Bitcoin And Renewable Energy

Renewable energy has an economic problem that most people don’t think about.

Solar and wind are intermittent. When the sun is shining and the wind is blowing but nobody needs the power, the generation gets curtailed — simply turned off because there’s nowhere to send it. In some regions, renewable generators actually pay to have excess power taken off the grid. Energy they produce has negative value because it’s being produced at the wrong time.

Bitcoin mining absorbs this excess energy in a way almost nothing else can.

Mining is one of the only industrial processes that can be switched on and off instantly, with no production penalty. A miner running on cheap curtailed renewable energy mines continuously. When the grid needs that power back, the miner stops. The Bitcoin operation loses nothing — it just mines when cheap power is available and pauses when it isn’t.

This creates a genuine alignment of financial and environmental interests — not from policy or subsidy, just from the economics of cheap power.

In Iceland, Bitcoin mining runs on geothermal energy. In parts of Canada and Scandinavia, miners sit next to hydroelectric dams, consuming water that would otherwise flow past the turbines unused. In El Salvador, Bitcoin is mined with volcanic geothermal power.

The financial incentive drives miners toward the cheapest electricity. The cheapest electricity is increasingly renewable — and particularly stranded renewable that has no other buyer.

This doesn’t resolve the entire energy debate. But it does mean the relationship between Bitcoin mining and renewable energy is structurally more aligned than the headline criticism acknowledges.

Tomorrow: stranded energy — the specific problem Bitcoin mining uniquely solves.

— The Daily Bit