NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Tuesday, January 2, 2018

Up in the Austrian Alps, inside two hydropower mills, a start-up called HydroMiner keeps high-power computers, CPUs, and servers running around the clock. These machines suck in a steady 600 Kilowatts of cheap hydroelectric power as they seek to mine new bitcoins — an energy-intensive process that involves solving mathematical problems by repeated trial and error. But unlike other bitcoin miners, HydroMiner says it’s minting cryptocurrencies without harming the environment or contributing to climate change.

“You need cheap energy to fuel your hardware,” says HydroMiner’s co-founder and CEO Nadine Damblon. By setting up shop next to where the electricity is produced, the start-up is able to pay only 4 to 6 euro cents per kW, racking up over $300,000 in profits every month. “Hydropower is the best renewable energy we could find,” Damblon says.

HydroMiner is one example of how the cryptocurrency community is hoping to address the public outcry over the astronomical amount of energy bitcoin mining consumes. Rather than impeding attempts to avert catastrophic climate change, some in the crypto community argue, all that energy demand could drive the development of better renewable energy technology. But others don’t buy it: Bitcoin can only work if it changes the way it operates, some researchers say. Otherwise, mining will drive up the consumption of energy from all sources — including coal and nuclear.

“Since the aim of expanding renewables is not to promote renewables for their own sake but to reduce the use of fossil fuels, the demand from Bitcoin is environmentally harmful, even if part of it is met by expanding renewables,” John Quiggin, a research economist at the University of Queensland in Australia.

Photo courtesy of Ken Teegardin.