As part of my continued series, Bitcoin Is An Energy Solution, Not An Energy Problem, I’m going to talk about mining bitcoin with hydro energy. Water falls from the sky, snow melts, rivers flow, and tides move in and out. All of that water contains a lot of potential energy as if it flows down from high points and tides shift. How can we harness that potential energy to help secure the world’s favorite distributed monetary system?
What Is Hydroelectric Energy?
Hydroelectric energy is any energy that comes from natural occurrences of water moving. It comes from rain and snow runoff as it forms rivers both large and small.
It doesn’t stop there though. There is also a daily occurrence of hydro energy that is often overlooked; ocean tides. Engineers, businesses, and governments are working to harness the energy that comes from the gravitational energy of our moon’s orbit. When tides flow in and out, there is an immense amount of energy that could potentially be harnessed.
If any of the forms of energy mentioned above are used to generate electricity, that energy is considered hydroelectric energy.
Harnessing Hydro Energy
Humans have been harnessing hydro energy for centuries with waterwheels to operate mills. Today we use hydro energy much more efficiently. The most common way that societies harness water’s immense energy is with hydroelectric dams. This is actually where the majority of electricity comes from in higher altitudes where rain and snowfall are abundant. Norway, Iceland, California, Washington, and China are a few great examples. There’s also an often overlooked form of energy that is being experimented with to see how much energy we are able to harness from ride and fall of the ocean tide.
Hydroelectric Dams
Dams are the most common way to convert hydro energy into electricity by diverting a river’s water flow into turbines that generate electricity. If you live in a mountainous climate with any amount of rain or snowfall, chances are that you don’t live too far from a hydroelectric dam.
In order to generate electricity from water, it needs to pass through a turbine which causes the turbine to spin. As that turbine spins, it generates electricity through a process called magnetic induction. This is the same process that is used to generate electricity in wind turbines and regenerative braking on electric vehicles.
Tidal Barrages
While most people tend to think of dams when it comes to harnessing energy from water, there is an often overlooked force of nature that is quite a bit more consistent than rainfall. Naturally, I am talking about the immense power of ocean tides and harnessing their energy with tidal generators.
The concept of tidal generators is the same basic concept as wind turbines except that they are underwater. When tides flow in and out of harbors, seas, fjords, and estuaries, an immense amount of energy is moving from one point to another. The objective of tidal generators is to capture some of that energy and convert it into electricity.
I’m not sure of the efficiency of tidal generation since the technology is still in infancy but tides are mathematically predictable. This could potentially make them a much more consistent energy source than solar and wind power.
Storing Surplus Hydro Energy
Since there isn’t a scalable way to store large amounts of electricity yet, we need a way to store surplus energy in its natural form. Hydro energy is not based on the combustion of water but rather on gravity. In order to store hydro energy, we need as much of it as possible, at the highest possible altitude, where it has the most potential energy. This holding area is called a reservoir and it is how we store surplus hydro energy.
When that energy needs to be converted into electricity, the dam sluice is opened and the water flows downhill to spin the turbine and generate electricity. Humans have it down to be about as efficient as it can be but there’s still a problem facing hydroelectric dams.
Sometimes there is a particularly rainy season that produces an abundance of water and the dam can’t hold all of it.
It’s the same problem facing many energy producers. Of course, I am talking about energy curtailment.
Hydroelectric Energy Curtailment
Although we have a relatively effective way to store surplus hydro energy, it is not without its own set of problems. Hydroelectric dams face the problem of energy curtailment when there is an excessive amount of rain and the amount of water is greater than what the dam can hold. To prevent overflow, hydro-dams have to open their sluices to let the excess water through. If there isn’t any demand for that electricity when it is flowing through the dam, and no efficient means to store that surplus electricity, it gets wasted.
Yes. A complete waste of all of that gravitational potential energy that could have been put to work.
What if there was a way to convert all of that surplus energy into something of value?
Mining Bitcoin with Hydroelectric Energy
Mining bitcoin with hydro energy is quickly becoming one of the most popular ways to mine bitcoin. Since Bitcoin mining rigs operate best when running all the time and at cooler temperatures, mining with hydroelectricity makes it a low overhead option. The consistent base energy load makes for consistent miner output and the cooler temperatures of higher mountainous altitudes make it easier to keep the miners running at a nice cool operating temperature.
Since it doesn’t typically require resources to collect and transport water to where its energy is harnessed and converted into electricity, hydroelectric energy is an incredibly efficient way to mine bitcoin.
When a region with hydropower has a particularly snowy or rainy season, the likelihood of an abundance of hydro energy is higher. If the dam cannot store all of this water, then either the spillway must be opened and that gravitational energy gets curtailed …OR it could be used to mine bitcoin. Mining bitcoin with hydro energy eliminates energy curtailment because it provides a buyer of last resort for any unused electricity.
Bitcoin Mining Is Subsidizing Hydroelectricity
Mining bitcoin doesn’t come without scrutiny from those who don’t fully understand the technology or the economics of how energy is produced. While this may seem like a waste of electricity to some, it is actually ensuring that clean renewable energy sources always have a buyer for every single watt of electricity that they produce.
All curtailed and otherwise surplus energy can instantly be converted into bitcoin and act like a digital battery until it is ready to be put to use at a later time and location. It can either be sold off at a bitcoin exchange or used to invest in more capital goods such as more efficient mining hardware or better hydroelectric infrastructure.
Northern Bitcoin AG
Northern Bitcoin quickly realized the opportunity to turn surplus hydro energy into bitcoin in an old olivine mine in Norway (olivine a mineral used for steel creation). HQ’d in Frankfurt, Germany, Northern Bitcoin is leading the way in mining bitcoin with hydroelectricity in Europe by setting up shipping containers full of bitcoin miners to mine bitcoin and cool the miners with the very water that they use to generate electricity. Since the cost of their hydroelectricity is so cheap, they are one of the largest renewable bitcoin mines in the world.
Final Thoughts
As the quest for the cheapest and most efficient energy source continues, mining bitcoin with hydro energy is likely to bring about some very exciting innovations. Harnessing the power of the rain, snow, and ocean tides could help to unlock cheap and sustainable hashing power for the world. If you’re considering undertaking bitcoin mining, hydro energy should absolutely be on your radar.
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