With the right plan, the adoption of cryptocurrencies can be leveraged as a facilitator for the investment and development of decentralized, renewable energy grids. This can play a key role in combating climate change and accelerating our transition to a more sustainable future.
Let’s start with the following points: 1) Energy & computers are ubiquitous in the modern world. They are a vital part of economic prosperity. 2) Climate change is real, and it is accelerating and demanding a systemic shift towards renewable energy. 3) Thankfully, renewable energy generation costs have dropped tremendously due to innovations in both solar photovoltaic and wind technology. [1] 4) However, storage and transportation costs remain high, preventing cheap renewables from reaching high demand areas. This surplus energy is stranded and goes to waste. This remains as the greatest obstacle to the economic viability of new renewable projects. [2] The wasted energy is on the scale of terawatts and should not be ignored. To put this into context, researchers from University Chicago have concluded that the stranded power from only 6 generation sites in the Midcontinent Independent System Operator grid can power the top 250 supercomputing systems from tech internet giants like Amazon, Google, and Facebook combined. [3]
To address the problem of stranded renewables, companies like Crusoe and Soluna are trying to scale distributed data centers to tap into this wasted energy at where it’s generated. This is genius! Data centers are location agnostic, but energy intensive. They can be anywhere, as long as there is cheap electricity. However, there are still challenges. Renewables are intermittent. The supply naturally fluctuates with wind and sunshine availability. The data centers that capture these excess centers can’t be active at all times. Each center needs to auto-scale its compute load based on when power is available. This supply-driven model is difficult to scale. Traditional data centers and computer workloads are not designed to be turned on and off. Imagine your ecommerce website going down because it’s raining in California (I know, it’s rare. But it happens).
This is where crypto comes in, offering a large-scale, compute-intensive workload that has uniquely allows for interruptions and is adaptable! Crypto, or cryptocurrency, is a payments system supported by a decentralized computer network using cryptography to secure transaction records. It is a digitized financial system built on blockchain – “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way.” [4] Without diving too deep into the technicalities, we can understand this system of computers as an energy buyer that can be located anywhere in the world and can be switched on or off. This makes it the perfect compute workload for distributed datacenters to run on “stranded,” surplus renewables. This provides a consumption demand guarantee for projects and eases the minds of investors deciding on whether to fund a new project. If used correctly, this can have a powerful effect incentivizing the development of renewables like solar and wind.
There’s a tremendous opportunity here for private and public sectors alike to accelerate the systemic transition to renewable energy. However, crypto is an expensive and new technology. Policymakers on the state and federal level need to start looking at crypto differently and devise incentives for crypto-underwritten renewable development projects.
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