Tesla, Block, Blockstream want to mine Bitcoin from solar power in Texas

Solar panels at the Impact solar facility in Deport, Texas can be seen in this drone photo on July 15, 2021.

Drone Base | Reuters

MIAMI – Blockstream and Jack Dorsey’s blockformerly Square, break ground on solar and battery powered bitcoin mine in Texas using solar and storage technology Tesla.

Tesla’s 3.8-megawatt solar PV array and 12-megawatt-hour Megapack will power the facility.

Blockstream co-founder and CEO Adam Back, a British cryptographer and member of the “Cypherpunk” crew, told CNBC on the sidelines of the Bitcoin 2022 conference in Miami that the mining rig was designed as a proof of concept for 100% renewable energy -Bitcoin mining at scale.

“People like to discuss the various factors involved in bitcoin mining. We thought let’s just prove it. Have an open dashboard so people can play along, maybe it can inform other players to participate,” said Back.

The dashboard will be publicly accessible and will display real-time metrics of project performance, including power output and total bitcoins mined. The company said a later version of the dashboard will also include solar and storage performance data points.

“This is a step towards proving our thesis that bitcoin mining can fund zero-emission energy infrastructure and build economic growth for the future,” Back said.

Improving the economics of renewable energy

West Texas is a renewable energy mecca in the United States.

“You get this perfect overlap with both the sun quality and the wind speed in West Texas,” said Shaun Connell, executive vice president of power at Houston-based technology company Lancium.

But much of that wind and solar power is concentrated in remote parts of the state. Without financial incentive, there is little reason to build renewable infrastructure to harness this energy.

Enter bitcoin miner. When these energy buyers co-locate with renewables, it creates a financial incentive for expansion and improves the core economics of renewable power generation, which has been fraught with volatility.

According to Castle Island Venture’s Nic Carter, miners are creating demand for these semi-stranded assets and making renewable energy commercially viable in Texas.

The constraint is that West Texas has about 34 gigawatts of power, five gigawatts of demand, and only 12 gigawatts of transmission. You can think of bitcoin miners as temporary buyers who keep the power plants running until the grid can fully absorb them.

Back said the off-grid mine, which is expected to be completed later this year, highlights another key tenet of the Bitcoin network: miners are location-agnostic and can “do it from anywhere without local infrastructure.”

Should the project prove profitable in its pilot phase, Back said the companies would add wind power to the mix and scale up the entire project.

“They do a sort of calculation of the optimal economic mix between solar and battery,” Back said. “There’s 3.8 megawatts of solar power and one megawatt of mining, so you can see you need an oversupply as the maximum insolation varies during the day and of course isn’t there at night.”

However, adding wind would lower the overall cost and help offset the downtime with solar.

Ultimately, according to Blockstream, a key goal is to strengthen the Bitcoin network by diversifying the cryptocurrency’s energy sources.

“By collaborating on this 100% solar-powered, full-stack bitcoin mining project with Blockstream using Tesla solar and storage technology, we aim to further accelerate the synergy of bitcoin with renewable energy,” said Neil Jorgensen, global ESG leader Lead at Block and Project Head of Block’s Bitcoin Clean Energy initiative.

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