How Bitcoin Mining Advances the 3 E’s: A White Paper from Square and ARK Invest
SquareUp, the bitcoin-friendly component of payment rail Square, and ARK Invest, the innovation technology-focused investment company, have just released a White Paper together in which they outline the reasons for their shared conviction that the marriage of green energy and bitcoin mining is a mutually beneficial pairing that will advance cheap green energy while expanding the bitcoin mining function.
Square identified the benefits to green energy infrastructure development and the use case argument, including cost:
As society starts deploying more solar and wind, we believe it should bring their LCOE (Levelized Cost of Energy) even further down their cost curves, making the next batch of solar and wind even more affordable. If the LCOE falls, it could potentially unlock profitable new use cases for that electricity like desalinating water, removing CO2 from the atmosphere, or producing green hydrogen. Some experts in the field expect that the marginal cost of producing new electricity will actually approach zero.
Square also identified benefits to bitcoin mining from pairing with alternative energy producers:
The second major potential impact could be a sizable transformation and greening of the bitcoin mining industry. It’s estimated that there’s only 10-20 GW of mining capacity worldwide today. Deploying miners at even 20% capacity with the above mentioned 200GW of delayed solar and wind projects on U.S. grids alone could result in 40 GW of new mining capacity, effectively dwarfing the entirety of the existing global market. Note that while many of these projects would likely be built “behind the meter” to utilize otherwise curtailed solar and wind power whenever possible, they would likely still mine with grid electricity during other periods when profitable to do so, so it wouldn’t be entirely
green from day one. But if solar and wind become even less expensive and constitute an increasingly large portion of baseload power, the ultimate trend would continue moving quickly toward renewable dominated hashrate. We believe deploying such a large amount of new, geographically diverse hashrate would also have the second order consequence
of strengthening the security of the Bitcoin network, potentially further entrenching bitcoin as a sound currency for all.
Our model demonstrates that integrated bitcoin mining could transfigure intermittent power resources into baseload-capable generation stations. It suggests that the addition of Bitcoin mining into power developers’ toolboxes should increase the overall addressable market for renewable and intermittent power sources. All else equal, with bitcoin mining, renewable energy could provision a large percentage of any locality’s power economically. As a follow-on effect, cost declines associated with scaling renewables should most likely accelerate, leaving them even more economically
competitive at equilibrium.
The White Paper outlines 3 business development opportunities that are necessary to scale up the marriage, and promises additional material to come as they continue to explore the benefits of the synergy. They conclude:
The bitcoin and energy markets are converging and we believe the energy asset owners of today will likely become the miners of tomorrow. Utility executives, sustainable infrastructure funds, and grid-scale storage developers are well-positioned to expedite this future by aligning their strategic roadmap and deploying large scale investments into the
emerging synergy between bitcoin mining and clean energy production.