August 8, 2022

Bitcoin isn’t the nice evil we now have been led to consider. Till you’ve seemed deeply into one thing, you’re not able to guage it, says Daniel Batten.

John Lennon as soon as mentioned, “Life is what occurs once you’re busy making different plans.” I remembered this line right now once I recalled the plans I used to be making for this 12 months, and what really occurred. 

For so long as I can keep in mind, defending the surroundings was my #1 worth. At drama faculty, a buddy affectionately teased me by christening me Daniel “loves bushes greater than folks” Batten. In my teenage years and twenties, I used to be a daily on protest marches: towards the confiscation of indigenous land, towards Genetic Engineering, and towards the logging of native forest to call a couple of. The latest one I went on was 9 years in the past towards Deep Sea Oil Drilling off New Zealand’s coast.

I nonetheless keep in mind the day a buddy from Greenpeace, a corporation I supported over 4 a long time, rang me as much as ask me to guide an motion towards one among McDonald’s environmental practices. Along with a flock of people dressed as chickens, we stormed the McDonald’s HQ and I, wearing Ronald McDonald-like regalia, introduced my resignation. “Oh, and there’s a slight probability you’ll be arrested” he talked about on the finish. I used to be CEO of a expertise firm I’d based on the time. With out telling my board what I used to be planning, I mentioned “sure.”

The concept

Slowly it dawned on me although, I used to be a greater supporter of expertise than I used to be a protestor. What if I used that ability to make a distinction? That led me to create a ClimateTech VC fund.

It was a simple determination. I’d been investing in expertise firms for 19 years, so I knew what to search for, what to keep away from and how one can optimize a founding staff’s probability of success.

We invested in firms that not solely made business sense however who we felt pleased with. One firm is on a mission to decarbonize your entire Zinc business by 2045. One other has a purpose to take away 50% of all CO2 emissions from the Greenhouse business by 2030. The best way they’re going, they’ll in all probability make it.

Bitcoin awakening

About the identical time, a buddy of mine began speaking to me much more about Bitcoin. I felt conflicted. On one facet, I might see the social good: the way it helped construct a world the place wealth switch from the poor to the wealthy through quantitative easing was now not doable. However as an environmentalist, I’d heard the tales about its vitality utilization and was unconvinced if it did sufficient good to justify its carbon emissions.

When Greenpeace got here out towards Bitcoin – the interior battle intensified. My Bitcoiner buddy was telling me that it helped construct out the renewable grid. My associates at Greenpeace have been saying this was Greenwash propagated by grasping Bitcoin buyers who would say something to extend the user-adoption upon which their returns depended.

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I noticed I needed to do my very own analysis.

I didn’t know what I’d discover, however I suspected the reality would lie someplace within the center.

Bitcoin analysis

For the primary time in my life, I spent an prolonged time period merely researching one thing I used to be inquisitive about and wished the reply to.

My analysis led me to learn extra about Local weather Change, CO2 emissions, and methane emissions than I’d ever learn. I’ll be sincere: discovering the true enormity of the local weather disaster and the duty forward of us was not straightforward studying. I pressured myself to know physics, vitality, the jargon of {the electrical} grid, vitality buying and selling, and Bitcoin mining. I interviewed or listened to interviews with local weather scientists, photo voltaic engineers, grid operators, analysts at utility firms, utility scale wind operators, photo voltaic installers, battery specialists and onchain analysts.

Slowly however absolutely, an image began to emerge from the haze. It was a constant image, constantly espoused by all of the folks I spoke to who had seemed into it deeply.

The conclusion was this:

1.    Bitcoin mining can be utilized in a method that’s dangerous for the surroundings. Examples of this embrace the re-opening of a gasoline plant in NY State for the only real objective of Bitcoin mining.

2.    Bitcoin mining can be utilized in a method that’s good for the surroundings. Examples of this embrace the photo voltaic and wind operators I found who wouldn’t have gotten financing to construct their crops had it not been for having a Bitcoin mining buyer.

That appears like a impartial end result, some arguments for and towards. The result was something however impartial.

Different issues to know

I additionally came upon

1.    That the path Bitcoin mining is heading is in direction of renewable vitality

2.    That the speed at which it’s transitioning to renewable vitality is quicker than some other business I’d seen (as a VC who sees round 50 cleantech pitches a 12 months, we’d seen a complete stack!)

3.    The present % of renewable vitality use can be larger than some other business

4.    All of the photo voltaic engineers, battery engineers, grid operators and utility analysts I spoke to, individuals who’d extensively studied the way you construct out a renewable grid, mentioned the identical factor.

1. You can not construct a renewable grid with out having versatile load prospects

2. Bitcoin miners are the perfect versatile load prospects they’ve seen

3. Bitcoin mining is more and more utilizing vitality that may have in any other case been wasted (reminiscent of photo voltaic vitality at noon or wind at midnight when folks didn’t want it)

4. Bitcoin mining offered a path to retire all fossil fuel-based generators wanted as backups throughout “peak load” instances

5. Bitcoin mining helped with sustaining the frequency and voltage regulation of the grid (which turn into progressively tougher with each 10% of variable renewable vitality you add)

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6. Bitcoin mining might make energy extra inexpensive to shoppers by lowering the curtailment charges that utilities in any other case needed to pay to renewable operators for not taking their surplus energy.

