Block (formerly Square) and Blockstream (a long-time Bitcoin company) have agreed to co-finance a pilot project to mine bitcoin off the electric grid in an all-solar facility.
Why it matters: The energy overhead of Bitcoin has become hotly controversial, but some bitcoiners argue the technology can help finance further development of renewable energy.
- The new facility, announced Friday, fits into a larger trend where more mining of bitcoin is done by publicly traded companies, up now to a fifth of all such activity, according to Arcane Research.
Context: Mining refers to bitcoin’s “consensus mechanism,” where computers compete to solve ever more difficult puzzles to win the right to add the next set of entries to Bitcoin’s ledger and earn fresh new bitcoins.
Details: According to an interview with Blockstream’s Adam Back on CNBC, the new facility would be a $12 million project, built using Tesla technology.
- “What we’re going to do — unusually — is open source all the information about it,” Back said.
- A CNBC report suggests the facility would be in West Texas, a part of the state so thinly populated it’s unlikely solar facilities would ever get built there otherwise, despite ample space and sunshine.
- That’s because “a significant part of the electricity is lost when transmitted over vast distances. That’s where a bitcoin miner comes into the picture,” Jaran Mellerud, an analyst at Arcane, tells Axios.
The intrigue: The value of that stranded power, once converted to bitcoin, can then be sold over the internet. As such applications increase development of solar technology, it should lower the price for all applications, in theory.
- Block and Blockstream did not reply to further requests for comment from Axios.
The bottom line: “We’re interested to prove out our thesis that bitcoin mining can help fund green power infrastructure,” Back told CNBC. “Let’s just prove it, have an open dashboard, so people can play along.”