Market Insights

Bitcoin Waste Heat Powers Holland’s Tulips

January 20, 2023 by Kevin Clemens

Using waste heat from cryptocurrency mining to power hothouses and grow tulips in Holland.

Among the biggest stories of 2022 was the spectacular collapse of the cryptocurrency market. More than $1.3 trillion was lost, and Bitcoin, the largest digital currency, lost 60 percent of its value. At the beginning of 2022, it was trading at $46,000 per coin; by the beginning of 2023, the value of a Bitcoin had dropped to $16,800.

 

Bitcoin. Image used courtesy of Pixabay

Bitcoin. Image used courtesy of Pixabay

 

Blockchain is the Key

As a brief review, cryptocurrency is a medium of monetary exchange that works through a computer network that is not tied to any central bank or authority. Crypto coin ownership is stored in a distributed ledger using blockchain technology to ensure every transaction is recorded in a public database and is transparent, maintaining the currency's security.

 

Blockchain. Image used courtesy of Pixabay

Blockchain. Image used courtesy of Pixabay

 

New crypto coins are created through a process that is both complicated and consumes vast amounts of energy. Creating a new Bitcoin, for example, requires “miners” to solve complex cryptographic and mathematical equations. To be competitive requires specialized computer networks—the more computing power you have, the more likely you will be the first to solve the mathematical equations and earn a Bitcoin for your efforts. 

 

Bitcoin Takes Lots of Energy

It has been estimated that it requires more than 1,300 kilowatt-hours (kWh) of energy to create a single Bitcoin (more than the total energy consumed by a U.S. household in a month and a half) and that the annual energy consumption to make Bitcoins is 129 terra-watt-hours (TWh) per year—roughly the amount of energy consumed annually by Sweden. 

 

Tulips and Waste Heat

While Bitcoin requires huge amounts of energy to power its vast computer networks that produce large quantities of waste heat, what does that have to do with tulips in Holland? 

 

Tulips and wind turbines in Holland. Image used courtesy of Pixabay

Tulips and wind turbines in Holland. Image used courtesy of Pixabay

 

In January 2022, the price of natural gas increased dramatically, largely caused by Russia's eventual invasion of Ukraine. Natural gas is used to heat many of Holland’s greenhouses that produce tulips, one of Holland’s most important exports. The rise in gas prices caused many tulip growers to suspend their production, and a few went out of business. A plan was developed by a company called BitcoinBloem to use the excess heat from the computers and servers that mine Bitcoin to warm greenhouses containing tulips.  The servers and computers are powered by solar panels on the building’s roof, creating an environmentally sound carbon-negative way to mine Bitcoins and grow tulips. 

BitcoinBloem has six servers that produce hot air that can maintain a 20-degree C difference between the outside air temperature and the conditions within the hothouse. Three servers are owned by BitcoinBloem, while the other three are owned by a crypto-mining company called Bitcoin Brabant. The flower company can use its servers to mine for Bitcoin, adding another income stream to the operation. 

 

History, Ironically, Repeats Itself

There is some irony in using shaky finances to produce tulip bulbs. 

 

Tulips in Holland. Image used courtesy of Pixabay

Tulips in Holland. Image used courtesy of Pixabay


In the 17th Century, the world’s first economic bubble occurred when the price of tulips suddenly increased. At the height of the buying frenzy in February 1637, the price of a single tulip bulb was ten times the salary of an average skilled worker in Holland. The bubble collapsed at the end of that month, wiping away the fortunes of many and demonstrating the danger of economic bubbles—a lesson that seems to have been lost on recent cryptocurrency investors.