Generating energy is pretty awesome for humanity. The well-known astrophysicist Nikolai Kardashev even thought that energy generation is a key factor in measuring how advanced a civilization is. So, when we hear that the AI sector is expected to use about 120 GW by 2030 or that Bitcoin mining is currently using around 17.6 GW worldwide, we might see these as signs of progress.
Over the last ten years, there’s been a big push for renewable energy, with folks like Elon Musk leading the charge towards electrification. But since there’s no one-size-fits-all solution in the energy world, we need to mix things up instead of putting all our eggs in one basket.
For a while now, I’ve argued that Bitcoin mining works well with green energy production and can actually serve as a form of energy storage that helps us transition to a world with more energy abundance.
The Importance of Storing Energy
When we talk about electrification, batteries are often the big topic. It’s no secret that the energy storage needed to keep up with the rise of electric vehicles and renewable energy sources is a huge concern for many in the field.
While there are several options like hydroelectric or geothermal storage, these often rely on specific conditions, which is why batteries are becoming a more popular choice for energy storage.
To really grasp the issue, it helps to understand what problem energy storage solves. When we generate electricity from renewable sources instead of fossil fuels, there’s often a mismatch between how much energy is produced and how much is needed. This is because sources like wind and solar aren’t always consistent. For instance, wind energy tends to peak at night, while solar power is strongest during the day, and both depend on the weather. This inconsistency is known as intermittency, and right now, the best way to tackle it is through energy storage solutions like batteries.
Think about a home with solar panels that generates a lot of electricity in the middle of the day when everyone’s out but hardly any in the evening when all the appliances are on. That’s why homes with solar panels usually store the extra electricity in a battery—typically a lithium-ion one.
Understanding Batteries: What Should We Know?
Looking at the total battery storage capacity in the US, it’s clear that production and use are skyrocketing, with 30 GW expected to be reached by the end of this year and a whopping 970 GW projected by 2030, according to the US Energy Information Administration.
Most batteries today only provide power for a short time before needing a recharge. Some companies are working on advanced battery solutions that can store energy for over 12 hours. Another way to extend storage time is by adding more batteries to facilities, but that can hit some economic bumps.
States like California and Texas have been stockpiling batteries to keep up with the growing renewable energy supply. Electricity is stored during low-demand times and then distributed during peak hours.
However, with the current limits of battery technology, we still need additional long-duration grid balancing solutions—and Bitcoin mining could help fill that gap.
A Profitable and Flexible Energy Load or Balancing System
Bitcoin miners can set up shop pretty much anywhere in the world, whether it’s near a city or in a remote area, as long as they can cover their costs. All they really need is electricity and an internet connection.
Plus, Bitcoin miners have a lot of flexibility, allowing them to turn their machines off and on without facing costs aside from a slight loss of profit during that downtime. This means they can shut down during peak demand times or when a winter storm messes with the energy grid and turn back on when demand is low, preventing wasted electricity or overloading batteries.
This flexible load helps stabilize the grid and increases the share of green energy sources. Texas is a prime example of how a regional operator, the Electric Reliability Council of Texas, collaborates with Bitcoin miners to keep the energy grid stable. Bitcoin miners adjust their energy usage in real-time, which helps ERCOT balance supply and demand more effectively during peak times.
With Bitcoin mining, electric service providers can make money from their unused electricity from renewable sources without solely relying on batteries, leading to greater efficiency. This is a game changer because unused energy shifts from being a cost or lost profit to a new revenue source. This could encourage more investment in renewable energy, ultimately benefiting consumers.
Getting the Policies Right
In this context, local authorities might soon explore new policies that view Bitcoin mining as a public good and an alternative energy production method worth incentivizing. This could create interesting synergies between batteries and Bitcoin mining, especially since the latter generates many local jobs, boosts regional economies by partnering with local suppliers and contractors, and often revamps abandoned infrastructure for its operations.
While recent developments have put Bitcoin mining and the broader industry in a favorable position from a policy standpoint, there’s still a lot of work to do in educating decision-makers. Once the grid-stabilizing and green energy support benefits become clearer to both national and local regulators, we’ll have a huge opportunity to improve the energy sector.
By offering unprecedented flexibility and monetization opportunities for energy producers, Bitcoin mining presents a fresh and effective approach to energy production, grid stabilization, and battery storage at a time when battery deployment is on the rise like never before.
By tapping into the unique aspects of Bitcoin mining, like its location flexibility and operational adaptability, we can integrate more renewable energy production better than ever.
Policymakers need to see the potential of Bitcoin mining as part of their energy strategy. Only through experimentation and diversification can we build a more resilient and sustainable energy future.