Bitcoin mining advantages

There have been a bunch of different advantages too. However this may require some deeper evaluation (and jargon) about how electrical grids work.

However actually, the primary two factors say all of it: grids constructed on variable renewable vitality should have versatile prospects who can alter their utilization in response to era provide. They have to additionally be capable of cut back their utilization given minutes’ discover. Bitcoin miners are the one prospects who present this flexibility.

Or to place it much more bluntly: with out Bitcoin mining, the renewable grid will merely not occur – it’ll stay a perfect: Grid operators and utilities will say they’re “working in direction of it”.

So what downside with renewables does Bitcoin uniquely remedy?

Grid operators’ #1 purpose is to keep up the soundness of the grid. Price-effectiveness and renewable composition is essential, however not as essential as stability. That’s as a result of when grids fail, folks die and grid operators lose their jobs (as just lately occurred throughout the Texas 2021 Winter Blackouts). Even with battery expertise, this stability turns into progressively tougher to realize once you base your grid on variable renewable vitality.

Whereas we should transfer away from fossil gasoline plant, coal and gasoline did provide one benefit over renewables: you may improve or lower the era of a gasoline plant at will. Photo voltaic and Wind don’t have that flexibility. They’re additionally extremely unpredictable.

While you add rigid and unpredictable mills reminiscent of photo voltaic and wind, until you counterbalance this with versatile, predictable prospects – your entire grid will turn into unstable due to both under-supply or oversupply of electrical energy and there will probably be a better danger of blackouts.

Bitcoin: Why Environmentalists Need to Relax, It’s Better Than You Think

Local weather change components

Paradoxically, as local weather change bites, excessive climate occasions have gotten extra widespread. Which means that grid operators are confronted with the Herculean activity of making an attempt to transition to a grid made up of variable renewable vitality at a time when even the present grid is turning into extra unstable resulting from local weather occasions.

Grid operators have investigated a variety of different choices: Hydrogen, batteries, pumped hydro, machine management applications, and Demand response based mostly on curbing metal crops. None of them come anyplace near the flexibleness of Bitcoin miners. Even batteries are solely a partial resolution for causes I cowl intimately in my separate article

Bitcoin’s location-agnostic and time-of-day agnostic options prove to make it the best solution to take away many of the world’s atmospheric methane brought on by human intervention too, however that’s one other story.

Bitcoin and the surroundings: A abstract

In abstract: listed here are some quotes instantly from among the key gamers.

“By no means in my wildest goals would I’ve imagined a buyer as very best as Bitcoin miners” [Utility Scale Wind Operator]

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“I began off researching batteries as an answer to the intermittency of photo voltaic. I quickly realized that with out one other offtaker for surplus energy, batteries have been incomplete. After testing a variety of doable offtakers, I noticed the that finest one by far was Bitcoin Mining.” [Sam Kivi, Solar Engineer]

“We will use that cryptocurrency to … discover a dwelling for extra photo voltaic and extra wind to come back to our grid. “Then they cut back consumption after we want that energy for different prospects. So it’s an excellent balancing act.” [Brad Jones, Interim CEO, ERCOT (The Grid Operator for Texas)]

An enormous part of how we get [to our 2050 renewable grid goal] is new demand response methods. And Bitcoin mining is completely different as a result of you may cut back demand in minutes to the precise stage you want with pinpoint precision. You simply don’t see that stage of flexibility or response in these legacy (demand response) applications. [lead analyst, major US Electrical Utility]

In the long run…

So, there you could have it. It wasn’t what I used to be anticipating to search out. I needed to put apart every little thing I believed I knew about Bitcoin. The extra I’m going by means of life, the extra I understand that till you’ve seemed deeply into one thing, you’re not able to guage it.

A deeper take a look at Bitcoin reveals a shocking fact. Bitcoiners typically despair that the mainstream media narrative doesn’t take this deeper look. I’d encourage these Bitcoiners to not be involved. Each novel disruptive expertise will get attacked as a result of, properly, it disrupts some individuals who don’t wish to be disrupted.

In the meantime behind the scenes, Bitcoin is enabling one of many single most essential transitions of a era: the transition to the renewable grid. Ultimately this fact will turn into so simple that Bitcoin detractors will probably be pressured to decide on a distinct assault vector. Within the meantime, as an environmentalist, I couldn’t be extra delighted that we now have Bitcoin in our world.

There’s a phrase within the local weather motion: “the right is the enemy of the nice.” Photo voltaic isn’t good nevertheless it’s good. So is the case for Wind. For Bitcoin additionally, it’s in the identical membership: not good, however good. Bitcoin gives us a sensible solution to construct out the renewable grid at a time we’re in a footrace towards a fast-warming world.

Concerning the writer

Daniel Batten is a ClimateTech investor, writer, ESG analyst and environmental campaigner who beforehand based and led his personal tech firm which exited in 2019.

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