A Unique Energy Solution Emerges in Kenya
In the Rift Valley of Kenya, where zebras and warthogs roam, the tectonic plates are gradually separating, suggesting that millions of years from now, this area may evolve into an ocean. However, for now, this geological activity presents an exceptional opportunity for energy generation. “We have more generation than we can use,” states Fredrick Apollo, the manager of a local geothermal power facility operated by Oserian Development Co. This scenario has led to an unexpected integration of bitcoin mining into the energy landscape.
Balancing Bitcoin Mining and Renewable Energy
Bitcoin mining is notorious for its immense energy consumption, equivalent to the electricity usage of an entire country like Poland. Currently, only about one-third of this electricity is generated from renewable sources or nuclear power. To address this issue and explore new avenues for affordable energy, numerous cryptocurrency mining firms are establishing operations near renewable energy sources. This approach allows them to utilize excess energy that is challenging to store or transport, unlike fossil fuels. While this strategy presents a temporary relief for struggling renewable energy producers, experts caution that it may not provide a lasting solution to energy storage challenges. Nevertheless, in Africa, where the primary focus is on electricity generation, cryptocurrency miners are unexpectedly bridging a significant gap.
Unpacking the Energy Dilemma
The 500-kilowatt bitcoin mining operation at Lake Naivasha is discreetly located off a dirt path near Hell’s Gate National Park, famous for inspiring scenes in “The Lion King.” Inside the shipping container, rows of machines buzz continuously, highlighting the energy-intensive nature of bitcoin mining. The process involves computers racing to solve complex mathematical puzzles, with those who succeed first earning bitcoin—a currency that has seen its value soar from less than $1,000 in 2016 to over $80,000 recently. Initially, anyone could mine bitcoin using a standard computer, but as popularity surged, the complexity of the puzzles increased, necessitating more advanced machinery and consuming more energy. Consequently, most bitcoin mining now occurs in massive facilities in regions with abundant and inexpensive energy, such as Texas and Kazakhstan. Gridless, the operator of the Kenyan mine, recognizes the potential to leverage this energy demand to foster renewable energy development in rural Africa. The startup, supported by Twitter co-founder Jack Dorsey, partners with companies like Oserian to purchase surplus energy that would otherwise go to waste.
Challenges of Energy Access in Africa
This situation is widespread across many African nations, where renewable energy resources are plentiful, yet energy infrastructure remains underdeveloped. Approximately 600 million people, nearly half of Africa’s population, lack access to electricity. Establishing power grids can be prohibitively expensive, and even in areas where grids exist, there may not be enough consumers capable of affording the service. Erik Hersman, CEO and co-founder of Gridless, notes that power grids often depend heavily on large industrial clients to remain viable, which are scarce in these regions.
A Sustainable Partnership
For Oserian, the proposal from Gridless was appealing. The mining operations would absorb excess energy during low-demand periods and temporarily shut down when demand peaks, thereby contributing to grid stability. In exchange, Oserian would receive a portion of the bitcoin mined. Although bitcoin is known for its volatility, research indicates that the additional revenue from bitcoin mining can help renewable energy providers expand their operations. In Ethiopia, renowned for its low-cost green energy, nearly 20% of the electricity sold last year was purchased by bitcoin mining companies, which in turn aids in the development of the national grid.
Long-Term Implications for Renewable Energy
Gridless asserts that its efforts are also enhancing access to renewable energy. For instance, in a remote area of southern Malawi, the company established a partnership with a micro-hydropower system. Following the commencement of mining operations, the facility could extend electricity access to an additional 500 households. Similarly, another hydropower project in Kenya managed to reduce energy costs by nearly 33%. However, not all developments are encouraging. The transition from fossil fuels to renewable energy hinges on advancements in storage and transportation technologies. Energy providers selling to nearby bitcoin miners currently lack the impetus to innovate in storage solutions, according to Jona Stinner, a postdoctoral researcher specializing in the environmental effects of bitcoin mining. He argues that this reliance on bitcoin mining may hinder significant progress toward a sustainable green transformation.
A Continued Demand for Energy
Yet, the machines at Gridless’ mining facility near Lake Naivasha continue to operate, their fans drowning out the sounds of wildlife. As long as there is surplus electricity available, the company remains committed to keeping these operations running.
