Bitcoin

Bitcoin Mining Meets Renewables: Stabilizing the Grid and Powering a Greener Future

Andreas Koidis

22 Feb 2025 • 8 min read

(Much) Greener bitcoin mining

Bitcoin mining, once a niche phenomenon, has turned into a trillion-dollar influence on global finance. This trend is not just about hashing power or block rewards. It is about how Bitcoin mining is increasingly linked to the renewable energy sector and the broader conversation on energy transition. The basic logic behind Proof of Work is straightforward: miners worldwide compete using computational power to validate and secure transactions, and the winner of this game-of-chance is awarded newly minted bitcoin. Critics often frame this system as energy-hungry, but a closer look reveals a more nuanced perspective. In many instances, Bitcoin mining can stabilize the electricity grid and even propel the renewable energy transition. The essential takeaway is that Bitcoin’s steady development cycle, combined with its growing real-world adoption, creates a long-term incentive structure that favors efficient and renewable energy usage.

Global concerns about climate change and the need to meet ambitious net-zero targets have placed the energy sector in the spotlight. Bitcoin’s energy consumption became a talking point as the network’s hashrate soared over 70% year over year, driving energy use up by roughly 38%. At face value, this seems like a cause for alarm. However, the flip side is that efficiency has grown by 24% in the first half of 2023, according to various industry sources, and the global Bitcoin mining sector now draws from a 59.9% sustainable energy mix. This does not even factor in the additional benefits of energy and carbon credits. Market dynamics favor renewable power when it can be cheaply procured, leading mining operators to seek out hydropower, geothermal, wind, or solar resources. This synergy helps in creating large controllable loads where the miners can ramp up or down, creating balance on the grid and allowing for better integration of intermittent renewables. As many watchers predict, by Bitcoin’s next halving, the combined improvements in mining hardware and energy efficiency—about a threefold increase in hashrate-per-watt—will drive the network closer to achieving net-zero emissions by 2030.

..combined improvements.. will drive the Bitcoin network closer to achieving net-zero emissions by 2030.

Control the demand not the supply - better economics

In Europe, especially, where the push toward renewable energy and climate targets is pervasive, Bitcoin mining is seen as a potential partner in the transition. Bitcoin operations can be located wherever power is cheapest, which means they can pop up in regions with abundant hydro, wind, or solar capacity. The ability for miners to relocate or scale down offers grid operators a valuable dispatchable load. And it is not just about employing renewables. Oil and gas producers are also harnessing flared methane—previously wasted or burned off—by using it to power generators that feed into mining rigs. The net result is less carbon-intensive than flaring and allows the recapture of what was formerly a wasted resource. Meanwhile, for entrepreneurs and corporate actors, Bitcoin mining becomes a mechanism to diversify revenue streams, partner with energy producers, and invest in a stable yet increasingly robust technology.

The details...

The core argument is that Bitcoin, far from being solely an “energy sink,” can be a tool to promote the green transition and stabilize the electricity grid. The fundamental driver is Bitcoin’s game-theory-based monetary policy, which encourages miners to seek low-cost energy. Renewable sources often match that description because they can generate energy at nearly zero marginal cost when the infrastructure is already in place. Excess supply that might otherwise be curtailed—think extra solar power on a sunny afternoon or surplus wind power at night—can be directed into mining rigs. This arrangement helps renewable operators monetize their surplus capacity. Over time, the presence of a flexible, always-on energy buyer can make those renewable projects more economically viable, ultimately driving further investment into green infrastructure.

The fundamental driver is Bitcoin’s game-theory-based monetary policy, which encourages miners to seek low-cost energy.

Excess supply that might otherwise be curtailed—think extra solar power on a sunny afternoon or surplus wind power at night—can be directed into mining rigs.

More power consumption in a region often drives down the cost of power production per unit because it helps amortize the fixed costs of energy generation. By anchoring demand, Bitcoin mining can spur the construction of larger renewable facilities, producing an effect known in the energy industry as load-based demand growth. Higher load can potentially help unlock economies of scale for new wind, solar, geothermal, or hydro projects, pushing electricity prices lower while also giving grid managers a tool to prevent overproduction and maintain grid stability. The presence of Bitcoin mining also aids oil and gas producers who need to handle methane emissions or flared gas. Converting these to electricity on-site and feeding into mining rigs can reduce greenhouse gas emissions and generate new revenue, which can be reinvested into further decarbonization.

