Recently, I was invited to give a talk at the Texas Blockchain Summit on the topic of the growth of bitcoin mining in Texas. Not knowing anything about bitcoin mining in Texas, I interrogated around two dozen mining entrepreneurs, wholesale energy traders, academics and energy experts. What I discovered would completely alter my views on bitcoin mining.
Put shortly, bitcoin mining is converging with the energy sector with amazing rapidity, yielding an explosion of innovation that will both decarbonize bitcoin in the medium term, and will dramatically benefit increasingly renewable grids. What’s more, it appears that only bitcoin – rather than other industrial load sources – can actually achieve some of these goals.Bitcoin mining is suitable for renewables – and the proof is in the pudding
Bitcoin enthusiasts have long maintained that bitcoin mining could drive a clean energy transition. The logic went as follows: Bitcoin miners voraciously buy the cheapest sources of energy available; renewable (wind and solar) sources of energy are getting progressively cheaper and will soon outmatch thermal energy on cost; bitcoin miners will therefore subsidize the buildout of renewable energy, benefiting everyone.
I was long suspicious of this argument, due to the acknowledged low capacity factors exhibited by wind and solar sources of energy. Given that miners enter a race against time to get the most out of their new mining machines before hashrate climbs and they become uneconomical to run, putting those miners to work with low-uptime solar or wind energy wouldn’t make sense. Indeed, this was a common critique leveled at bitcoiners promoting this narrative: that renewables weren’t suitable for bitcoin mining.
However, a few new developments within the mining market completely changed my mind on this. I now firmly believe that bitcoin mining is suitable for and beneficial to renewable energy, both on a first order and second order (indirect) ...