Power-hungry bitcoin miners want stable and carbon-free electricity
The matchup has the potential to solve the key issues facing each industry, executives and analysts say: electricity-hungry bitcoin miners want stable and carbon-free electricity, while nuclear plants facing competition from cheap power sources. New customers are required.
Talen Energy Corp. has entered into a joint venture with bitcoin-mining company TeraWolf Inc., which has begun land development for a mining facility the size of four football fields next to it. Pennsylvania Nuclear Plant. Nuclear generator Energy Harbor Corp. will provide electricity to a standard electricity mining center ohio Starting in December.
“We are building demand around the existing nuclear plant,” said Alex Hernandez, president of Talen Energy, which is jointly developing the mining project near the Susquehanna Steam Electric Station.
New nuclear projects are also eyeing cryptocurrency miners: startup Oklo Inc., which plans to build a small-scale fission power plant that can run on used nuclear fuel, has partnered with hardware and hosting firm Compass Mining. 20 years supply agreement signed.
“Both the industry’s challenges are the other industry’s positives,” said Sean Lowry, partner at consulting firm Scottmaden Inc.
Bitcoin mining is an energy-intensive process. To unlock more currency, miners must solve mathematical puzzles that become increasingly complex, meaning they require more computing power—and electricity. A decade ago mining only required a person with a PC, but rising bitcoin prices and limited supply have created a race. The way to increase the odds of locating the puzzle is to put more machines to do the job.
“At the core of bitcoin mining is energy and energy infrastructure,” said Paul Prager, CEO of TeraWolf.
The rise of huge mining operations has fueled criticism from environmentalists and others that the increased use of fossil-fuel electricity for cryptocurrencies could waste resources and worsen climate change. A tweet from Tesla Inc Chief Executive Elon Musk expressing concern over the environmental impact of mining operations briefly caused the bitcoin price to plummet in May.
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Meanwhile, nuclear power has lost public support in the wake of accidents such as JapanThe Fukushima disaster of 2011 and the US has struggled to compete economically.
Nuclear plants provide a stable source of emissions-free electricity, but like coal-fired power plants, many have been forced to sell their output in wholesale electricity markets and natural gas production amid stiff competition from wind and solar power. Faced with a tough challenge, which turned out to be cheap. The fracking boom was followed by a major new discovery of fuel.
“They’re still making money because they’re still running, but it’s very difficult for them to recover a reasonable return on their maintenance investment in the current electricity markets,” said Travis Miller, energy and utility strategist at Morningstar.
Several nuclear plants in the US have been closed in recent years, including the Indian Point facility outside New York City According to the Energy Information Administration, formerly owned by Entergy Corp. With new projects likely to be pursued, nuclear is poised to decrease in the US power mix in the coming years.
In June Exelon Corp. said it would shut down two of three Illinois nuclear plants that failed to sell their electricity during the most recent wholesale power auction for PJM Interconnection, a market serving 13 states and Washington, DC. , which approved state lawmakers a bailout this month to keep the plants running.
Talen’s Susquehanna plant also saw less MW extraction in 2018 than the previous one at the same PJM auction. The outlook for Talen Energy Supply LLC, a subsidiary of Talen, was revised to negative by Fitch Ratings and Moody’s Investors Service. According to Fitch, there will be a $209 million drop in auction revenue in 2022 and 2023.
“We find ourselves in a place where the supply of electricity markets continues to be, and in general, very weak, with few exceptions,” said Mr. Hernandez, president of Talen. He added that the company sees the bitcoin facility as vital in building a carbon-free digital infrastructure business. It also plans a data center next to Susquehanna, and said Tuesday it has secured another $175 million in capital for the projects.
While more nuclear-Bitcoin alliances are expected, they are unlikely to be large enough or even large enough to save nuclear plants on the edge of closure, said Bill, director of Customized Energy Solutions, an energy consulting firm. Dugan said. .
“It would be a lot of them gathering together,” said Mr. Dugan.
For bitcoin miners, the partnership allows them to promote projects as an environmentally friendly power source.
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“It was a big difference for us,” said Maxim Serezin, chief executive officer of Standard Power, which is building a nuclear-powered bitcoin-mining facility at a former paper mill in Koshokton, Ohio. Standard Power’s formal name is 500 N 4th Street LLC.
Energy Harbor declined to comment and sent questions to Mr. Cerezin.
The Compass Mining deal with startup Oklo does not include a set price for electricity, but Compass CEO Whit Gibbs said he is confident the companies will agree on a price that allows profitable cryptocurrency mining.
Oklo co-founder and CEO Jacob DeWitt said he had received inquiries from other bitcoin miners interested in the company’s 1.5-MW project using small modular reactors. However, it still requires federal approval, and is unlikely to happen until sometime between 2023 and 2025, he said.
In Miami, Mayor Francis Suarez is looking to his hometown as a destination for cryptocurrency miners, exchanges and investment firms. Part of his pitch includes a nearby nuclear power plant owned by Florida Power & Light Company, a subsidiary of NextEra Energy Inc.
Many environmental, social and governance, or ESG, concerns about bitcoin mining “come from the fact that too much mining was being done in coal-producing countries,” Mr. Suarez said.
Talks with Florida Power & Light officials include whether mining facilities can be located near a nuclear plant, and challenges such as a lack of affordable land to build large warehouses for mining gear, Mr. Suarez said.
Florida Power & Light declined to comment on the discussion, but spokesman Bill Orlov said South Florida has become a relocation destination for the tech industry. “We look forward to supporting the continued innovation and growth that those companies bring,” said Mr. Orlov.