Crypto-enthusiasts believe that digital currency could become closely linked to the energy industry of the future, thereby improving failures of aging infrastructure and helping to reduce carbon emissions. So how will magic virtual money help the fossil fuel and renewable energy sector in the years to come?
Texas, home to many crypto start-ups, is seeing several new companies seeking partnerships with Big Oil and state energy players to integrate their operations into energy strategies for the next decade. The Bitcoin mining community thinks adding another electricity consumer to the already oversaturated system could help, perhaps somewhat surprisingly.
Currently, the existing grid system – Electric Reliability Council of Texas, aka ERCOT, provides electricity to about 90% of the state of Texas. But it is finicky because it requires a careful balance between supply and demand to work well. It is for this reason that the crypto companies suggest that additional buyers in the system, who can take any amount of power supplied to them at any time of the day, will help maintain this balance.
Bitcoin miners could benefit from better access to electricity, and the network would benefit from the almost immediate responsiveness of the user. This is thanks to the ability of bitcoin machines to turn on in seconds. Therefore, energy can be taken and returned to the grid as needed.
Senator Ted Cruz Explain, “If you have a time when you have an electricity shortage or an electricity crisis, whether it is a freeze or some other natural disaster where the capacity to generate electricity is decreasing, this creates the ability to instantly move that energy back into the grid. “
Innovations like these have emerged in response to dramatic failures in aging US infrastructure. Earlier this year we saw the Texas power grid failure in response to a severe winter storm. At the same time, gas and water supplies were blocked, resulting in severe energy shortages and ultimately the loss of several lives. Although President Biden is currently pursuing a trillion dollar infrastructure bill, this will only solve some of the problems and may take years. Thus, the alternative solutions of start-ups seem more and more attractive when one examines the alternative.
But this isn’t the first intervention we’ve seen from crypto startups in the energy sector. Tech companies in Houston, a digital currency hub, recommend building huge crypto mines powered by renewable energy. It is estimated that digital currency mining uses about 0.5% of all electricity consumed in the world or 7 times more than Google. Therefore, switching from fossil fuels to renewables would mean a dramatic reduction in the carbon footprint of Bitcoin and other currencies.
Tech firm Lancium in November announced plans to build Bitcoin mines in Texas, worth $ 150 million, to run on wind and solar energy. Since West Texas is part of the nation’s “wind belt” and the state has on average good sunlight, this makes it the ideal location for this type of project. In fact, the region expects to double its solar and wind power generation over the next five years, encouraging greater interest in technology and energy partnerships.
Crypto-energy projects are already operational in parts of the country. In Wyoming, for example, the JAI company is mining Bitcoin for itself and for energy investors who want to get in on the action, operating mining platforms from electricity converted from flares. Rather, the gas that would generally be released into the atmosphere is captured and reused. The company, like many others, is now hoping to expand its business into Texas and other states.
At present, gas flaring contributes approximately 1 percent of global carbon emissions. As governments push for net-zero and companies scramble to decarbonize their operations, a crypto-power partnership could be just what the doctor ordered. By-product of fractured shale, gas is burned because it is considered uneconomical. But with growing international pressure for Big Oil to reduce its carbon footprint, digital currency companies quickly found a way to reuse that gas to run their mines.
As the numbers of investment in digital currencies are climbing, the global electricity consumption associated with this mining system will continue to increase. Contributing to a significant portion of global energy consumption, it makes sense for crypto companies to join forces with oil, gas, and renewables.
From venting waste gases and reducing emissions to helping build large green energy projects, it looks like the two sectors will continue to intersect as long as digital currencies retain their recent appeal. . However, the volatility of these types of currencies could deter energy companies from investing until their future becomes more certain.
By Felicity Bradstock for Oil Octobers
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