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8 Types Of Energy Sources That Can Mine Bitcoin

July 22, 2021 by Bitcoin Foqus
bitcoin miners in modern warehouse with cold blue light

The Bitcoin energy debate is in full swing in 2021, so I thought it would be interesting to see all the different energy sources that can be used to mine Bitcoin. When you hear politicians talk about the Bitcoin network using “more energy” than a country, what that immediately tells you is that they haven't done their homework. What's wrong with using a lot of energy if it's “clean” and “renewable”?

Ultimately, at the heart of the Bitcoin energy debate is whether or not you believe that Bitcoin is useful. I won't dig too deep into the arguments in this post (though I may at a later date), but what it really boils down to is that if you think Bitcoin is useful, then you don't really care what type of energy it uses. If you think Bitcoin is useless, then you do care what type of energy it uses.

Nobody would care if we had to run hospitals on diesel generators, because hospitals are useful, right?

Nothing is more powerful than an idea whose time has come, and it's time for a globally recognized, digitally native money, which can be verified without a trusted third party. It's time for the separation of money and state. Bitcoin is a technology that allows us to carry a private, secure, bank account in our pocket.

That's the value of Bitcoin, so Bitcoin mining deserves energy use, no matter where it comes from.

The great thing about being able to mine Bitcoin with a variety of energy sources is that it strengthens the resiliency and security of the network. You can mine Bitcoin with a solar farm in Africa, or a stranded oil field in Texas. You can mine Bitcoin with state-subsidized hydroelectric power, or recycled tires. You can mine Bitcoin with cutting edge nuclear fission technology or cow shit.

You can also mine Bitcoin at home, meaning whatever energy mix you use to play video games or dry your clothes can also be used to participate in securing the network and mining new coins!

In This Article

  • Which Energy Sources Can Be Used To Mine Bitcoin?
    • 1. Hydropower
    • 2. Natural Gas
    • 3. Nuclear
    • 4. Waste Recycling
    • 5. Organic Matter & Biogas
    • 6. Wind & Solar Power
    • 7. Geothermal
    • 8. Home Electricity (grid energy mix)
    • What Is Stranded Energy And Why Does It Matter For Bitcoin?
    • Final Thoughts
      • Further Education

Which Energy Sources Can Be Used To Mine Bitcoin?

1. Hydropower

hydroelectric dam area in forest

Hydropower is a popular method of mining Bitcoin at a large scale in many countries around the world, including Russia and Canada. Building a hydropower facility is a massive undertaking, but once the project is done, the resulting energy generation is continual, abundant, and therefore cheap.

Hydropower electricity is an easy option for many northern countries like Canada, Iceland, and Northern Europe. The downside to using hydro is that it's an expensive undertaking and limited to where it can supply power. The source of water flows is often way outside of city centers, and you can't exactly move a river to a more convenient location.

The overproduction of cheap electricity is why Bitcoin miners are attracted to such locations. Though a dam isn't mobile, ASICs are.

The carbon neutral nature of hydropower looks great in a headline as well.

2. Natural Gas

natural gas flare stack in rural area

Natural gas is an excellent source of power for modern society because it's energy dense and transportable. Unlike large scale renewable projects like wind, solar, and hydro, you can move extracted natural gas anywhere in the world and maintain its energy production power.

There are even companies producing mobile natural gas mining rigs, so you can mine Bitcoin in hard-to-reach areas, without building permanent infrastructure. That also means that the owners of land with natural gas resources have a lower capital investment and a shorter time commitment compared to building something out like Crusoe.

Though natural gas is criticized for its carbon output, it's still a whole lot less carbon-intensive than coal, and more reliable than renewables like solar and wind.

3. Nuclear

nuclear reactors during sunset

Nuclear energy is very often ignored or even rejected as a potential source of cheap, reliable, renewable energy. Nuclear power plant footprints are small and nuclear waste recycling and storage methods have greatly improved in recent decades. Though most experts will tell you that nuclear is safe, there is still a lot of fear due to catastrophic events like Chernobyl and Fukushima.

In spite of nuclear FUD (fear, uncertainty, and doubt), private companies are still pushing the industry forward, and some companies are even starting to mine Bitcoin!

A tech startup named Oklo partnered recently with the retail-hosted mining company Compass for a 20-year contract to mine Bitcoin. Oklo founders appeared on the Compass Mining Podcast and explained that by partnering with a Bitcoin mining company, they are able to earn revenue to help sustain and expand their operation.

Bitcoin miners as a predictable consumer of energy mean that companies will be able to build more nuclear facilities and bring clean, reliable power to more communities.

