Can renewable energy make crypto mining greener?


Crypto has a bad climate representative. Bitcoin, the largest cryptocurrency in the world, now it consumes more electricity annually than Argentina, a country with a population of 45m.

There is a growing dissatisfaction with the energy consumption of the cryptocurrency. Kosovo has banned mining based on its footprint. In Europe, the Swedish financial control body, the Finansinspektionen, recently asked the EU to do the same.

But one startup thinks that cryptography can be greener, and that it plays a key role in the transition to green energy.

The startup, Lake Parime, is helping renewable energy companies extract bitcoins using their excess energy. By creating a lucrative business for the renewable energy market, the company hopes to encourage the construction of cleaner energy infrastructure.

It is one of the few companies in the world that is already trying to use renewable energy to power cryptography. The best known could be Jack Dorsey’s Block (formerly Square), which is opening a solar-powered bitcoin mine in Texas using solar and Tesla storage.

In Sweden, Canadian company HIVE Blockchain is using a hydroelectric plant to power its ether mining facilities. There is also KryptoVault in Norway, which uses 95% hydraulic power and 5% wind power.

The Cambridge Center for Alternative Finance estimated in 2020 that 39% of cryptography is extracted through carbon-neutral media.

Bitcoin and crypto mining farm.

Turning energy companies into bitcoin miners

Founded in the UK in 2019, Lake Parime’s plan is to help energy companies monetize any excess renewable energy they produce by building data centers on their sites that divert excess energy to energy-intensive computing. .

That may mean video rendering or machine learning, but the most lucrative use – and one that Lake Parime initially focuses on – is bitcoin mining.

“We are turning energy companies or people with access to large amounts of clean energy into bitcoin miners and providing them with the infrastructure and services around them,” he explains. Sath Ganesarajah, founder and CEO of Lake Parime.

Read: Meet the largest mining crypt in Europe

Lake Parime is working with “one of the largest wind operators in the UK and Europe” to extract bitcoins using the excess energy it generates.

Wind turbines generate excess energy when grid demand is low and wind power is high.

Lake Parime’s argument is that diverting that power to cryptographic mining means both decarbonizing the cryptographic sector and making renewables a more lucrative business, which is expected to waste the industry for investors.

There are other companies, such as the US company Crusoe Energy, that use excess natural gas to extract cryptography and power data centers. Otherwise, the gas would be burned by oil and gas companies, in a process known as burning.

Crusoe says his process reduces CO2 by 63% compared to continuous burning, though critics say it is only a lucrative nuisance for fossil fuel companies.

So should we divert clean energy to cryptographic mining?

To undermine crypto, you need a constant source of energy.

“If you’re a miner, you want energy 24/7,” says Alex de Vries, a data scientist working on a doctorate in the sustainability of cryptographic assets. Bitcoin power consumption index.

“If you’re not running your device, you’re not making money, and every time you turn off your machine, there’s a loss of revenue that will never come back,” he says.

Wind power, by nature, varies. This means that people trying to use it to undermine cryptography would see their systems shut down and their revenue would decline, or they would use a source of backup power when there is not enough wind power in excess. The most common source of reserves, de Vries says, is fossil fuels.

Lake Parime said it “uses the surplus energy generated when local grid demand is low, and effectively” fills the gap “with grid energy” when there is no surplus. The company says it is working on a new model that would include batteries to store the surplus so the system can run out of excess renewable energy for longer.

De Vries also criticizes the model of diverting excess renewable energy to crypto. Wind power itself is not stable enough to run the grid, but if combined with other sources, such as solar, and better storage technology, we could make a more stable grid from renewables and move away from fossil fuels. .

It is a criticism that has been made leveled at Lake Parime for his work in New Zealand. He is working on the operation of the data centers using the excess energy of a hydroelectric power plant.

The New Zealand project, however, has been criticized by local groups, who say the infrastructure will divert renewable energy from local communities.

Ganesarajah of Lake Parime says it is a misconception that data centers divert energy from alternative uses and that the Lake Parime model works with excess energy.

“I think the key thing to remember is that, as a big energy consumer, the system returns money to the energy system, which can then be reinvested in energy, infrastructure, security, and later generation.”

Can cryptography be sustainable?

But some are skeptical about the possibility of making cryptography sustainable or its place to encourage the adoption of renewable energy.

There is an argument that as more institutional investors turn to bitcoin, it encourages miners to use renewable sources.

Argument does not support, Peter Howson, a professor of internal development, says: because miners will always turn to the cheapest possible source of energy for the best yields, and because it is difficult to determine where miners ’energy comes from, credit will not go to those who use renewable energy anyway.

“It’s very difficult to make this process more sustainable because, if you think about what mining really is, it’s really just running number generators,” de Vries says.

“In the bitcoin network, miners are generating 200 random numbers every second. Every 10 minutes they will make a correct guess and that creates the next block for the blockchain. The rest is just thrown away. So we’re really using all that energy to do “It’s very difficult to turn that into a sustainable story, because what you’re doing is useless.”

Freya Pratty is a journalist at Sifted. She’s been tweeting since @FPratty and write our sustainability-focused newsletter you can register here.





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