Tech Insights

Profits from Crypto Mining Could Jump-Start Renewables

December 07, 2023 by Jessica Zimmer

Before connecting wind and solar projects to the grid, energy developers could profit by selling electricity to cryptocurrency miners. 

Wind and solar power developers that engage in cryptocurrency mining before integrating their facilities into the grid could earn millions of dollars, which they could then invest in constructing additional renewable energy facilities. 

 

Wind and solar can benefit from cryptocurrency mining.

Wind and solar can benefit from cryptocurrency mining. Image created using Canva via Unsplash

 

Texas offers the highest potential, with 32 projects that could generate $47 million during pre-commercial operations. California is in second place. Installations set for Colorado, Illinois, Iowa, Nevada, and Virginia show promise. 

 

Making Crypto Profits Possible 

For benefits to accrue, renewable energy developers must have the information and inclination to offer electricity to cryptocurrency miners. They must prepare to take this step soon after their facility becomes operational. Federal and state governments can encourage renewable energy development with economic incentives like carbon credits. 

Selling the energy to cryptocurrency miners will require establishing cryptocurrency mining centers, ideally close to renewable energy facilities. In California, Colorado, Nevada, and Virginia, solar installations have been the only renewable energy project to realize a profit-generating Bitcoin during the pre-commercial phase. 

The findings were published in an October 2023 study by Apoorv Lal, Cornell University doctoral student in chemical and biomolecular engineering, and Dr. Fengqi You, Cornell University professor of energy systems engineering. Dr. Jesse Zhu, a chemical and biochemical engineering professor at Western University of Canada, contributed to the study. 

Lal recommends federal and state governments develop policies encouraging cryptocurrency mining companies to invest their profits in infrastructure development. 

“This would help create a self-sustaining cycle for renewable energy expansion,” said Lal in an interview with EEPower.

The Texas solar projects with the most potential are the Aktina Renewable Power Project in southeast Texas, southwest of Houston, and the Roseland Solar + Storage Project in central Texas, southeast of Waco. Aktina has been constructed, but Roseland is still being built. 

 

Aktina Renewable Power Project in Wharton County, Texas.

Aktina Renewable Power Project in Wharton County, Texas. Image used courtesy of Rosendin

 

Aktina is a 500 MW project that achieved full capacity in the first half of 2022. There is no news of a cryptocurrency mining center being constructed close to this project. 

 

Pros and Cons of Crypto Mining 

A cryptocurrency mining farm typically consists of one or more data centers with thousands of specialized computers set up to mine for digital tokens. These are expensive to set up and generate a great deal of heat. 

Critics are upset that some farms draw water from tributaries or lakes. The farms use the water to cool the data center and release the heated water into the environment. This stresses plants and wildlife. Further, critics are worried crypto mining farms will pull electricity from the grid during extreme needs like fires and freezes. 

Crypto mining can be interrupted if needed—an advantage to energy developers working with crypto mining companies. Crypto mining can also respond rapidly to shifts in power demand, according to a study published in November. The authors, which include the former president of the Electric Reliability Council of Texas (ERCOT), concluded that using crypto mining can utilize stranded energy resources, defined as assets that do not provide an economic return.

Texas is the most significant state to monitor the potential of cryptocurrency mining operations. ERCOT has enthusiastically welcomed cryptocurrency mining companies to set up data centers in the past few years. Texas also has ample wind and solar resources. The state leads the country in total renewable capacity. In addition, in Q4 of 2022, Texas Bitcoin miners made 43.6 percent of the U.S.'s hashrate. A hashrate is the total computational power to mine and process transactions for mining-based blockchains. 

The winter of 2023-2024 is unlikely to present a test case for Texas. In February 2021, Texas was on the hot seat for grid mismanagement, failing to generate adequate electricity during a severe storm and its aftermath. Yet, ERCOT does not project energy emergency conditions this winter, adding 3,000 MW for this season’s peak load.

 

Cryptocurrency mining facility in Texas.

Cryptocurrency mining facility in Texas. Image used courtesy of SEC

 

ERCOT is hopeful future winter storms will not lead to a collapse of the grid. Since 2021, ERCOT has taken some winter preparedness measures and made several grid improvements. These include enhanced requirements for winter weatherization for generation and transmission facilities, additional sources of onsite fuel for generators in the event of a natural gas scarcity, and a scheduled fall maintenance period to prepare winter equipment. Other grid improvements include the reduction of weather forecast errors by procuring additional weather forecasts and developing load forecast models tuned for extreme cold weather.