As Bitcoin looks to go 'green,' some miners look to nuclear power as a possible solution

Bitcoin mining rig
Photo courtesy Compass Mining

As bitcoin miners search for ways to remove the carbon emissions from the electricity they use for their many large computers, there have been some signs of interest in nuclear power as a solution.

"Nuclear energy is well suited to providing the [power] needed to do bitcoin mining," Alex Gilbert, a project manager for nuclear power think tank the Nuclear Innovation Alliance, tells CNBC Make It.

Indeed, Elon Musk, who has been critical of Bitcoin's energy use, recently suggested nuclear could be a viable alternative power source for bitcoin mining.

Here's a look at the early signs of interest in nuclear energy powering Bitcoin and whether or not the trend is likely to have much potential for the future.

Interest as a new 'green' energy source for Bitcoin

There have been several recent announcements of partnerships between nuclear power companies and bitcoin miners, according to Gilbert

In July, micro-nuclear reactor company Oklo and bitcoin mining company Compass Mining announced a 20-year commercial partnership in which Oklo will eventually power a portion of Compass' mining activities with carbon-free nuclear energy.

Earlier in July, Akron, Ohio-based energy company Energy Harbor Corp. announced it will provide nuclear power to Standard Power's new Bitcoin blockchain mining center in Coshocton, Ohio beginning in December 2021.

And Texas- and Pennsylvania-based Talen Energy is looking to develop a cryptocurrency mining facility and data center near its nuclear power plant in Berwick, Pennsylvania, which it expects to be operational in the second half of 2022, according to the company.

Though it may be a small start, "the move by bitcoin miners to carbon-free energy resources like nuclear energy reflects emerging concerns in the cryptocurrency industry about ensuring their operations are green," Gilbert says. "Previously, the industry relied heavily on coal generation, with its attendant health impacts and large carbon emissions."

While still a nascent trend, that may change. "Looking forward, nuclear energy is one of several options to decarbonize cryptocurrencies," Gilbert says.

Why nuclear could be a good option for bitcoin mining, according to Elon Musk

In May, Tesla stopped accepting bitcoin as payment for its vehicles. Musk made the move because overlooking the energy usage of bitcoin was "too sketchy" for an electric vehicle car company whose mission is to "[accelerate] the advent of sustainable energy,", he said at The B-Word conference hosted by the Crypto Council for Innovation in July.

One option for cleaning up the energy used by Bitcoin is nuclear, Musk said.

"Hydro or geothermal are great as renewable means… I'm also pro nuclear," Musk said. "I think modern nuclear power plants are safe contrary to what people may think."

What's key is being able to continuously power bitcoin mining rigs — the computers that solve the computational puzzles to generate bitcoin. "In order to operate a bunch of hashing rigs effectively, you have to run them 24-7, which means you need baseload," Musk said.

"Baseload" power refers to a consistent source of power, like nuclear, versus "intermittent" power, which refers to power sources that are available sometimes, but not all the time, like wind or solar.

Musk said bitcoin miners could mine effectively with wind and solar power with use of long-duration batteries to store the energy for the when the wind is not blowing or sun is not shining. But, said Musk, nuclear energy would be a solution for miners looking for a reliable source of clean energy.

A closer look at a mining/nuclear deal: Oklo and Compass Mining

"It's just a natural thing" that Bitcoin and modern nuclear energy "are drawn to each other," says Jacob DeWitte, co-founder and CEO of Silicon Valley-headquartered Oklo, which in the process of getting approval to build micro nuclear power plants that create nuclear energy from what is considered the waste of conventional nuclear reactors. That's because bitcoin miners are looking for a clean energy source at the same time that advanced nuclear companies are developing and seeking customers.

With the Compass Mining deal, Oklo committed to supplying at least 150 megawatts of clean power in the first phase of the partnership. That's enough energy to power roughly 150 small towns. It is also enough to power 44,000 S19s, which are the newest model bitcoin mining computers from mining technology company Bitmain.

