Bitcoin miners seek alternative energy sources to cut costs


During the 2021 bull market, many giant mining firms took on massive loans to purchase gear and the correct infrastructure required to mine cryptocurrency. Yet the collapse of crypto alternate FTX and Celsius left many of those firms submitting for chapter. 

The present bear market, coupled with high Bitcoin network hash rates and low profits, has but once more left the crypto business questioning if miners can be in a position to get better from losses. While this stays questionable, it’s grow to be evident that mining firms at present are focusing more on alternative energy resources to cut costs, guarantee income and, in some instances, scale back their environmental influence.

Alternative energy sources utilized by miners

Steven Lubka, managing director for Bitcoin-focused monetary providers firm Swan Bitcoin, instructed Cointelegraph that whereas the average rate to mine a single Bitcoin (BTC) is round $26,000, mining firms targeted on renewable energy sources are seeing charges between $5,000 and $15,000 per BTC.

A spokesperson for Riot Blockchain, a United States-based publicly traded Bitcoin mining firm, instructed Cointelegraph that wind and photo voltaic energy generated throughout Texas has helped Riot guarantee a few of the lowest costs to mine crypto. “As stated in our Q2 investor deck, it costs Riot $8,389 to mine 1 Bitcoin,” he stated.

Aerial view of Riot Blockchain’s Rockdale mining website. Source: Riot Blockchain

Kent Halliburton, president and chief working officer of Sazmining — a hosted Bitcoin mining supplier — instructed Cointelegraph that the most important expense for mining has all the time been electrical energy:

“Bitcoin miners are naturally incentivized to find the lowest-cost power. Excess electricity is the lowest priced. With renewables, there is often excess electricity, which makes it a perfect fit for Bitcoin mining.”

Halliburton added that independently sourced data from the Bitcoin Mining Council exhibits that the Bitcoin community could certainly be probably the most sustainable industries. According to the supply, 59% of mining operations are carbon-free and rising at a price of almost 4.5% per yr.

“All of our mining operations in Wisconsin and Paraguay are utilizing excess hydroelectricity,” he stated.

The shift to alternative energy sources appears to be a development for miners desirous about long-term success. Phil Harvey, CEO of crypto mining infrastructure supplier Sabre56, instructed Cointelegraph that the corporate is at present working with dozens of mining firms to get machines arrange throughout Sabre56’s three services situated in Wyoming and Ohio.

Saber56’s Bonepile website in Gillette, Wyoming. Source: Rachel Wolfson

Harvey defined that Sabre56’s facility in Gillette, Wyoming — often known as “Bonepile” — hosts almost 2,200 mining machines which can be powered by a mixture of energy sources, together with a fabric contribution from renewable energy. The 5,200-square-foot website attracts on Basin Electric’s blended energy portfolio. According to Basin Electric’s website, this contains 24% wind, 0.6% recovered energy and 4.3% hydro, which provides up to 28.9% renewables. 

Harvey stated, “The machines at our Bonepile site consist of a mixture of MicroBT Whatsminer M50s and Bitmain Antminer S19s. In terms of the site design and methodology, we leverage a forced-air design, meaning air is forced into the facility to cool the machines.”

According to Harvey, the Bonepile facility is designed to guarantee surplus air provision. Harvey defined that this methodology reduces overheating and pressure on the mining gear whereas additionally permitting the miners to naturally exhaust scorching air by overpressure.

“This is different from the standard design widespread in the mining industry, which is often extracting the hot air with an additional mechanism while not having a system in place to aid air into the facility,” he remarked.

OceanBit, an organization growing renewable energy platforms utilizing ocean thermal sources, is taking a unique strategy. Michael Bennett, co-founder of OceanBit, instructed Cointelegraph that the corporate is integrating Bitcoin mining into its ocean thermal energy energy plant design. “This will allow us to balance variable loads, deliver power faster to offshore operations, and monetize excess energy to improve plant profitability,” he defined.

According to Bennett, ocean thermal energy is the biggest untapped energy supply on the planet. “It’s a base load source of renewable energy, like hydro or geothermal, but uses the temperature difference in ocean water to generate electricity.”

