Crypto Miners Turn to Renewable Energy 

Crypto Miners Turn to Renewable Energy 

As environmental concerns and costs mount, the future of crypto mining is looking increasingly green. Industry leaders are exploring alternative energy solutions for more sustainable and cost-effective operations.

In 2021, when cryptocurrency prices were soaring, big mining companies borrowed a lot of money to buy the gear and set up the systems they needed to mine crypto. But then major crypto platforms like FTX and Celsius went under, leaving many of these companies broke and struggling.

With crypto prices down and competition in Bitcoin mining fiercer than ever, people are questioning whether these mining operations can bounce back from their losses. One thing’s for sure, these companies are now looking at using greener energy options to save money, make some profit, and also be a bit kinder to the planet.

How do you keep crypto mining prices low?

According to Swan Bitcoin, a company focused on Bitcoin financial services, it generally costs around $26,000 to mine one Bitcoin

However, companies that use renewable energy are finding it much cheaper, with costs ranging between $5,000 and $15,000 per Bitcoin.

A spokesperson from Riot Blockchain, a U.S.-based Bitcoin mining company, explained that thanks to wind and solar energy in Texas, their costs are among the lowest in the crypto mining business. To be exact, it costs Riot $8,389 to mine a single Bitcoin.

Kent Halliburton from Sazmining, a company that hosts Bitcoin mining operations, pointed out that the biggest cost in mining is electricity. He said that miners naturally want to find the cheapest power available, and renewable energy often fits the bill because it sometimes produces excess electricity. He also mentioned that data from the Bitcoin Mining Council indicates that the Bitcoin network is becoming increasingly sustainable, with 59% of mining now carbon-free and growing each year.

Phil Harvey, the CEO of Sabre56, a company providing infrastructure for crypto mining, said that they’re helping several mining companies set up operations at their facilities in Wyoming and Ohio. This move towards renewable energy appears to be a growing trend among miners who are thinking about their long-term success.

Crypto miners have ingenious designs to keep running costs low

Phil Harvey from Sabre56 said their mining center in Gillette, Wyoming, known as “Bonepile,” has around 2,200 mining machines running on a mix of energy sources. Nearly 29% of this energy is renewable, coming from wind, recovered energy, and hydropower. The machines they use are a mix of MicroBT Whatsminer M50s and Bitmain Antminer S19s. The Bonepile site uses a special design to keep the machines cool: they force air into the facility, which helps prevent the machines from overheating and allows for hot air to naturally exit.

This design is different from the usual methods used in the mining industry, where typically additional systems are used to suck hot air out, but there’s no special system to bring fresh air in.

On the other hand, OceanBit is taking a unique approach to renewable energy for mining. Michael Bennett, the co-founder, explained that they are incorporating Bitcoin mining into their ocean thermal energy power plants. This allows them to adjust to fluctuating energy demands, deliver power more quickly to offshore projects, and also make extra money from unused energy.

Ocean thermal energy, according to Bennett, is a massive and largely untapped renewable energy source. It uses the temperature difference in ocean water to generate electricity, similar to how hydro and geothermal energy work. Bennett thinks that Bitcoin could be the key to making this type of energy more widely used because it helps solve some of the commercial challenges associated with ocean thermal energy.

Diagram of OceanBit’s thermodynamic cycle. Source: OceanBit

Nathaniel Harmon, who co-founded OceanBit with Michael Bennett, explained how their system is a win-win. The ocean thermal energy conversion (OTEC) process produces cold water as a byproduct, which is perfect for cooling the specialized computers used in Bitcoin mining, known as ASICs. On the flip side, these ASICs produce low-level heat, which can be recycled back into the OTEC process. This creates a cycle that makes both operations more efficient and cost-effective.

Bennett also mentioned that OceanBit is aiming to reveal its research and development power plant in Hawaii by 2024.

Alternative energy sources

Stronghold Digital Mining, a crypto mining company in Pennsylvania, is taking a different approach by using waste coal to power its mining activities

This waste of coal, which is left over from the coal mining process and mixed with various impurities, has been a pollution issue in Pennsylvania for years. Greg Beard, the CEO of Stronghold, said they’re working with local environmental agencies to clean up these waste coal piles and use them for energy.

Beard pointed out that the waste coal has been a major source of water pollution and has also caught fire spontaneously over the years, releasing toxic fumes. By converting this waste into energy, Stronghold either powers its own Bitcoin mining or feeds electricity back into the local grid. Beard argues that this makes their operation more efficient than other miners who are just looking for cheap power.

However, this method isn’t without its critics. Using waste coal still means burning hydrocarbons, and some groups claim that these kinds of plants actually pollute more than new coal plants. Stronghold also faced backlash when it planned to burn tire-derived fuel at one of its plants. Russell Zerbo, an activist with the Clean Air Council, said that the plant should be reclassified as a solid waste incinerator, which would subject it to stricter air pollution monitoring. So, while Stronghold’s method does help clean up waste coal, it also raises environmental questions.

The challenges of using renewable energy 

While it’s good news that crypto mining companies are moving towards alternative energy, there are hurdles that could slow down this transition

Kent Halliburton mentioned that people often misunderstand the benefits that Bitcoin mining can bring to local communities, like creating jobs and making use of excess or wasted electricity. Electricity is hard and expensive to store, so if it’s not used or stored right away, it goes to waste.

Phil Harvey pointed out another challenge related to the location of their mining facility in Gillette, Wyoming. Due to the high altitude, the air is thinner, making it harder for their machines to pull in enough air for cooling.

