Kenya’s Gate to Hell – Two and a half hours’ drive northwest of Nairobi, a small group of people Bitcoin Miners set up shop on the site of an extinct volcano near Hell’s Gate National Park.
The mine, located on the edge of Lake Naivasha and run by a startup called Gridless, consists of a 500-kilowatt mobile container that, from the outside, looks like a small residential trailer.
Powered by Jack Dorsey cloggedGridless uses solar energy and trapped, wasted energy from nearby geothermal sites to power its machines. It is one of six mines the company operates in Kenya, Malawi and Zambia, powered by renewable energy inputs and dedicated to its broader mission of securing and decentralizing the Bitcoin network.
Gridless operation Hellgate’s grid runs on geothermal energy.
Mackenzie Sigalos
“Most people think about Bitcoin and the price of Bitcoin and how to save or spend the value of Bitcoin,” Gridless CEO Erik Hersman told CNBC during a visit to a Kenyan mine earlier this year. “Without Bitcoin miners and us With global distribution, this doesn’t happen. “
Decentralization is a key feature of Bitcoin because it means that the network is not controlled by any entity and cannot be shut down—even without government approval.
Bitcoin and some other cryptocurrencies are created through a process called proof of work, in which miners around the world run high-powered computers and work together to verify transactions and simultaneously create new coins. This process requires large amounts of electricity, causing miners to search for the cheapest sources of electricity.
While there are a dozen publicly traded miners, thousands of smaller, private miners are also competing to process transactions and pay out in new Bitcoin. This includes artisanal miners in countries from Venezuela to Lebanon, and can involve a single mining rig in a kitchen or hundreds of thousands of mining rigs in an industrial-scale data center.
Gridless operates a geothermally powered Bitcoin mining farm at Hell’s Gate on the shores of Lake Naivasha.
Mackenzie Sigalos
Regardless of where it operates, Bitcoin mining is a volatile business because the economy depends heavily on the price of the cryptocurrency. Bitcoin has rebounded significantly since losing 60% of its value in 2022, hitting an all-time high above $73,000 in March, but has pulled back slightly in recent weeks.
Much of the rally has to do with the launch of a spot Bitcoin exchange-traded fund in the United States, as well as optimism surrounding Friday night’s so-called halving. This event occurs every four years and is designed to cut Bitcoin miner rewards in half, thereby reducing the rate at which new Bitcoins enter the market. Cryptocurrencies have seen significant gains following previous halving events.
Bitcoin CEO Adam Sullivan said: “Bitcoin is virtually indestructible at the moment.” core science, a Texas-based Bitcoin miner. “Bitcoin is currently at a stage where it is more profitable to continue supporting the network than to try to undermine it.”
Deutsche Bank analysts wrote in an April 18 report that they expect the geography of cryptocurrency mining to change after the halving, as declining profit margins force miners to seek cheaper and more reliable forms of energy. . The U.S. currently accounts for 40% of the mining industry, Russia 20% and China 15%, analysts wrote.
“Latin America, Africa, and the Middle East have captured the attention of crypto miners due to lower energy costs,” they wrote.
Bitfarms is headquartered in Toronto and currently operates in Argentina, while marathon numbersHeadquartered in Florida, it has expanded to the United Arab Emirates and Paraguay.
Hersman, 48, grew up in Kenya and Sudan, where his parents were both linguists. Before entering the field of Bitcoin mining, he and his two co-founders Philip Walton and Janet Maingi spent several years building Internet connectivity infrastructure in rural and urban Africa.
Gridless operates Bitcoin mining farms in Kenya, Malawi and Zambia using a variety of renewable energy sources. The company’s Hell’s Gate facility relies on geothermal energy to generate electricity.
Mackenzie Sigalos
In early 2022, the trio began brainstorming creative solutions to the gap between generation and capacity and the lack of electricity in Africa. They came up with the idea of Bitcoin mining, which could solve a big problem for renewable energy developers by harnessing stranded electricity and spreading it to other parts of the continent. In Africa, 43% of the population (approximately 600 million people) have no access to electricity.
Gridless currently has eight full-time employees and manages most operations remotely through its software.
Turn lava into Bitcoin
Hell’s Gate is a deep, winding canyon, home to cheetahs, zebras and giraffes, surrounded by cliffs, volcanoes and dense bush.
The area is covered in volcanic ash, and plumes of sulfur steam periodically erupt from the ground, reminiscent of the surrounding smoldering craters that wiped out some of the local Maasai tribe in the mid-19th century and threaten others who dare to take over. live there.
Gone are the days of deadly volcanoes erupting and spewing lava. Instead, a complex, maze-like system of pipes and volcanic plugs make up multiple geothermal power plants.
A borehole at the Olkaria Geothermal Power Plant in Hell’s Gate National Park.
Getty Images/Michael Gottschalk
Volcano-driven Bitcoin mining is not new.
Countries such as Iceland and El Salvador have been using geothermal energy to mine Bitcoin. Nic Carter, founding partner of Castle Island Ventures, which focuses on blockchain investments, said that in order to make conditions suitable for miners, companies need support from local governments, cheap and sufficient electricity, and some infrastructure.
“If you have those three elements, it can work, but sometimes it’s the nation-states or the national, state energy companies that are doing it,” Carter said. He noted that the Middle East is getting into flare gas extraction, which is An example of national players entering the industry.
“In some cases it’s with the explicit support of nation states like Bhutan, and in Texas it’s just because local regulators and local conditions are very favorable,” he said.
Africa has an estimated 10 terawatts of solar capacity, 350 gigawatts of hydroelectric capacity and a further 110 gigawatts of wind capacity.
Some of these renewable energies are already being harnessed, but many are not because of the high cost of building specialized infrastructure to capture them. Although Africa has 60% of the world’s best solar resources, it only accounts for 1% of its solar photovoltaic installation capacity.
Enter Bitcoin miners.
Bitcoin has been criticized for the amount of energy it consumes, but it can also Help unlock this trapped renewable energy. Miners are essentially energy buyers, and coexisting with renewable energy sources can provide financial incentives to boost production.
“As often happens, there is a surplus of electricity during the day and even at night, but no one is absorbing it,” Hersman said. He said his company’s 50-kilowatt mining containers can “hold a full day’s worth of excess electricity.”
Steam pipes at the Olkaria geothermal power plant in Hell’s Gate National Park.
Getty Images/Michael Gottschalk
“At any given second or minute, we’re going up and down with a certain number of miners running,” Hersman said. “It might go down to 50 kilowatts, then go up to 300 kilowatts, then go down to 200 kilowatts, and then Go to another level – this will happen all day and all night long.”
According to the International Energy Agency, in rural Africa, “more than 80% of the population lives without electricity, and mini-grids and stand-alone systems (mainly solar) are the most viable solutions.”
Demand from Bitcoin miners for these semi-stranded assets makes renewable energy in Africa economically viable. Electricity suppliers benefit from selling energy that was previously discarded, while power plants sometimes reduce costs for customers. At an off-grid pilot site in Kenya, hydroelectric power plants reduced electricity prices from 35 cents per kilowatt hour to 25 cents per kilowatt hour.
Capacity is also built to electrify homes.
Gridless says its sites have powered 1,200 homes in Zambia, 1,800 homes in Malawi and 5,000 homes in Kenya. The company’s mines also power local farmers’ container cold storage, electric motorcycle battery charging stations and public WiFi points.
“It’s not really sexy,” Hersman said. “It’s a mining container made out of shipping containers. There’s a bunch of stupid machines inside that run the same equations over and over, but it’s actually about securing the network.”
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