7-minute Video version
Bitcoin Mining can drive us to 70% renewables-based energy consumption by 2030. To say “Bitcoin mining is good for the environment” is like saying “the sun is warm”: an understatement. Bitcoin Mining is our unexpected superhero. Here’s how.
First, here’s our energy mix today. While renewables are growing. However – so too is fossil fuels. It’s still by far the major source of our global energy consumption. Unless we have mostly renewable energy by 2030, the IPCC tells us we’ll have runaway climate change. Not cool.
Here’s the picture by line item. Coal has peaked. That’s good. Solar & wind is increasing. But not fast enough. If we look at their annual growth, it’s alarming Both solar & wind have slowing growth rates eg: Solar slowed from 54%/year 10 years ago to 22%/year in 2020.
This means renewables are not currently on a growth curve that’ll challenge the incumbents: fossil fuels. By 2030, all renewables combined are on track to supply just 24% of our global power needs. That’s less than ¼. Nowhere near enough to stop runaway climate change
So if we are to going to change the world we have to do something additional.
To do this we must understand something called the energy barrier.
The activation energy barrier exists everywhere in nature & commerce. In chemistry, it stops 2 chemicals from reacting, in life, it stops us from forming new habits. It’s also what stops new technologies from going mainstream, even when they’re superior (what’s happening today with wind & solar)
We overcome the energy barrier with a catalyst. Often, this catalyst is a new type of customer. Eg: AirBnB’s catalyst was the new type of customer the GFC brought them, who sought low-cost short-term urban accom. This customer catapulted AirBnB to success where others failed.
Happily, in our renewable energy sector, we do have a unique type of customer who is such a catalyst. This customer has 3 unique features. They:
1. Are location agnostic
2. Are time-of-day-agnostic
3. Have an insatiable appetite for both existing & new energy production
10 years ago, there was no such customer
But today, we have many of them. They are growing. And critically, they lower the economic barrier that has been preventing faster adoption of renewables. They are our Bitcoin miners
Here’s how they change the equation
A wind farmer goes to get capital to build a new wind farm – this time teaming up with a Bitcoin Miner. She shows the spreadsheet to her financial backer. The numbers look good because she has a steady customer buying all year round, including previously unpopular times of day
That means higher revenue & higher profit. It also means it takes less time to pay off the capital investment for a new wind farm. Then she reveals a signed contract from the Bitcoin Miner that says, “I’ll be your 1st customer “off the plans”. This gives guaranteed locked-in income
The financial backer says, “well – you’ve got 40% more revenue, 60% more profit and you’re paying off the build cost 3 months ahead of time. Plus you’ve reduced risk by having a buyer off the plans. I can actually approve a loan to build not one but five new wind farms.”
Now we’ve still got to convert our vehicles from fossil fuel onto the grid, decarbonize many of our major industries and stop methane emissions from oil fields and livestock from going into the sky. However, this would be a major step forward for all humanity.
But the story gets better. It’s not only existing renewable operators that can expand, Bitcoin mining lowers the barrier to entry so new operators can get in the game.
For example, in New Zealand, we’re in the roaring 40s. We have abundant wind. You’d never know it. Big utilities have the customers but are moving slowly. Meanwhile, independent operators want to go fast but lacked customers. But with Bitcoin Miners, suddenly their business case stacks up.
When we add the Bitcoin mining customer to the renewable energy adoption curve, we can achieve an almost 20% year-on-year growth both in new operators and in growing existing operators. Compounding the 2 together, the entire renewables sector expands at 43% per year.
Compounding that over 8 years, here’s what our global energy consumption looks like in 2030. We have the capacity to make 70% of all global energy renewable.
Obviously, this figure is constrained by how much demand there is for electrified energy, which is driven by the adoption of EVs, E-heating and Electrification of industrial processes. However, our big question mark has been “will there be enough capacity on the grid for the additional demand for electric energy?” With Bitcoin mining, this question mark is now an exclamation mark after an emphatic “Yes!”
Grid operators will correctly point out that ramp-up, load balancing and demand response are all big issues with more variable renewable energy. Shaun Connell and other energy engineers have articulated how Bitcoin mining is the most flexible type of customer of electricity the grid has ever had, and can also help solve each of these issues. We’ll cover that in more detail in another post.
In summary, it turns out Bitcoin mining is our catalyst for mainstream renewable energy adoption. It is our unexpected superhero.
This picture should give us hope. Remember, this is not just electricity consumption, this is all global energy consumption. And we now have a valid, sustainable, practical path towards achieving it.
I believe we’ll get there. However, it will take a shift in our thinking.
We’ll need to think more critically, debunk old myths faster, and believe in a better future, deeper than we’ve dared to date. Let’s champion our unexpected heroes, and in so doing spread hope that’s been carefully thought through. It does make a difference, and so can you.
Original Twitter Post: 13 Apr 2022