Gridless: Despite consuming an estimated 0.17% of global energy and 0.1% of total carbon emissions, Bitcoin mining remains controversial and the subject of much criticism. While some criticism of Bitcoin mining relates to its energy consumption as a matter of principle (whether excessive or not), some also relates to its energy mix.
Notwithstanding, efforts are being made globally to make Bitcoin mining more sustainable, evident through local industry leaders such as Australian Bitcoin miner Iris.
Aside from debates around Bitcoin’s energy mix, and questions of sustainability, some Bitcoin miners have made the bold claim that they are in fact helping electrify rural parts of Africa with entirely renewable hydroelectric-powered Bitcoin mining.
A bold assertion to be sure, but that’s what the Jack Dorsey-backed Gridless it’s doing.
The problem Gridless aims to solve through Bitcoin mining
Africans need access to energy, period. However, only half of the continent has access and in some rural parts, as little as 8% are able to switch the lights on at night, refrigerate food or turn on a fan.
For those fortunate enough to have access, the cost is often exorbitant and unreliable, seen most recently in South Africa’s persistent rolling blackouts — euphemistically termed ‘load-shedding’.
Why not just build out electrical grids? Two reasons. The first is the economics – you need to have consumers ready and able to pay to provide a return on investment (ROI). The second is that energy generally needs to be transported to high density areas, and in the process, a significant portion of it is lost.
For many Africans who live in rural parts of the continent, it’s been difficult to gain access to electricity, much less energy that is affordable.
This is where a Bitcoin miner like Gridless comes in, here’s how.
Gridless wants to reducing the cost of electricity through Bitcoin mining
Large parts of East Africa have abundant rivers that could otherwise provide ample hydroelectric power to isolated rural communities.
The problem though is the harsh reality of economics – it just doesn’t make economic sense to build out costly infrastructure to impoverished rural communities because there isn’t sufficient demand or an ability to provide a ROI.
However, with the involvement of Bitcoin miners, rural communities across Kenya and Malawi are being connected as the company’s Bitcoin mining is able to operate as a buyer of first and last resort. In doing so, it essentially subsidises the initial capital outlay of infrastructure, as well as the ultimate cost of electricity to consumers.
Bitcoin miners can then become flexible clients for providers of energy grids and can switch on and off at a moment’s notice. But let’s say you are an electrical grid infrastructure company that wants to build out a hydroelectric power grid, what if you could de-risk the entire project by having a guaranteed buyer of energy? Enter the Bitcoin miner.
By partnering with infrastructure companies building out renewable hydroelectric facilities in rural Africa, Bitcoin miners are able to provide a secured ROI from the outset. This is no mean feat as Erik Hersman, the CEO and co-founder of Gridless, told Peter McCormack of the ‘What Bitcoin Did Podcast’.
Hersman, an American who grew up in Sudan and Kenya, told McCormack that he first thought of the idea in 2014 when he heard about an electrical power grid in Kenya that was built out, but essentially “poured that energy into the ground” for six years until the infrastructure was in place to properly distribute it.
In a recent interview with Bitcoiner Joseph Hall, Hersman highlighted additional benefits to energy providers who work with Bitcoin miners, “We work with the power producer, and they work to keep the power price affordable, and all of their employees are from the community, too, providing jobs for everything from security to linesmen to operations”.
Bitcoin miners on the search for stranded energy
Bitcoin miners are typically not in competition for electricity to residential or even most commercial consumers. Instead, they are on the hunt for the lowest electricity on earth which tends to be ‘wasted’ or ‘stranded’. Effectively, Bitcoin mining creates a market for energy that would otherwise have no economic value.
To explain further, this outlines how Bitcoin mining could actually act as an ‘energy dung beetle’.
In that sense, Bitcoin miners are creating a market for stranded or wasted energy, and have the ability to subsidise both the initial outlay and ongoing expenses of electrical grid. This is primarily due to the flexible nature of Bitcoin mining.
As Bitcoin miners like Gridless expand their operations to other parts of Africa, rural communities are being lit up, one at a time.
To be fair, the current scale is small and there are significant regulatory challenges working in the region. Nonetheless, it’s encouraging to see impoverished communities in isolated parts of Africa get access to reasonably priced energy, and most importantly that it’s renewable.