Additionally, the issue of thermal pollution exists, where hot air from mining machines is released into the atmosphere. To counter this, some companies are getting creative. For example, Genesis Digital Assets uses the hot air generated by its mining machines to grow vegetables in colder climates.

So, while the move towards renewable energy in crypto mining is promising, there are still a variety of challenges that need to be addressed.

It looks like renewable energy will play a key role in the future of crypto mining. Bitmain, a top company in crypto mining gear, is now focusing on water-cooling technologies, as the demand for such eco-friendly options will keep rising.

Nearly 25% of all Bitcoin miners are already using water-powered setups. Wind and nuclear energy come in second and third as the most popular sources of power for these miners.

The Potential Benefits for Montana with the Approval of Pro-Crypto Mining Bill

The Potential Benefits for Montana with the Approval of Pro-Crypto Mining Bill

Recently, the Montana Senate passed a bill that aims to safeguard the interests of crypto miners operating within the state. 

The proposed law is currently being reviewed by the Montana House of Representatives and seeks to eliminate discriminatory regulations that could hamper their mining operations, both for individuals and commercial entities. 

The bill seeks to exempt digital assets used as payment from taxes, and allow home crypto mining that uses less than 1 megawatt of energy annually, except when it violates existing noise bylaws.

The proposed pro-crypto mining bill in Montana aims to remove any energy rate classification that hinders home crypto mining and digital asset businesses. Lobbyists and crypto companies have been working together for years to establish crypto-friendly laws in the state. Montana has high wind energy potential, but remote wind projects struggle due to the need for long transmission lines. However, the bill can be an early buyer of that power and help to bring customers (Bitcoin miners) to the state. There is a misconception that mining is bad for the grid or the environment is holding back the crypto-mining industry in the United States, despite it being a powerful tool for balancing the grid and cleaning up the environment.

Regulatory policies also fail to consider the positive aspect of this process. One of these would be the grid balancing concept. 

Crypto mining is best suited for states with grid-balancing programs. These programs pay participants to lower their power consumption during times of high power prices or low supply. Miners can easily reduce their power consumption at any hour of the day, making them ideal participants in such programs.

What is the Montana pro-crypto bill?

The proposed bill seeks to establish a “right to mine digital assets” in Montana and prevent discriminatory electricity rates for crypto miners. The bill also protects “home” mining and removes local government’s power to use zoning laws to prohibit crypto mining operations. 

Additionally, the bill prohibits extra taxes on the use of crypto as a payment method and categorizes digital assets as personal property, similar to stocks and bonds. The Montana Senate passed the bill on Feb. 23 with 37 for and 13 against, and it will now be presented to the House for approval. Finally, the bill will require the signature of Governor Greg Gianforte to become law, who may choose to veto it.

How Montana Could Benefit from Pro-Crypto Mining Bill

Proponents of the bill anticipate that Montana can attract mining companies by updating legislation, which will, directly and indirectly, boost the region’s economy. 

Montana State Senator Daniel Zolnikov, the primary advocate of the bill, believes that Montana has a lot to gain by embracing the digital asset industry. 

By permitting unrestricted crypto mining operations, Montana can potentially attract more businesses and investments from the cryptocurrency sector, creating jobs in rural communities. 

Senator Zolnikov hopes that this move will signal to the larger digital asset industry that Montana welcomes their innovation and new companies into the state.

Sustainability Concerns Surrounding Montana’s Pro-Crypto Mining Bill

Despite optimism about the potential benefits of crypto mining, some are concerned about the impact on small towns and communities. 

Colin Read, former mayor of Plattsburgh, New York, and SUNY economics professor, pointed out that mining companies often fail to deliver on their promises of job creation

Additionally, an influx of crypto mining companies could cause energy and sustainability challenges, as seen in New York, which experienced skyrocketing retail energy rates due to increased demand. 

As a result, the New York Public Service Commission introduced steeper energy tariffs for crypto miners to mitigate the issue. 

Similar challenges have arisen in Texas, where crypto mining businesses have set up operations, leading to power grid overloading during extreme weather conditions. 

In Montana, Missoula County has implemented requirements for crypto mining firms to either consume or generate enough renewable energy to cover 100% of their operations, responding to concerns about power consumption and pollution. These sustainability concerns underscore the importance of balancing the potential economic benefits of pro-crypto mining legislation with sustainable energy practices.

Montana’s weather conditions, including summer heat rising above 100 degrees Fahrenheit (38 Celsius)  and sub-zero temperatures in winter, contribute to the state’s high per capita energy consumption rate. Due to environmental concerns surrounding the environmental impact of crypto mining, several American states have implemented laws limiting energy-intensive activities, such as placing caps on energy usage or restricting energy sources. 

For instance, New York recently imposed a temporary ban on mining firms using non-renewable energy sources to reduce the state’s carbon footprint. Montana may face similar sustainability challenges if its pro-crypto mining bill is passed. 

Senator Zolnikov addressed these concerns, stating that Montana already has an attractive energy mix for digital asset mining and that the bill aims to provide legal certainty for long-term operations. Montana has access to geothermal, wind, solar, and hydro energy sources, including the Missouri River and its tributaries, which are used to generate hydroelectric energy.

Will the pro-crypto bill pass?

Montana’s pro-crypto mining bill aims to attract more cryptocurrency mining businesses to the state, potentially bringing positive transformations. However, the bill’s approval could lead to initial sustainability challenges related to eco-friendly and sustainable energy. 

While Montana presently has both renewable and non-renewable energy sources, the state’s response to emerging changes in the wake of the pro-crypto mining legislation will be crucial. Balancing economic benefits with sustainable energy practices will be a delicate balancing act for Montana.