Hydropower

Bitcoin mining brings more than money to this East African country

A Bitcoin mining project in a remote corner of Malawi connects more families to the grid while delivering economic empowerment to an impoverished region.

A Bitcoin (BTC) mining project that taps into clean, stranded and excess hydro energy in Malawi, a landlocked country in southeastern Africa, has picked up steam. The company behind the project, Gridless, tweeted that there are now “1600 families connected to this remote hydro minigrid in the mountains of southern Malawi.”

The project exploits 50 kilowatts (kW) of stranded energy to test out as a new Bitcoin mining site. Erik Hersman, CEO and co-founder of Gridless, told Cointelegraph that while it’s a brand new mining project, the “impact was immediately felt.”

“The power developer had built these powerhouses a few years ago, but they weren’t able to expand to more families because they’re barely profitable and couldn’t afford to buy more meters to connect more families. So, our deal allowed for them to immediately buy 200 more meters to connect more families.”

Bitcoin miners are flexible but energy-hungry clients. They are a plug-in-and-play solution for sources of excess energy around the world. In Malawi, the miners run off environmentally friendly hydropower.

The facility runs off hydropower. Source: Hersman

In Hersman’s words:

“The environmental footprint is quite light, as it is run off a river. And the Bitcoin mining didn’t change any of that.”

It’s Gridless’ second project in Sub-Saharan Africa to date. Late last year, a mining project in Kenya connected a remote community using excess hydropower.

Street sellers in Malawi. Source: Hersman

The environment aside, the Bitcoin mine brings economic empowerment and job opportunities to Malawi. Hersman explained that electricity load shedding is common in Malawi, but the 1,600 families using the hydropower source do not have any power issues:

“It’s always amazing to me to see how useful and valuable mini-grids are to the community. It [Bitcoin mining] immediately changes the education, healthcare, business, logistics and wealth of the community where they go in.”

Obi Nwosu, CEO of Fedimint and a board adviser at Gridless, also shed light on the story, explaining that the project in “Malawi is one more in a line of what I expect to be many examples over the coming years.”

“As usual, these are modest people rolling up their sleeves and helping talented, local engineers do what they do best. The project brings power as well as financial and economic freedom to many.”

Bitcoin miners tapping into stranded energy while empowering local communities is a growing trend in 2023. From El Salvador’s promise of geothermal Bitcoin mining to balancing the grid load and sustaining jobs for local communities in Canada, there is a “torrent of opportunities coming their way,” Nwosu explains.

Related: Seven times Bitcoin miners made the world a better place

Michael Saylor has described Bitcoin mining as “the ideal high-tech industry to put in a nation that has plenty of clean energy but isn’t able to export a product or produce a service with that energy.” It’s an accurate summation of the project in Malawi.

A canal channeling water in Malawi. Source: Hersman

Ultimately, this type of Bitcoin mining project is more akin to a partnership. Hersman sums it up, “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.”

Nuclear and gas fastest growing energy sources for Bitcoin mining: Data

Some governments can negatively impact Bitcoin’s environmental footprint by banning BTC mining, according to new data from Cambridge.

The electricity mix of Bitcoin (BTC) has drastically changed over the past few years, with nuclear energy and natural gas becoming the fastest growing energy sources powering Bitcoin mining, according to new data.

The Cambridge Centre for Alternative Finance (CCAF) on Tuesday released a major update to its Bitcoin mining-dedicated data source, the Cambridge Bitcoin Electricity Consumption Index (CBECI).

According to the data from Cambridge, fossil fuels like coal and natural gas made up almost two-thirds of Bitcoin’s total electricity mix as of January 2022, accounting for more than 62%. As such, the share of sustainable energy sources in the BTC energy mix amounted to 38%.

The new study suggests that coal alone accounted for nearly 37% of Bitcoin’s total electricity consumption as of early 2022, becoming the largest single energy source for BTC mining. Among sustainable energy sources, hydropower was found to be the largest resource, with a share of roughly 15%.

Despite Bitcoin mining relying significantly on coal and hydropower, the shares of these energy sources in the total BTC energy mix have been dropping over the past several years. In 2020, coal power powered 40% of global BTC mining. Hydropower’s share has more than halved from 2020 to 2021, tumbling from 34% to 15%.

Bitcoin mining electricity mix from 2019 to 2022. Source: CCAF

In contrast, the role of natural gas and nuclear energy in Bitcoin mining has been growing notably over the past two years. The share of gas in the BTC electricity mix surged from about 13% in 2020 to 23% in 2021, while the percentage of nuclear energy increased from 4% in 2021 to nearly 9% in 2022.

According to Cambridge analysts, Chinese miner relocations were a major reason behind sharp fluctuations in Bitcoin’s energy mix in 2020 and 2021. China’s crackdown on crypto in 2021 and the associated miner migration resulted in a major drop in the share of hydroelectric power in the BTC energy mix. As previously reported, Chinese authorities shut down a number of crypto mining farms powered by hydroelectricity in 2021.

“The Chinese government’s ban on cryptocurrency mining and the resulting shift in Bitcoin mining activity to other countries negatively impacted Bitcoin’s environmental footprint,” the study suggested.

The analysts also emphasized that the BTC electricity mix varies hugely, depending on the region. Countries like Kazakhstan still rely heavily on fossil fuels, while in countries like Sweden, the share of sustainable energy sources in electricity generation is about 98%.

The surge of nuclear and gas energy in Bitcoin’s electricity mix allegedly reflects the “shift of mining power towards the United States,” the analysts stated. According to the U.S. Energy Information Administration, most of the nation’s electricity was generated by natural gas, which accounted for more than 38% of the country’s total electricity production. Coal and nuclear energy accounted for 22% and 19%, respectively.

Among other insights related to the latest CBECI update, the study also found that greenhouse gas (GHG) emissions associated with BTC mining accounted for 48 million metric tons of carbon dioxide equivalent (MtCO2e) as of Sept. 21, 2022. That is 14% lower than the estimated GHG emissions in 2021. According to the study’s estimates, the current GHG emissions levels related to Bitcoin represent roughly 0.1% of global GHG emissions.

Combining all the previously mentioned findings, the index estimates that by mid-September, about 199.6 MtCO2e can be attributed to the Bitcoin network since its inception. The analysts stressed that about 92% of all emissions have occurred since 2018.

Total greenhouse emissions related to Bitcoin as of mid-September 2022. Source: CCAF

As previously reported, the CCAF has been working on CBECI as part of its multi-year research initiative known as the Cambridge Digital Assets Programme (CDAP). The CDAP’s institutional collaborators include financial institutions like British International Investment, the Dubai International Finance Centre, Accenture, EY, Fidelity, Mastercard, Visa and others.

Related: Bitcoin could become a zero-emission network: Report

The new CDAP findings differ noticeably from data by the Bitcoin Mining Council (BMC), which in July estimated the share of sustainable sources in Bitcoin’s electricity mix at nearly 60%.

“It doesn’t include nuclear or fossil fuels so from that you can imply that around 30%–40% of the industry is powered by fossil fuels,” Bitfarms chief mining officer Ben Gagnon told Cointelegraph in August.

According to CBECI project lead Alexander Neumueller, the CDAP’s approach is different from the Bitcoin Mining Council when it comes to estimating Bitcoin’s electricity mix.

“We use information from our mining map to see where Bitcoin miners are located, and then examine the country, state, or province’s electricity mix. As I understand it, the Bitcoin Mining Council asks its members to self-report this data in a survey,” Neumueller stated. He still mentioned that there are still a few nuances related to lack of data in the study.