The partnership is "an overlap between people who are... pro technology," DeWitte says, and the timing is right.

An artist rendering of the Oklo powerhouse, called the Aurora. Image credit: Gensler
Image courtesy Oklo

Compass Mining, a Miami-headquartered company that oversees and manages bitcoin mining hardware remotely, among other services, currently has 21 bitcoin mining farms, where many mining computers live and are monitored. Eight of those farms are powered either in part or completely by clean, primarily renewable energy like wind, solar or hydro, with some nuclear energy. Compass is aiming to increase the number of its facilitates powered by clean energy, says Whit Gibbs, the company's CEO.

Oklo co-founder and chief operating officer (and DeWitte's wife), Caroline Cochran, met Gibbs when they were speakers on the same panel about green mining during an online conference in March, and their respective teams followed up with each other, leading to their partnership.

The partnership will likely start in the early 2020s, according to Oklo and Compass Mining.

Oklo's power plants will not be powering Compass Mining's existing mining facilities. Instead they will "go towards new facilities, new expansion projects that we will purposefully build" alongside Oklo power plants.

"It is kind of a great example of how ... driving the sustainability and green footprint of bitcoin also helps drive more clean energy market, because it's a great complement and sort of enabler," DeWitte says. "It's kind of an inevitability where you're going to see bitcoin largely shifting to clean sources."

Why some say nuclear is not a good solution to clean up Bitcoin mining energy use

While there have been a few indications of bitcoin miners partnering with nuclear companies, it's still very early days.

"There's no data on this specifically, but it's likely only a very small percentage," says Alex de Vries, a financial economist who runs Digiconomist.

And further, "I don't expect this to become a wider trend," de Vries says.

He points to a recent July 15 announcement that Nevada-based Black Rock Petroleum Company entered into a 24-month binding agreement with Optimum Mining Host Limited Liability Co. to host up to one million bitcoin miners, all powered by natural gas from Alberta, Canada.

Natural gas emits about half as much carbon dioxide as coal and a third less carbon emissions than oil or petroleum, but methane is emitted during the production and transportation of natural gas. Methane is 25 times more potent in causing climate change than carbon dioxide.

The wholesale rates in that deal (about 2 cents per kWh or $55.55 per miner per month) "are incredible and will generally be hard to compete with by nuclear power," de Vries says.

The price of large nuclear energy plants is too high to make it a feasible option right now, says Marc Bevanda computer security expert who developed the original methodology for the Cambridge Bitcoin Electricity Consumption Index. "It's worth pointing out that the cost to build utility-scale renewable energy power plants is less than the cost to build new nuclear power plants," Bevand says. "So when it comes to expanding existing capacity, renewables are more attractive."

Also, it takes a significant amount of time to build a nuclear reactor, and that makes it unlikely for nuclear power to play a significant role in shoring up emissions related to Bitcoin mining, says Jesse Morris, CEO of non-profit Energy Web.

"It is extremely challenging for new nuclear facilities of any size to be developed," Morris says. "Next to no new nuclear capacity has been built in the U.S. in recent history, so I am somewhat skeptical that new nuclear technology from any vendor will be built on-time and on-budget in the US." 

The advancement of making nuclear energy from what is considered the waste of conventional nuclear reactors, as Oklo is aiming to do, makes the nuclear option more compelling for bitcoin miners, Morris says. "Recycling old nuclear waste would be a great innovation."

And as Gilbert says, the better nuclear solution for bitcoin miners is likely using surplus nuclear power or, in the future, using smaller nuclear reactors that are faster to build.

"Building new conventional nuclear power plants may not make sense because their long project lifetimes do not match the business cycles for miners," Gilbert tells CNBC Make It.

"However, using power from existing plants is straightforward," and also a potential source of lifeblood for nuclear power plants, he says. "Some of those existing plants may otherwise close down without the revenue and would be replaced by fossil fuels. Similarly, microreactors can be built relatively quickly and co-located with mining facilities, growing alongside the crypto industry."

See also:

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