Welcome to our new series, Node Notes, where we’re spotlighting topics from our bi-weekly research piece, The Node Ahead. If you want to read the full piece, you can check out our blog or sign up to receive The Node Ahead straight to your inbox.
A carbon-negative future for bitcoin
In previous issues, we argued that bitcoin mining is the single greatest tool we have to incentivize the adoption of clean and renewable energy. We showed that more than half of the bitcoin network is already powered by clean energy sources and why it’s possible that in the next decade or so, the bitcoin network might become carbon-negative, reducing the number of global carbon emissions. We’ve highlighted examples of how bitcoin mining is being used to capture methane rather than flaring it at oil drilling sites or letting it seep into the air from landfills. However, there are plenty of other real-world examples of bitcoin mining incentivizing the development and use of clean energy sources in a practical way you might not be aware of.
How bitcoin mining is making the world a greener place
In 2021, the Environmental Defense Fund released a map of 81,000 abandoned oil and gas wells that are leaking methane into the atmosphere. Methane is far worse for the environment than carbon dioxide (CO2). In fact, The EPA found that methane from these abandoned oil and gas wells accounts for the equivalent of 60 million metric tons of CO2 in the atmosphere combined, the fifth largest source after landfills and manure management. With insufficient federal funding to address the issue, bitcoin mining is likely the best solution. Bitcoin mining advocate group, the Satoshi Action Fund, is pushing a policy that would allow bitcoin miners to take responsibility for these abandoned wells, capture the remaining gas to power bitcoin mining operations, and then seal the well once it runs out. According to Dennis Porter, founder of the advocacy group, “It is a win-win-win for everybody. It’s an inarguable win for the environment. It’s an inarguable win for the economy. And it’s an inarguable win for those states that don’t have to spend taxpayer dollars to plug these abandoned oil and gas wells.”
In Sub-Saharan Africa, bitcoin mining is being used as a business model to bring electricity to the region. Roughly half of the population doesn’t have access to electricity even though there are plenty of river, solar, wind, and geothermal sources of energy that can be used to generate clean electricity for local communities. The problem has always been these communities tend to be very poor, and the fear of an unstable customer base and inability to recoup investment has prevented infrastructure development. Enter bitcoin mining. Bitcoin miners are essentially helping bootstrap local energy production by being the initial, guaranteed, and persistent buyers of locally produced clean energy. This lowers the barrier for capital investment into projects such as dams or small hydroelectric plants because investors know they have a buyer of last resort even if the local community is unable or unwilling to purchase the electricity. A company called Gridless is doing exactly this in several locations throughout Africa. In addition to the needed infrastructure, the bitcoin mine brings economic empowerment and job opportunities to these communities.
Believe it or not, bitcoin mining is helping to save Congo’s most famous national park and the endangered mountain gorillas that live there. The Virunga National Park, Africa’s oldest protected park and a place famous for endangered mountain gorillas was financially devastated due to a lack of tourism caused by COVID. Facing the threat of shutting down, the park turned to bitcoin mining. The proceeds from the world’s first known Bitcoin mine operated by a national park, one that runs on 100% clean hydroelectric energy, are helping pay for park salaries, infrastructure projects like roads and water pumping stations, and protecting the endangered gorillas.
In El Salvador, geothermal energy generated by numerous volcanoes in the country is being used to produce 100% clean energy for local communities. However, these power plants produce more sustainable energy than they can consume. Bitcoin mining is being used to absorb the excess energy, which lowers costs, balances the electrical grid, and produces an extra source of revenue.
Bitcoin mining is being explored to help unlock clean, continuous, and year-round baseload power for one billion people by harnessing the thermal energy of the oceans.
Bitcoin mining is being used to clean up millions of tons of leftover coal waste in Pennsylvania that pollutes groundwater and releases ash toxins into the air. And, in addition to the positive environmental impact bitcoin mining is having, it is also saving local taxpayers more than $5 billion to clean up all the state’s abandoned mines.
Bitcoin mining not only saved the oldest hydroelectric energy facility in the US, but the renewable energy facility is also now more profitable than ever. In Costa Rica, a hydroelectric plant that had shut down for nine months because it was lagging in profits is now back to producing clean energy thanks to incorporating bitcoin mining into its operations. And in Norway, a bitcoin miner running on 100% hydroelectric and wind power uses the heat generated from the machines to dry out wood for local businesses as a free service.
Every year there are millions of used and discarded tires that can’t be buried because they can contaminate the soil, nor should they be burned because the tires release a whole bunch of air contaminants. Instead, North Carolina-based PRTI created a process to convert these tires into clean energy and uses that energy to power bitcoin mining rigs.
Japan’s largest power company TEPCO now uses its surplus renewable energy to mine bitcoin and help lower energy costs for consumers, increase profits, and decarbonize the energy grid. ConocoPhillips is selling extra gas to bitcoin miners so that it can both monetize excess energy as well as reduce carbon emissions. Exxon Mobil is reportedly expanding its bitcoin mining pilot program to four countries in order to further reduce the volume of natural gas it routinely burns off or flares into the atmosphere.
Lastly, as Texas has proven over the last two years, the effect of bitcoin mining on electrical grid demand response has been a runaway success. As a persistent buyer of electricity, bitcoin mining stabilizes the electrical grid by absorbing excess energy created and then turning off when demand peaks. This is especially true for intermittent energy sources such as wind and solar. For example, wind farms in Texas are using bitcoin mining to absorb excess energy from the wind farm and prevent the need for curtailment when the wind is at full tilt. This improves the stability of the energy generation and economics of the farm.
What all of this means is that bitcoin is rapidly increasing the innovation and adoption of renewable energy and reducing our dependence on carbon-based methods.
Disclaimer: This is not investment advice. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. All Content is information of a general nature and does not address the circumstances of any particular individual or entity. Opinions expressed are solely that of Brett Munster and do not express the views or opinions of Blockforce Capital or Onramp Invest.