Few saw it coming, but Bitcoin is proving to be a valuable asset for energy companies in the throes of a costly energy transition.
The Specter of Blackout
The fear of power cuts has resurfaced due to the limits of European gas storage capacities. These stocks being emptied in some years by more than 80%, a harsh winter could have turned out badly given the current context.
This is how electricity cannot be stored, at least on a large scale. And the rise of renewable energies is not of much help to us. On the contrary.
To understand this, you need to remember that an electrical network works in just-in-time conditions. The network operator (RTE in France) constantly ensures that electricity production is exactly equal to demand. Power plants are started if the grid frequency drops below 50 hertz and vice versa. Otherwise, it’s blackout.
Maintaining this balance is complex because it is impossible to accurately predict the evolution of electricity demand. This exercise becomes even more complicated when the supply of electricity is itself unpredictable. Renewable energies are indeed very intermittent.
In France, it is the nuclear power plants that meet the basic demand. That is to say the demand which is certain. Unanticipated variations in demand are managed thanks to dams as well as gas-fired power stations which can adjust their electricity production in a few seconds (unlike nuclear power stations).
But there is a risk that the network may not be able to meet demand. Very cold winter, war and shortage of gas, unavailability of certain nuclear power plants, etc. In these cases, load shedding and load shedding can be implemented to reduce electricity demand.
The problem of peak consumption
The transition to renewable energies complicates the equation for energy companies. The reason being that the vagaries of the weather can considerably reduce production. The intermittence of wind power and photovoltaics has turned everything upside down.
These unpredictable fatal moments make it mandatory to maintain very large redundant production capacities. And it comes at a cost…
The solution would be to adopt a culture of energy sobriety by making demand more flexible. This would make it possible to get rid of the peaks in demand that force energy companies to keep power plants that are not profitable.
England got into it. More than a million people are now paid not to use energy during certain hours. In France, the ecowatt application gives the “weather forecast” for electricity to know when not to use energy-intensive machines (oven, air conditioning, washing machine, etc.).
Others think that it would be necessary to be able to store the intermittent electricity which is produced when it is not needed. The popular idea is to store this excess electricity by electrolysing water to make hydrogen, the combustion of which emits only water. Perfect in appearance. Except that the yields are low and the cost prohibitive. A false good idea.
A study commissioned by Matignon estimated in 2015 that “the technical and economic elements available […] storage using hydrogen reveal extraordinarily high production costs. The storage of electricity via hydrogen appears to be totally unprofitable today. »
In short, storing electricity at a lower cost remains a pipe dream for the moment, despite the rise in the price of gas.
Enter Bitcoin
Let’s say it right away, Bitcoin obviously does not allow you to store electricity. Nevertheless, it is an asset for the energy transition and the fight against global warming.
More and more energy companies understand this. The Japanese Tepco for example. And very recently the American nuclear energy company Talen Energy, which joined forces with the miner TeraWulf. In Texas, miners enjoy tailor-made erasure contracts with the obligation to disconnect their machines on demand.
Unconvincing, some would say. With or without miners, the peak to manage remains the same. Yes, but the miner brings in money. With bitcoin consuming about 90 TWh of electricity per year, we are talking about $5 billion (at 5 cents per kWh).
Enough to build a few wind turbines and nuclear power plants. Or reduce the electricity bill which has just been increased by 15% by EDF…
Others will point to the rebound effect since the Bitcoin network represents 0.1% of global CO2 emissions (which is absolutely negligible given the service rendered).
True, but not for long. Finding the cheapest electrons is vital in this extremely competitive industry. The miners who survive are those who settle near surplus renewable energy resources.
In addition, Bitcoin can also directly reduce greenhouse gas emissions!
Bitcoin vs Methane
To understand how Bitcoin reduces CO2 emissions, we must begin by explaining that oil fields extract methane along with oil. And that it is often unprofitable to transport it to civilization. So much so that it is burned on the spot, in flares.
It is preferable to burn methane in CO2 because the greenhouse effect of the latter is much less powerful. Unfortunately, a substantial part of the methane still escapes into the atmosphere (incomplete combustion due to the wind).
This problem is such that oil companies often pay fines for their flares. The solution to this problem is to convert methane into electricity to power bitcoin miners.
Daniel Batten has calculated resulting in a 63% reduction in CO2 equivalent emissions (over 20 years). Miners Nakamotor Partners, Green Mining Capital and Arthur are hard at work and already offset 4% of Bitcoin’s CO2 emissions.
Since the IEA estimates that flares release 8 million tons of methane each year, installing BTC miners on all these flares would offset 17 times the current CO2 emissions of Bitcoin…
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