The off-grid solar mining experiment: What does this mean for the energy industry?

I recently came across this interesting piece of news that Tesla, Block (formerly Square) and Blockstream are working together to develop the world’s first open-source, off-grid, solar-powered bitcoin mining facility.

This article will explain some of the details of this project and I will provide my thoughts about how this could impact the global energy industry.

The Project

Block (a financial services and digital payments company) and Blockstream (a blockchain technology company) are developing a bitcoin mining facility using a Tesla 3.8MW solar PV array coupled to a 12 megawatt-hour battery. The mining facility is designed to be a proof of concept for 100% renewable energy bitcoin mining at scale.

“This is a step to proving our thesis that bitcoin mining can fund zero-emission power infrastructure and build economic growth for the future”

Blockstream co-founder and CEO Adam Back

This project is very unusual because they are promising to make all the project data open-source, which is almost unheard of in these industries. This will be facilitated through a publicly available dashboard showing real-time data of the projectʼs performance, including power output, bitcoin mined and the financials.

Why should we care?

Cryptocurrency is now a 2 trillion dollar market that is still rapidly growing, where the biggest asset is Bitcoin. Bitcoin is a proof-of-work blockchain and the technology is revolutionising the global financial markets. Its value is derived because it is the most secure financial system on the planet coupled with the fact that the currency is mathematically governed and not susceptible to control by any nation or corporation.

The system is secured through its decentralised consumption of electricity via a network of miners who are rewarded in Bitcoin for providing this service. Therefore mining itself is also a lucrative business. However, as of 2021, the bitcoin network was powered by about 19GW of electricity, consumed by a million bitcoin miners around the world, further increasing global CO₂ emissions.

For more information on the energy impact of bitcoin see my article: https://charleshaworth.com/bitcoin-and-sustainable-energy/

This electricity consumption leads to two key issues which need to be addressed.

1. The cost of electricity vs. the price of bitcoins mined
2. The emissions related to the electricity produced

The facility proposed above is aiming to prove to the world that it can solve both these problems using the fact that the cost of solar generation in Texas is very low and solar power does not directly generate CO₂.

The consequences of success in this project

If Block, Blockstream and Tesla are successful in executing this project they may fundamentally change the renewable energy market as two key issues facing electricity grids today can be addressed by bitcoin mining.

1. Curtailed energy
2. Stranded assets due to transmission limits

Curtailment

Electricity grids are always sized to meet the peak electricity demand on a network, due to the difficulties in storing electricity. This means that all grids inherently have power production assets that are underutilized. A problem that is made even worse when intermittent sources like wind and solar are included.

Take for example Ireland, which has one of the highest wind power penetrations in the world. As of 2021, it had 5.5 gigawatts of power generation installed, ~80% of which is wind power (4.3 gigawatts). These wind turbines generated more than 36% of Ireland’s electrical consumption. The problem with such a high penetration of intermittent power is that at times of high wind (and therefore high power production) the grid is forced to curtail (i.e. throw away) the excess power which could be produced.

Irish windfarms have been facing anywhere between 9 to 12% curtailment in recent years and this will only increase in the future.

Stranded Assets

In West Texas (where this project is planned), they have roughly 34 gigawatts of power generation assets installed vs. five gigawatts of demand and only 12 gigawatts of transmission.

If this project is successful it would prove to the energy industry that bitcoin miners can solve both of these key problems. The bitcoin miners can be installed “behind the meter” to use excess curtailed energy and generate an income from it. In an off-grid configuration, they can use the energy generated by semi-stranded assets to generate income until the transmission network can be sufficiently developed to export the power.

Conclusion

The coming years are going to be very exciting in the energy industry as we continue to decarbonise the globe. I am pleased to see companies such as these developing new forms of technology to reduce waste and make renewable sources as financially viable as possible. Doing so in an open source way is very noble and is extremely important as the global community needs to work together to stop climate change over the next few decades.

It will be inspiring to log into their public dashboard at the end of this year and see all that green bitcoin flowing.

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