged to a record of more than $67,000 in November 2021 before falling to just over $35,000 in January.
Central to bitcoin’s technology is the process through which transactions are verified and
then recorded on what’s known as the blockchain. Computers connected to the bitcoin network race to solve complex mathematical calculations that verify the transactions, with the winner earning newly minted bitcoins as a reward. Currently, when a machine solves the puzzle, its owner is rewarded with 6.25 bitcoins — currently worth about $260,000 total. The system is calibrated to release 6.25 bitcoins every 10 minutes.
When bitcoin was first invented it was possible to solve the puzzles using a regular home computer, but the technology was designed so problems become harder to solve as more miners work on them. Those mining today use specialized machines that have no monitors and look more like a high-tech fan than a traditional computer. The amount of energy used by computers to solve the puzzles grows as more computers join the effort and puzzles are made more difficult.
The Cambridge Bitcoin Electricity Consumption Index estimates bitcoin mining used about 109 terrawatt hours of electricity
over the past year — close to the total amount used in Virginia in 2020, according to the U.S. Energy Information Center.
Cambridge’s estimate does not include energy used to mine other cryptocurrencies.
Marathon Digital is one of several companies pinning its hopes on tapping into excess renewable energy from solar and wind farms in Texas. Earlier this month the companies Blockstream Mining and Block, formerly Square, announced they were breaking ground in Texas on a small, off-the-grid mining facility using Tesla solar panels and batteries.
Companies argue that cryptocurrency mining can provide an economic incentive to build more renewable energy projects and help stabilize power grids. Miners give renewable energy generators a guaranteed customer, making it easier for the projects to get financing and generate power at their full capacity.
The mining companies are able to contract for lower-priced energy because “all the energy they use can be shut off and given back to the grid at a moment’s notice,” Thiel said.