An Introduction: Bitcoin

Bitcoin is a decentralized digital currency that enables peer-to-peer transactions through a technology called blockchain, which securely records all transactions. With a fixed supply of 21 million coins, it offers an alternative to traditional currencies.

Mining As Computational Process

Bitcoin mining is the process of creating Bitcoin by connecting specially designed computers to an energy source and the internet. These computers, known as ASICs, use electricity to solve complex mathematical problems. This process is called ‘Bitcoin mining’ but it is actually a software process, not physical mining. Most Bitcoin mining companies join groups called consortiums, where they combine their computational power, known as Hash Rate. This means that the more computational power a company contributes, the more Bitcoin it earns.

The internet bandwidth needed for ASICs is generally low, so Bitcoin mining can be done almost anywhere. ASICs can be placed directly at the electricity source, like a hydroelectric dam, eliminating the need for extensive transmission infrastructure. This setup is called “Behind the Meter,” meaning it uses electricity that never enters the main power grid. This is especially beneficial for isolated power sources that have difficulty selling their electricity due to lack of transmission infrastructure or distance from customers.

Renewable Energy’s Role

Another advantage of Bitcoin mining is that it can be easily interrupted. Although mining companies aim for maximum uptime, the computational cycles take less than a second. This means that turning off the machines does not waste hours of work. This feature makes Bitcoin mining an excellent match for renewable energy sources, which can be intermittent. In the United States, Bitcoin mining has successfully partnered with solar and wind energy.

For example, a hydroelectric dam with solar panels on- site might only use two of its turbines for a few hours a day due to solar power spikes and peak evening demand. These turbines could run 24 hours a day if the extra energy is used for Bitcoin mining. If the grid unexpectedly needs more power, the mining company can be compensated by the utility to turn off their machines, a practice known as demand response. This use of Bitcoin mining for demand response is becoming more popular in the United States, especially with the growth of renewable energy.

Monetizing Potential Waste

Using behind-the-meter Bitcoin mining is a revolutionary way to monetize otherwise wasted energy. It creates a mutually beneficial relationship where power generators can sell electricity that would otherwise go unsold, and Bitcoin mining companies get access to low-cost electricity. This type of partnership is rare and presents an exciting opportunity to work with power producers across Africa.