Geothermal Energy Meets Bitcoin Mining in Kenya
Beneath the expansive landscapes where wildlife like zebras and warthogs thrive, the geological forces of the Rift Valley are gradually causing the earth to split apart. In millions of years, this region may evolve into an ocean. For the moment, the subterranean activity provides a substantial energy source, which is seen as remarkably advantageous. “We have more generation capacity than we can utilize,” asserts Fredrick Apollo, manager of a local geothermal power facility operated by the Oserian Development Company.
Innovative Solutions to Energy Surplus
Enter an unexpected remedy: bitcoin mining. Cables extend from the geothermal plant to a shipping container a few miles away, where a cluster of sixty small machines operates continuously, consuming electricity that Oserian cannot use. These machines are engaged in the production of new cryptocurrency units.
Addressing the Energy Consumption of Bitcoin Mining
Bitcoin mining is known for its excessive electricity consumption, matching the energy usage of an entire country, specifically Poland. Currently, only about a third of the electricity used in this process is sourced from renewable or nuclear energy. In a bid to transform this scenario and seek affordable energy sources, numerous cryptocurrency mining operations are establishing themselves near renewable energy sites. They effectively utilize surplus energy that is often challenging to store or transport, unlike fossil fuels. This arrangement is appealing to renewable energy providers facing difficulties, though experts caution that it may only serve as a temporary fix to their storage challenges. In Africa, where the priority is to generate energy, cryptocurrency miners are surprising allies in bridging existing gaps.
Inside the Shipping Container Mine
The 500-kilowatt bitcoin mining facility situated at Lake Naivasha is discreetly placed off a dirt road near Hell’s Gate National Park, a location that inspired the scenery of “The Lion King.” The machines inside the shipping container radiate heat, indicating the significant energy demands tied to bitcoin mining. The creation of bitcoin relies on computers worldwide competing to solve intricate mathematical problems, with the first to solve them receiving bitcoin as a reward. The cryptocurrency’s value has surged dramatically, climbing from under $1,000 in 2016 to over $80,000 recently.
Initially, in 2009, bitcoin mining was accessible to anyone with a computer. However, as more participants joined the network, the complexity of the puzzles increased, necessitating advanced machinery and escalating energy requirements. Consequently, most bitcoin mining activities now take place in large facilities located in regions where energy is both abundant and cost-effective, such as Texas and Kazakhstan. Gridless, the company operating the Kenyan mine, identifies an opportunity to leverage the energy-intensive nature of mining to foster the development of renewable energy in rural parts of Africa.
Challenges in African Energy Infrastructure
This situation mirrors the reality in various African nations, where renewable energy resources are plentiful but the infrastructure for energy distribution is lacking. Approximately 600 million individuals across the continent, nearly half of the population, lack access to electricity. Establishing power grids can be prohibitively expensive, and even where such infrastructure exists, there may not be sufficient customers able to afford service.
Globally, power grids often depend on large industrial clients to maintain their viability, according to Erik Hersman, CEO and co-founder of Gridless, which operates multiple sites in Kenya, Malawi, and Zambia. “Those large clients are not present here,” he notes.
Long-Term Strategies for Energy Stability
For Oserian, the proposal from Gridless was appealing. The mining operations would consume surplus energy during off-peak hours and cease operations when demand from other consumers was high, thereby helping to stabilize the grid. In exchange, Oserian would earn a portion of the bitcoin produced.
Despite the inherent volatility of bitcoin, research suggests that additional revenue from mining activities can assist renewable energy providers in expanding their operations. In Ethiopia, which boasts some of the world’s lowest-cost green energy, nearly 20% of the electricity sold last year was allocated to bitcoin mining firms. This financial influx is expected to aid in the development of the national grid.
Renewable Energy’s Path Forward
Gridless asserts that it is also contributing to the growth of renewable energy access. For example, in a remote area of southern Malawi, the company operated within a community utilizing a micro-hydropower system. With the commencement of mining activities, the facility was able to extend electricity access to 500 additional households. Another hydropower operation in Kenya achieved a nearly 33% reduction in electricity rates.
Nonetheless, not all perspectives are optimistic. The true transition to renewable energy will only occur once technologies for effective storage and transport are developed. Energy companies that sell surplus power to bitcoin miners may lack motivation to innovate in storage solutions, according to Jona Stinner, a researcher focused on the environmental implications of bitcoin mining. He argues that this scenario does not significantly contribute to the long-term green energy transformation.
As the fans in the Gridless mining facility near Lake Naivasha continue to operate, drowning out the sounds of nature, the company remains determined to keep the operation running as long as excess electricity is available.
