HODL Your Assets
There is a concept many of us learned in grade school when it comes to how we use our products: reduce, reuse, recycle. As our energy system moves from using less coal to more natural gas, we are sometimes left with idle assets, like power plants, that go unused. But that does not necessarily have to be the case. We can reuse them.
As reported in the Wall Street Journal, power plants across the country are being converted to mine bitcoin, and many old coal plants are being converted to natural gas to fuel those efforts. It might sound confusing at first, but it makes sense if dig into it a bit
See, the process of mining bitcoin, as we know it right now, takes a lot of power:
To operate securely, the cryptocurrency’s network relies on computers solving puzzles; in return, the solvers get fresh bitcoin. The higher the bitcoin price, the more of these miners compete to solve the puzzles—a process that chews up electricity. The more competition, the harder the puzzles get and the more electricity is used.
These converted natural gas power plants can provide that capacity and can continue to scale up and increase their power output when needed in the future. Estimates show that it takes 72,000 GW of energy to mine one bitcoin. One plant in upstate New York says they can currently produce 19 megawatts of electricity that is being used to power bitcoin mining, and that it will increase that number to 86 megawatts by the end of 2022.
Since mining Bitcoin is such an energy-intensive process, it makes sense that miners and investors would turn to natural gas as a source of electricity—it’s cleaner, which makes the entire bitcoin process more environmentally friendly, and it’s more reliable than other power sources, which is important since downtime in bitcoin mining makes the entire enterprise less profitable.
Read more in the Wall Street Journal here.