Building Your ESG Narrative: Energy Mix

Circular sustainable chart

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The massive amount of energy required to mine bitcoin profitably has moved to the forefront of industry conversation, impacting everything from ESG investing behavior to which parts of the world can and cannot mine crypto.

When energy is in high demand, it also increases the demand for fossil fuels such as coal, oil, and natural gas – all of which are primary sources of greenhouse gas emissions globally. This has all led to an increased focus on renewable energy across many industries – and especially in crypto mining.

Here is a closer look at the current state of renewables in the U.S. and how to go about attracting ESG-driven capital for your cryptocurrency mining operations.

What is considered renewable energy?

The U.S. Energy Information Administration defines renewable energy as “energy from sources that are naturally replenishing but flow-limited,” adding that “renewable resources are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.” We will go into further depth on that later in this piece.

According to the EIA, the primary types of renewable energy are:

  • Biomass (wood and wood waste, municipal solid waste, landfill gas and biogas, ethanol, biodiesel)
  • Hydropower
  • Geothermal
  • Wind
  • Solar

The current energy mix in the U.S.

Despite the global and domestic prioritization of renewable energy, only 12% of the U.S.’s energy mix is currently made up of renewables, with petroleum and natural gas still combining to make up 69% of the equation.

pie chart of united states primary energy consumption by energy source, 2020

Still, matters have come a long way in recent decades and show signs of continued improvement in the years ahead. In 2019, the U.S.’s annual energy consumption from renewable sources exceeded coal consumption for the first time in more than 130 years. This reflects both the continued decline of coal usage and the growth of renewables – especially wind and solar.

line graph of u.s. coal and renewable energy consumption (1776-2019)

Renewables and crypto help ESG investing

When it comes to crypto mining, the increased demand for renewable energy is primarily driven by three factors: ESG initiatives, a reduced cost compared to fossil fuels, and the pressure applied by national regulations and commitments to reduce carbon emissions.

ESG stands for Environmental, Social, and Corporate Governance and has become a top priority for many investors in recent years.

ESG investing – also sometimes referred to as sustainable investing, socially responsible investing, mission-related investing, or screening – is powered by independent ratings that help investors assess a company’s behavior and policies when it comes to environmental performance, social impact, and governance issues. With so many investors prioritizing ESG investing, it has become in the best interest of growth-focused companies to prioritize their ESG standing. In the crypto space, this begins with utilizing renewable energy.

In addition to the reduced costs of renewables compared to fossil fuels, recent regulations surrounding carbon emissions and mining have also impacted demand, with China banning mining in several of its previously most mining-intensive regions.

Renewables bringing new challenges

While the shift toward renewables is a good sign, it does bring with it challenges for the energy grid, mainly in the increased difficulty of balancing generation and consumption in real-time.

The intermittency of renewable sources creates challenges primarily during times of peak demand, as sources like wind and solar only deliver energy when the wind is blowing or when the sun is shining. This goes back to the point of renewables being “virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.” While the sources may be essentially unlimited, accessing “unlimited” power during times of peak demand is not as accessible as we have grown used to with fossil fuels.

Demand response programs from data centers can serve as an effective solution, allowing grid operators to more efficiently balance generation and consumption by directing power toward mission-critical applications in times of great need (e.g. toward hospitals during times of local energy crises).

Crypto mining that occurs in data centers with demand response capabilities becomes an ideal solution to the problem. This is because the interpretability of mining can match the intermittency of available power – especially when renewables are interjected. Data centers can ramp mining down when the grid is not producing enough power or up when there is too much power to help stabilize the grid.

Build your ESG narrative with Compute North

Compute North is playing a leading role in the industry-wide shift toward sustainability and renewables. Partnering with us means leveraging our energy mix, which is beneficial not only for the planet but also for those looking to attract ESG investors.

Our TIER 0™ data centers are ideal candidates for demand response programs because the types of compute work performed in these facilities is fully interruptible around the clock and may be curtailed by grid operators unlike traditional data centers.

During Q2, we entered into a 40MW hosting agreement with Bit Digital to expand the firm’s bitcoin mining operations in North America through the deployment of an additional 13,000 ASIC miners. At the core of the agreement are the demand response programs Compute North has with select energy suppliers, allowing operations to be curtailed when necessary to align with periods of low supply or peak demand.

Contact us today to start exploring hosting solutions for your operation.

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