Nuclear power plants run by cities or states can also be used to generate revenue for the jurisdiction in which they operate as well, since Bitcoin miners pay for electricity that would otherwise be wasted, plus provide load balancing to the grid for high use times.

4. Waste Recycling

old tires being shredded to be recycled for energy

Imagine being able to turn garbage into money! That's exactly what some Bitcoin miners are doing.

The first law of thermodynamics says that energy is never “lost”, it's just transformed. That means the garbage you throw out doesn't just disappear. It's actually stored energy and, harnessed correctly, it can be used to create electricity and mine for Bitcoin.

One such company is PRTI, which is breaking down used tires to mine for Bitcoin.

Another, even better example of using waste products to generate energy for mining Bitcoin is Stronghold Digital, which is doing it one step better. They are not only getting rid of waste coal products, but their recycling process is even cleaning up the surrounding area which would otherwise be useless due to the poison that waste coal leeches into the ground.

Some companies such as Nodal are even starting to mine bitcoin on methane being vented from landfills. This is methane that is damaging the environment, but there is literally no other use case for it, so the garbage is left to rot. Now, some bitcoin mining companies are able to capture the methane, turn it into less harmful carbon dioxide, and turn securing the bitcoin network into a profitable business!

5. Organic Matter & Biogas

Biogas plant genereating renewable energy from biomass

The first law of thermodynamics is that energy is never created or destroyed. It only changes forms or is transferred. So when you use the toilet, what you leave behind is a steaming pile of energy. While I don't think anyone's invented a personal bitcoin miner for human waste just yet (though wouldn't it be cool?), there is a farmer in the UK who's using organic farm waste to mine bitcoin. Now, he's not the only one.

There are two things I love about this idea. One, is that it takes something which is essentially useless, and turns it into something useful! Bitcoin miners will use any type of energy, as long as it's cheap. Cheap energy means it's profitable to mine. Secondly, it provides an extra revenue stream for small farmers, which are generally struggling in a world dominated by massive, industrialized farms with access to practically infinite fiat capital.

Imagine a world where every small farm is mining a small amount of bitcoin, securing the network and earning money to help provide local, organic products to their surrounding area!

This slide from @nic__carter perfectly aligns with our first BioPod using renewable natural gas. We'll have +100 S9's connected to a 250kW genset using biogas from pigs manure. 🐷💩 pic.twitter.com/VY8te2yxUN

— biomining (@BioMining) October 9, 2021

6. Wind & Solar Power

solar farm in rural africa

As of now, wind and solar aren't a huge part of the Bitcoin mining story and may not be for a while. The economics of solar doesn't really work out due to the large initial investment required to actually get the panels up and generating enough electricity. Then there's the issue of intermittency, which would mean that you need a backup energy source (most likely natural gas) and the large land requirement.

Regardless, some companies are leveraging solar and wind to mine Bitcoin in creative ways, like a 900-megawatt wind farm in North Africa. In this case, Bitcoin isn't just a way to make money, but it actually helps the energy grid. By providing a consistent revenue stream, it allows projects to overbuild capacity and profitably load balance intermittent energy sources like these two green energy sources tend to be.

7. Geothermal

geothermal power plant of Grindavik during wintertime, Iceland

It's much cooler to think of geothermal energy as mining Bitcoin with volcanos. Geothermal energy is a lot like hydro, in that it's a constant source of immense power, located far away from urban centers. By harnessing heat generated from the earth itself, you basically have unlimited power capacity.

The issue then is how to build the infrastructure to harness the heat and turn it into electricity, then how to get that electricity to businesses and homes.

El Salvador is currently working on building out the facilities on their geothermal plants to mine Bitcoin now that Bitcoin is officially legal tender in the country. Iceland already mines Bitcoin using their volcanic power, and last I checked, Bitcoin miners consume more electricity than the citizens themselves. This use of electricity has been criticized as a waste, but this could be a great way for governments to fund larger and more robust infrastructure projects.

By harnessing public, green, naturally available energy to mine Bitcoin, they could sell the Bitcoin on the market to generate a profit and use that money to improve the lives of the citizens of the country. This is just one reason why governments should get in on Bitcoin mining and help secure the network for everyone around the globe!

8. Home Electricity (grid energy mix)

home mining bitcoin on asics on white rack

Bitcoin mining at home used to be the standard, but now almost nobody does it. It's hard to source the miners, and they aren't that profitable when you factor in the high cost of electricity for many homes around the world. Where I live, I pay $0.15 per kilowatt hour, while most industrial miners are trying to pay somewhere between $0.02 and $0.06.

