Bitcoin miners seek alternative energy sources to cut costs – Crypto News

During the 2021 bull market, many large mining companies took on massive loans to buy equipment and the proper infrastructure required to mine cryptocurrency. Yet the collapse of crypto exchange FTX and Celsius left many of these companies filing for bankruptcy. 

The current bear market, coupled with high Bitcoin network hash rates and low profits, has yet again left the crypto industry wondering if miners will be able to recover from losses. While this remains questionable, it’s become evident that mining companies today are focusing more on alternative energy resources to cut costs, ensure profits and, in some cases, reduce their environmental impact.

Alternative energy sources used by miners

Steven Lubka, managing director for Bitcoin-focused financial services company Swan Bitcoin, told Cointelegraph that while the average rate to mine a single Bitcoin (BTC) is around $26,000, mining companies focused on renewable energy sources are seeing rates between $5,000 and $15,000 per BTC.

A spokesperson for Riot Blockchain, a United States-based publicly traded Bitcoin mining company, told Cointelegraph that wind and solar energy generated across Texas has helped Riot ensure some of the lowest costs to mine crypto. “As stated in our Q2 investor deck, it costs Riot $8,389 to mine 1 Bitcoin,” he said.

Kent Halliburton, president and chief operating officer of Sazmining — a hosted Bitcoin mining provider — told Cointelegraph that the biggest expense for mining has always been electricity:

“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 shows that the Bitcoin network may indeed be one of the most sustainable industries. According to the source, 59% of mining operations are carbon-free and growing at a rate of nearly 4.5% per year.

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

The shift to alternative energy sources seems to be a trend for miners thinking about long-term success. Phil Harvey, CEO of crypto mining infrastructure provider Sabre56, told Cointelegraph that the company is currently working with dozens of mining companies to get machines set up across Sabre56’s three facilities located in Wyoming and Ohio.

Harvey explained that Sabre56’s facility in Gillette, Wyoming — known as “Bonepile” — hosts nearly 2,200 mining machines that are powered by a combination of energy sources, including a material contribution from renewable energy. The 5,200-square-foot site draws on Basin Electric’s mixed energy portfolio. According to Basin Electric’s website, this includes 24% wind, 0.6% recovered energy and 4.3% hydro, which adds up to 28.9% renewables. 

Harvey said, “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 ensure surplus air provision. Harvey explained that this method reduces overheating and strain on the mining equipment while also allowing the miners to naturally exhaust hot air through 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, a company developing renewable energy platforms using ocean thermal sources, is taking a different approach. Michael Bennett, co-founder of OceanBit, told Cointelegraph that the company is integrating Bitcoin mining into its ocean thermal energy power 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 explained.

According to Bennett, ocean thermal energy is the largest untapped energy source 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 missing piece needed to scale the energy source to global adoption since it solves a number of ocean thermal energy conversion (OTEC) commercial challenges.

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 power plant in Hawaii in 2024.

Some alternative energy sources are controversial

Pennsylvanian crypto mining company Stronghold Digital Mining is using coal refuse to power its mining operations. 

This refuse — also known as gob, culm or boney — is the result of the refining process of coal mining. These unrefined bits of coal mixed with shale, slate or other impurities are piled on thousands of acres of abandoned mine lands in Pennsylvania.

Greg Beard, CEO of Stronghold Digital Mining, told Cointelegraph that his firm is working with the Pennsylvania Department of Environmental Protection and local environmental authorities to clean up piles of waste coal and use them to power Bitcoin mining operations.

He said, “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 provide a method of cleaning up the tons of coal refuse, from an environmental perspective, it also poses something of a Catch 22.

The special plants that can use refuse coal are still burning hydrocarbons. The Pennsylvania arm of the Energy Justice Network project has even contended that refuse coal-firing plants pollute more than new coal plants.

Stronghold itself further came under the scrutiny of environmental groups when it applied for a permit to burn tire-derived fuel at its Panther Creek plant. 

Clean Air Council activist Russell Zerbo recently said 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 may hamper adoption 

While it’s notable that crypto mining companies are using alternative energy sources, certain challenges could hamper adoption. Halliburton claimed that misinformation regarding alternative energy sources is common:

“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 along with using renewable energy are also evident. Harvey mentioned that the altitude of Gillette, Wyoming results in much thinner air quality. As such, the machines at Sabre56’s Bonepile facility can struggle with pulling in enough air required for cooling.

Then comes the challenge of thermal pollution, as hot air is released into the atmosphere from the mining machines, which Cointelegraph witnessed firsthand at the Bonepile site in Wyoming. Given this, some mining companies are finding unique ways to reuse heat production. For instance, Genesis Digital Assets uses hot air produced by mining equipment to grow vegetables in the Nordic regions.

All things considered, the future of mining operations will likely rely on renewable sources. Margie Feng, head of marketing at Bitmain — a leading producer of crypto mining equipment — told Cointelegraph that the company has shifted gears and is currently working hard on promoting hydro-cooling technologies, as she believes that demands for this type of equipment will only grow in the future. 

Feng added that Bitmain has found that almost a quarter of all Bitcoin miners use water to power their setups, while wind and nuclear are the second- and third-biggest contributions, respectively.