Since September, Germany’s largest telecom operator has been participating in a project to produce cryptocurrencies from surplus renewable energy in the European Union. A model which, according to the head of the development of crypto solutions at Deutsche Telekom, makes it possible to make Bitcoin less energy-intensive, while the latter consumes more electricity than the Netherlands (171 Terawatt-hour over one year, according to Bitcoin electricity consumption index). However, doubts persist about the profitability and viability of mining on European soil.
LA TRIBUNE – Where did the idea for this project come from?
OLIVER NYDERLE – We wanted to support Bitcoin technology. But this is very energy-intensive since the network validates transactions by putting players in competition who will have to carry out calculations as quickly as possible with their computers and win crypto-assets in the event of victory. But we don’t want to use useful energy for this. The idea is therefore to link mining to the stabilization of renewable energy production.
Concretely, miners buy energy during periods when production is greater than demand and when energy is, in general, sold at a very low price or even lost due to a lack of buyers. Bitcoin mining is therefore good for green energy producers since we plan to buy their electricity at a price a little higher than the few cents they offer during periods of peak production.
Cryptocurrencies: why Bitcoin will become even more energy-intensive… but less polluting
What is your role in this project, and what are your objectives?
There are four actors in this project started in September. First the company Metis Solutions which will supply the miners. Riva Engineering, an industrialist which will sell its surplus energy produced by its solar panels and accommodate miners on its Backnang site in southern Germany. Then there is the Metzler bank which takes care of the sale of bitcoins and Deutsche Telekom which takes care of the technical part and provides the network infrastructure for a period of 18 months.
For us, this is a first step in this technology. Until now, we had only developed a “node”, that is to say a copy of the transactions carried out on the network. With this project, we will get paid by winning a portion of the crypto-assets produced by the miners. We hope to make money, but it is still difficult to know how much: it will depend on the price of electricity, the price of bitcoin, the number of crypto collected (which depends on the number of miners competing) and of the energy consumption of the machines we use.
How Donald Trump learned to love bitcoin
To be sure of being profitable, we could go outside Europe to places where electricity is the cheapest, like that produced by certain dams in Africa which suffers from a lack of demand. But our objective is not only financial: we also want to help European renewable energy producers find solutions to know what to do with their surpluses. In addition, what we are looking for is mainly experience, information on this technology and ideas from other businesses. If successful, we plan to offer our services to certain localities to enable them to absorb their surplus locally produced electricity.
What do you think about bitcoin mining in general? Is this the lasting solution to absorb excess renewable production?
Many countries have already shown that the economic model of bitcoin mining using surplus renewable electricity works. This is particularly the case for Texas, which uses this technology to absorb peaks in its wind and solar production. It is a solution to overcome the problems of intermittent electricity production.
Of course, there are others. Producers could also transform their surpluses into hydrogen or store electricity to redistribute it when there is high demand.
Why not favor these technologies which make it possible to redistribute electricity production later?
It is not incompatible. These are several solutions and we are open to discussion about which solutions are most desirable. Moreover, we are active in other solutions: Deutsche Telekom opened its first battery electricity storage site in Munster last April.
But for now, we see that producers need fast and flexible surplus absorbers. However, a bitcoin farm is easily transportable and turns on and off quickly. This is not necessarily the case for hydrogen plants which are heavier infrastructures.
If this solution seems interesting and profitable to you, why aren’t there more projects in Germany and Europe?
All energy or telecoms players are asking themselves the same question: is mining profitable in Europe, where energy is more expensive than in many other parts of the world?
At the moment, we are in the process of collecting information on the production carried out by our mining partner. It is therefore too early to know whether the operation is profitable. We will make an initial assessment after 6 months to see if the beginnings have been successful.
What specific benefits do you anticipate from integrating cryptocurrency mining into Deutsche Telekom’s sustainable energy initiatives, and how will it align with broader company goals?
Thank you for joining us today, Oliver. Can you share with us more about the motivation behind the decision to incorporate cryptocurrency mining into Deutsche Telekom’s sustainable energy initiatives? How do you envision this project contributing to the company’s overall goals, and what are the potential challenges you anticipate in implementing such a model? Additionally, how do you see the relationship between Bitcoin mining and renewable energy production evolving in the future, particularly in the European Union? what is your message to energy and tech leaders who may be considering similar projects but are hesitant due to concerns about profitability or sustainability?