Besides that, modern miners are hot and LOUD, so you need a place to put them that won't drive you crazy.

That being said, it's still possible to profitably mine Bitcoin at home if you really want to.

One of the main benefits of doing this is that you can mine for non-KYC Bitcoin, meaning that your Bitcoin will not be tied to your name, Social Security number, bank account, or other identifying information. You'll just have Bitcoin on the network, just like an OG Bitcoiner!

Lots of folks are speculating how to integrate Bitcoin mining into homes for things like heating during winter, or even heating a hot tub.

Someone actually made a hottub that's heated by bitcoin mining.pic.twitter.com/KWJuFHEwvr

— Documenting Bitcoin 📄 (@DocumentingBTC) May 31, 2021

While these types of projects are still in the “fun experiment” phase, they are a great way to continue to think about Bitcoin mining energy use as serving a double purpose.

What Is Stranded Energy And Why Does It Matter For Bitcoin?

Tachileik, Myanmar. Using solar panels to provide power for water pump in remote area of Myanmar

I think the coolest feature of Bitcoin mining is the idea of mining with “stranded energy”. This is a concept I hadn't heard of before getting into Bitcoin, so I'll briefly explain.

A stranded energy source is basically a place where an energy source exists, but it's too far outside civilization to realistically be useful. For example, if you had a natural gas well that sat 500 miles away from any urban center or processing facility, you would have to build all the infrastructure necessary to harvest, transport, and process that gas before selling it to make money.

The same would apply to other natural energy sources I listed above, like hydropower or geothermal power. There are massive amounts of natural power available at these spots, but it's impractical, or not profitable to build power stations there. Energy dissipates over long distances, so you can't just build a hydroelectric dam in Antarctica and send the power to Europe. You need to be close to the energy source to use it.

However, Bitcoin allows for the development of those stranded energy resources because it suddenly makes the building of infrastructure profitable. To build a Bitcoin mining operation you need good roads. To maintain the mining facility, you need workers, and workers need homes. As people settle in, they are going to need grocery stores and leisure activities. Jobs create wealth. Wealth attracts entrepreneurs.

This is why people are excited about Bitcoin miners tapping into stranded energy. Energy use is correlated with human flourishing, and by tapping into these resources, we have an opportunity to bring wealth to rural areas around the world.

Even better, this distribution of the global energy network creates more energy abundance and stability. Cheap energy leads to a higher quality of life, and Bitcoin miners love cheap energy.

Final Thoughts

Mining Bitcoin is unlike any other industry in that it's very localized. Bitcoin mined on nuclear energy is the same Bitcoin that's mined natural gas. Whatever you have locally can be used to power on your ASICs and start hashing. Even better, you don't have to plug into the grid to do it.

The cool thing about being able to generate power and mine Bitcoin anywhere in the world with a wide variety of resources is that it allows for diversification of mindshare to the Bitcoin mining network. Bitcoin is a deep rabbit hole, but the rabbit hole of Bitcoin mining by itself is just as interesting to go down. Who would think that Icelandic geothermal engineers, English farmers, and African farmers would all be able to participate in the same network? Where else can such divergent groups work towards the same goal, even if they have very little in common?

The one thing they do have in common is something that all humans have in common – a desire to have hard money to store their wealth so they can prepare for the future, and create a better life for themselves, their family, and their community.

Did I forget any energy options for Bitcoin mining here? Leave a comment and let me know! The technology for Bitcoin mining is always evolving, so I'm excited to see what smart Bitcoiners and entrepreneurs come up with.

Further Education

  • Why Bitcoin Uses Energy
  • Bitcoin Mining & The Grid (Part 1): Generators
  • Bitcoin: Cryptopayments Energy Efficiency
  • Bitcoin Net Zero
Category: Bitcoin MiningTag: Bitcoin & Energy

About Bitcoin Foqus

Bitcoin Foqus was started by a “Bitcoin Guy” who had nobody else to talk to about Bitcoin. I wanted to start a site that covered the basics of Bitcoin in an easy-to understand way, and remain focused on Bitcoin-only. Bitcoin is the best money we’ve ever had. Bitcoin a tool for financial freedom, and the beginning of the separation of money and state.

Bitcoin for Beginners doesn’t go off into the weeds about blockchain and the history of cryptography. Finally “get” bitcoin with the answers to these four basic questions:

  1. Why does bitcoin have value?
  2. Why should you care about bitcoin?
  3. Can bitcoin go to zero?
  4. How do I know my bitcoin is safe?

You won’t survive the next bear market if you don’t know what you hold. Hit me up in the comment section if you have any questions.




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