There is a technological path toward net-zero Bitcoin mining that includes immersion cooling for data centers, renewable-based microgrids, and improvements in miner algorithmic tuning. Immersion cooling specifically can reduce the water footprint of mining by eliminating the need for evaporative cooling. Mining software can manage and optimize energy flows in real time, adjusting parameters to maximize efficiencies and detect faults quickly. AI systems can assist but remain subject to rigorous human oversight to ensure reliability and data integrity. The result is a more robust operational environment, improved performance, and reduced operating expenses (Opex).

Call-to-action for Power Companies

Miners, entrepreneurs, and corporate entities exploring Bitcoin mining as a potential venture should start with a clear inception process. This includes analyzing the local regulatory environment, evaluating renewable energy availability, and modeling projected energy costs and volatility. Proper operationalization involves setting up the mining infrastructure in a location-agnostic way. Many industrial-scale miners opt for shipping-container-like modular setups that can be relocated as energy markets evolve. The next step is establishing robust revenue management. In addition to collecting block rewards and transaction fees, businesses can opt to HODL a portion of their mined bitcoin to capture potential long-term upside.

Optimization is crucial, both in terms of miner performance and in energy usage. Miner algorithmic adjustments enable participants to quickly adapt when electricity prices rise or more profitable hardware enters the market. Fault recognition and analysis, possibly aided by AI, can reduce downtime. Software that manages real-time curtailment is essential for acting as a flexible load, especially in regions where grid operators offer incentives for demand response. These solutions effectively allow miners to switch off or power down during peak demand periods or when the grid is strained, thus stabilizing the system.

Software that manages real-time curtailment is essential for acting as a flexible load, especially in regions where grid operators offer incentives for demand response.

Compliance and reporting must not be overlooked. Particular regulations in Europe or North America may require documentation of emissions, proof of origin for renewable power, and adherence to environmental standards. Corporate-level participants must have internal processes to track the carbon footprint, assess operational transparency, and maintain regulatory compliance. This forms part of an overall strategy for building trust with local communities and stakeholders, crucial for any operation tying itself to power infrastructure.

This forms part of an overall strategy for building trust with local communities and stakeholders, crucial for any operation tying itself to power infrastructure.

The goal for net-zero by 2030

Bitcoin mining’s intersection with the renewable energy industry is more than a passing fad. The current reality is that a majority—59.9%—of the network’s power is drawn from sustainable sources, indicating a notable progression toward a greener mining sector. With hashrate and energy usage rising, there is pressure to innovate and optimize, but there is also the potential for increased renewable adoption. Mining’s large, controllable load can act as a stabilizing force, helping balance the grid while delivering new revenue streams for energy producers. These benefits, combined with the forecast that improved mining hardware will reduce the energy cost per hash by around 3x by the next halving, make the journey toward net-zero by 2030 a realistic goal.

The call to action is for companies to look beyond the narratives that cast Bitcoin mining solely as an energy liability. Instead, consider it as an opportunity to convert wasted or stranded energy into economic value, reduce emissions, and incentivize the deployment of larger-scale renewable installations. The approach should not be naive. It requires strong due diligence, commitment to transparency, and a willingness to adapt operations to the changing regulatory environment as it evolves. However, the potential upside—both financially and environmentally—is enormous. Embracing Bitcoin mining in conjunction with renewable energy might well be the spark that speeds up the decarbonization of the global power sector, one carefully managed operation at a time.

News about negative energy prices are becoming frequent lately...

Good Morning from #Germany where the new year has kicked off w/negative power prices. In fact, Germany leads all major industrialized countries in Europe in the number of hours w/negative electricity prices – 468 hours last year alone. This highlights the challenges of the… pic.twitter.com/ZFtIdrs5Dx
— Holger Zschaepitz (@Schuldensuehner) January 3, 2025