Bennett believes Bitcoin is the lacking piece wanted to scale the energy supply to international adoption because it solves various ocean thermal energy conversion (OTEC) industrial challenges.

Diagram of OceanBit’s thermodynamic cycle. Source: OceanBit

Nathaniel Harmon, co-founder and CEO of OceanBit, elaborated, “The byproduct of OTEC generation process is four degrees Celsius cold water, which makes it ideal for cooling ASICs, while the byproduct of ASICs is low grade heat, which makes it ideal to use in the OTEC process. The combination increases the efficiency while decreasing the cost of both.” 

Bennett shared that OceanBit plans to unveil its R&D energy plant in Hawaii in 2024.

Some alternative energy sources are controversial

Pennsylvanian crypto mining firm Stronghold Digital Mining is utilizing coal refuse to energy its mining operations. 

This refuse — also referred to as gob, culm or boney — is the results of the refining technique of coal mining. These unrefined bits of coal blended with shale, slate or different impurities are piled on 1000’s of acres of deserted mine lands in Pennsylvania.

Greg Beard, CEO of Stronghold Digital Mining, instructed Cointelegraph that his agency is working with the Pennsylvania Department of Environmental Protection and native environmental authorities to clear up piles of waste coal and use them to energy Bitcoin mining operations.

He stated, “Acid mine drainage from these piles is one of the largest sources of water pollution in Pennsylvania. The waste piles have also been catching fire for decades by way of spontaneous combustion, releasing toxic pollution into the air. Stronghold converts the coal refuse into power by way of specialized facilities and then either supplies the power to the local grid or uses the power to mine Bitcoin.”

“Bitcoin mining is required to continue the waste coal cleanup activities, making it a much more efficient operation than miners seeking out power sources,” added Beard.

While this does present a way of cleansing up the tons of coal refuse, from an environmental perspective, it additionally poses one thing of a Catch 22.

The particular crops that may use refuse coal are nonetheless burning hydrocarbons. The Pennsylvania arm of the Energy Justice Network undertaking has even contended that refuse coal-firing crops pollute greater than new coal crops.

Stronghold itself additional got here underneath the scrutiny of environmental teams when it applied for a permit to burn tire-derived fuel at its Panther Creek plant. 

Clean Air Council activist Russell Zerbo not too long ago stated on a podcast that the plant “uses the electricity it produces to generate cryptocurrency; rather than selling that electricity to the energy grid, the plant should be completely repermitted as a solid waste incinerator that would be subject to increased air pollution monitoring requirements.”

Challenges for miners could hamper adoption 

While it’s notable that crypto mining firms are utilizing alternative energy sources, sure challenges may hamper adoption. Halliburton claimed that misinformation relating to alternative energy sources is frequent:

“Local populaces may throw-up roadblocks because they don’t realize that Bitcoin miners are providing a net benefit to their local communities through job creation and monetizing wasted or excess electricity. Electricity is also misunderstood; it’s extremely expensive to store, and if electricity is not utilized or stored when it’s generated, it gets wasted — quite literally put into the earth.”

Moreover, the challenges that come together with utilizing renewable energy are additionally evident. Harvey talked about that the altitude of Gillette, Wyoming leads to a lot thinner air high quality. As such, the machines at Sabre56’s Bonepile facility can battle with pulling in sufficient air required for cooling.

Then comes the problem of thermal air pollution, as scorching air is launched into the environment from the mining machines, which Cointelegraph witnessed firsthand on the Bonepile website in Wyoming. Given this, some mining firms are discovering distinctive methods to reuse warmth manufacturing. For occasion, Genesis Digital Assets uses scorching air produced by mining gear to develop greens within the Nordic areas.

Heat from mining machines is used to develop crops inside a greenhouse. Source: Genesis Digital Assets

All issues thought-about, the way forward for mining operations will seemingly depend on renewable sources. Margie Feng, head of selling at Bitmain — a number one producer of crypto mining gear — instructed Cointelegraph that the corporate has shifted gears and is at present working onerous on selling hydro-cooling applied sciences, as she believes that calls for for any such gear will solely develop sooner or later. 

Feng added that Bitmain has discovered that just about 1 / 4 of all Bitcoin miners use water to energy their setups, whereas wind and nuclear are the second- and third-biggest contributions, respectively.