Not only insane profits, but also enormous CO2 emissions have made Bitcoin known in recent years – because the servers that “mine” Bitcoin require enormous resources. A group of US miners has now set itself the goal of developing a green and lucrative crypto strategy.
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Bill Spence often played on piles of coal-mining waste as a child in the midst of Pennsylvania in the early 1970s. When he returned to his hometown in the 1990s – after a career as a software developer on the west coast – the pitch-black mountains still dominated the landscape. They are called “Gob”, which stands for “garbage of bituminous”. The greatest danger of this waste? Deadly carcinogens could get into the groundwater through cracks – or the mountains could start burning and pollute the air.
This is how Spence found his mission. The now 63-year-old set himself the goal of dismantling these coal mountains and restoring the land all around – and making money with it. In 2017, he acquired a majority stake in the Scrubgrass Power Plant in Venango County, north of Pittsburgh. It specialized in asphalt recycling, but it was barely viable. After Spence was diagnosed with pancreatic failure and kidney cancer later that year, he retired from the company. Bored of all the free time, he began to deal with cryptocurrencies. It wasn’t long before he had a moment of awakening: he would save the scrubgrass powerhouse by converting the asphalt waste into bitcoin.
Now Spence has recovered and has returned to pursue his mission: to turn the garbage of the 20th into the gold of the 21st century. Around 80% of the 85,000 kilowatt hours generated by Scrubgrass are used today to operate supercomputers. They validate Bitcoin transactions and compete against computers around the world to solve computational challenges in order to generate new Bitcoins. Depending on the Bitcoin price, which was recently around US $ 48,000, Scrubgrass realizes a turnover of 20 cents or more per kilowatt hour (kWh). Compared to that, the same amount of energy in the power grid would only bring in three cents.
Spence is just one of many American bitcoin miners who are turning one of the cryptocurrency’s biggest weaknesses – its incredible energy consumption – into a strength. According to the University of Cambridge, Bitcoin’s global network consumes between eight and 15 gigawatts of electricity, depending on the current Bitcoin price (a higher price attracts more miners). For comparison: New York City consumes six, Belgium ten gigawatts. To mine just a single bitcoin, a computer needs around 150,000 kWh – enough energy to supply 170 households in the US for a month.
The large amount of electricity is required for the calculation of the extremely complex mathematical formulas that “mine” new Bitcoin. This complexity is what makes Bitcoin special and what drives the price up. Of course there are also numerous cryptocurrencies, such as Ethereum, Cardano, Stellar, Ripple / XRP and Algorand, which require far less electricity. But the supremacy of Bitcoin cannot currently endanger any of them. Bitcoin recently reached a market capitalization of US $ 700 billion – more than the five next largest cryptocurrencies combined.
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If you want to know how green Bitcoin can be, you have to look to Texas: There are plans for projects there that will generate wind and solar energy with a volume of 16 gigawatts for next year. Bitcoin miners are supposed to serve as a kind of shock absorber for this new green energy: They buy the excess energy at a discount, but in return they have to stop their calculations completely as soon as more electricity is needed in periods of frost or heat.
“West Texas will dominate the market, everyone will come here,” predicts Jesse Peltan, the 24-year-old CTO of Autonomous. Last year, Peltan helped open a 150 megawatt crypto mining data center called Hodl Ranch in Texas. It is the first large-scale operation in the region to be operated exclusively with wind and solar energy from the farms in the surrounding area. On some nights the gusts of wind are so strong that electricity has to be released again so that the system does not burst with energy.
The largest bitcoin mining company in the US is also located in Texas: Riot Blockchain has a market value of over $ 3 billion and is located near a node in the power grid that carries 5,000 megawatts (MW). Riot draws 300 MW of this to power 120,000 high-speed computers. A ten-year contract allows the company to buy an unlimited amount of electricity at a discounted price of 2.5 cents per kWh. This corresponds to a discount of 0.5 cents per kWh. During a period of frost, the Rockdale Center unceremoniously switched off all its computers for two days and sold its electricity for US $ 9 per kWh. In total, the mining center generated sales of US $ 90 million with this alone. “With such a high energy consumption, we are not just a Bitcoin mining center,” says CEO Jason Les – Riot would also function as a “virtual power plant”.
Crusoe Energy Systems, which has raised US $ 250 million in venture capital to mine bitcoin in the middle of remote oil and gas fields in New Mexico, Texas and North Dakota, is even more committed to green technology. Investors include venture capital funds Bain Capital and Valor Equity Partners as well as Tesla co-founder JB Straubel and twin brothers and crypto billionaires Cameron and Tyler Winklevoss. Crusoe has already set up 45 containers full of Bitcoin mining computers. The computers run on natural gas, which would otherwise be burned. (If new oil is found in drilling before the pipes that then take the natural gas are clear, the natural gas will be burned. Discharge of the gas into the atmosphere would be even worse for the climate.) The mining center saves around a day 280 million liters of natural gas before burning.
Incidentally, in Pennsylvania, environmentalists are far from happy that the scrubgrass power plant is receiving the same subsidies as hydropower plants. But the state has decided that the CO2 released by burning asphalt is better than letting the toxic coal residue pound in front of you. “This is a real problem,” says Spence, “and the only way to solve it is with power plants like this.”
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Text: Chris Helman / Forbes US
Photo: Aaron Kotowski / Forbes US
This article appeared in issue 7–21 on the topic of “Smart Cities”.
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