Bitcoin mining knowledge
This is how Bitcoin mining enables renewable energy scalability
Bitcoin mining provides the necessary demand and stability to build renewable power grids at scale
The challenges of renewable energy
Renewable energy production has grown consistently over the years. Two major factors drive this increase: decreasing generation costs and low carbon emissions.
Despite its many advantages, renewable energy has another aspect that impedes its development at a large scale: inconsistency. Generation from renewable sources fluctuates according to weather conditions, geographical location, and time.
Solar panels need long, sunny days to reach their maximum performance. Turbines need consistent wind to keep generating power. Even hydroelectric dams built on rain fed rivers require regular rains to work properly.
Load variance is a major issue because of how energy grids work. Once energy transforms into electricity, we cannot store it. We can only transfer it.
Thus, the electricity on the grid has to be used. Consumption has to always match the load. Otherwise, the grid could collapse, leading to blackouts or overloads.
As a result, the inconsistency and variance of renewable energy generation make it impossible to build at-scale, exclusively renewable power grids. The load on these grids would vary so much depending on the weather that homes and industries would experience consistent shortages.
Renewable energy and scalability
Imagine a small city builds a solar farm that produces 2,000kWh of electricity to power all its homes and businesses, which consume a total of 1,000kWh on average. Now, this wouldn’t be a problem, because the city can simply “turn off” the excess solar panels to match load to consumption.
Now, let’s assume that a streak of rainy days hit the city, making solar energy generation drop to 200kWh. Without another source of energy, the city would be experiencing severe shortages all across its territory, since it can only provide 20% of the total electricity it needs.
On the other hand, the city could expand its solar power facilities to produce 10,000kWh, making it four times larger. That way, the solar farm would be able to produce the required 1,000kWh even on rainy days.
However, this wouldn’t be cost effective, as the city would have to turn off most of its solar panels during sunny days to reduce the excess electricity. That means 90% of its resources would be sitting idle, wasting a lot of capital.
Of course, this is a hypothetical situation with made-up numbers, but it illustrates why power grids at-scale relying exclusively on renewable energy are not viable at the moment.
Cost effectiveness of renewable energy, transmission, and distribution
As mentioned above, even if we built massive infrastructure for renewable energy generation at-scale, it wouldn’t be cost effective.
The necessary balance between load and consumption demands disconnecting an overwhelming majority of the technology and have it sit idle to avoid generating excess energy and overloading the grid.
Selling excess electricity isn’t an effective solution either.
Firstly, because electricity transmission and distribution is inefficient. About 6% of electricity is lost during these processes, according to the U.S. Energy Information Administration.
Secondly, because it isn’t cost efficient either. Electricity travels on high-voltage transmission lines, often for very long distances. These cables — along with the metal structures that hold them — are large, long, and expensive, so we only use them for long distance transmissions.
On the other hand, short-distance electricity transmission is handled with smaller, lower-voltage power lines, which are safer for populated areas. However, the smaller the cables, the bigger the losses due to inefficiencies.
How Bitcoin mining solves scalability and cost effectiveness
We’ve seen how the inconsistency of renewable sources of energy affects scalability and cost effectiveness. Now, let’s see how Bitcoin mining can help mitigate that disadvantage.
First of all, several aspects of Bitcoin mining are a perfect fit for the challenges of renewable energy:
- It’s location-agnostic, meaning that it can be done from anywhere as long as there is power and an internet connection.
- It’s power-intensive, which provides a constant and consistent demand for electricity.
- It has an off-switch, which enables miners to turn off thousands of computers instantly.
- Last but not least, it provides a regular source of income in an anti-inflationary asset.
Let’s go back to the first example and imagine that the city actually builds the 10,000kWh solar farm for its 1,000kWh demand. This time, however, it also sets up a large Bitcoin mining operation in the same facilities to account for the remaining 9,000kWh.
During sunny days, when the solar panels generate electricity at peak performance, the facilities would provide the whole city with the necessary power while using the excess power to feed the Bitcoin miners at a profit.
More importantly, if the climatic conditions are sub-optimal and the solar facilities can only generate as much as 1,000kWh, the city can turn off all its miners instantly just by flipping a switch. When the sun comes out again, all it takes is to turn miners back on to “absorb” the excess electricity.
Conclusion: Bitcoin mining and renewable energy, the winning combination
By setting up an industrial mining operation within renewable energy generation facilities, we can build at-scale, low-carbon, 100% green, and efficient power grids.
Bitcoin mining represents a consistent, stable demand for the excess electricity produced in peak performance periods — while generating revenue at the same time.
Additionally, it is also versatile enough to provide an easy way to reduce consumption when power load decreases due to unfavorable weather conditions.
Most importantly, the combination of these two technologies represents substantial advantages for local communities.
Building renewable energy facilities and industrial cryptocurrency mining operations creates thousands of jobs.
Moreover, renewable energy scalability reduces air pollution from carbon emissions and prevents grid collapses, blackouts, and power shortages thanks to the load-demand balancing capacity of mining.
On the other hand, cryptocurrency and blockchain are a thriving, massively growing industry, and mining is a critical part of it.
That said, mining capital is constantly looking for clean, low-cost energy and friendly regulations to set up camp. This kind of collaboration would be a major factor in attracting outside investment from the industry.
A dynamic between crypto miners and the energy industry offers unmeasurable potential. Those willing to take the risk will be the ones who come out with the greatest rewards. In that regard, because of everything we’ve stated here, energy producers have an unfair advantage.
If you’re a Bitcoin miner or an energy producer interested in setting up your mining operation with your own exclusive Bitcoin mining pool, we can help you. Get in touch here.
About Titan
Titan provides powerful services for crypto mining at scale, including the first enterprise-grade mining pool. Titan is also the builder of the Lumerin Protocol, a peer-to-peer, open-source solution that makes crypto mining hashpower a tradable, liquid financial asset, unlocking mining profitability and providing greater access to capital.
