HELL'S GATE, Kenya – Two and a half hours northwest of Nairobi by car, a small group of bitcoin miners set up shop at the site of an extinct volcano near Hell's Gate National Park.
The mine, nestled on the shores of Lake Naivasha, is run by a startup called Gridless and consists of a 500-kilowatt mobile container, which from the outside looks like a small civilian trailer.
Powered by Jack Dorsey Block, Gridless electrifies its machines with a combination of solar power and wasted, trapped energy from a nearby geothermal site. It is one of six mines operated by the company in Kenya, Malawi and Zambia, powered by a combination of renewable inputs and geared towards the broader mission of securing and decentralizing the bitcoin network.
Runs off-grid Gridlesin Hell's Gate is powered by geothermal energy.
MacKenzie Sigalos
“Most people think about bitcoin and bitcoin price and how they can save the value or they can spend it,” Gridless CEO Erik Hersman told CNBC during a visit to a Kenyan mine earlier this year. “That wouldn't happen if bitcoin miners and we weren't globally distributed.”
Decentralization is a key feature of bitcoin, because it means the network is not controlled by any one 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 to validate transactions and coins. time to create new tokens. This process requires a lot of electricity, causing miners to look for the cheapest energy sources.
While there are more than a dozen publicly traded miners, thousands of smaller private miners are also competing to process transactions and get paid in the new bitcoin. That includes individual miners in countries from Venezuela ARRIVE Lebanonand can involve a single mining rig in a kitchen or hundreds of thousands of machines in an industrial-grade data center.
Gridless operates a bitcoin mine powered by geothermal energy in Hell's Gate on the shores of Lake Naivasha.
MacKenzie Sigalos
Wherever it operates, bitcoin mining is a volatile business, because so many economic factors depend on the price of the cryptocurrency. Since losing 60% of its value in 2022, bitcoin has grown again, reaching its highest level take note above $73,000 in March, before falling slightly in recent weeks.
Much of the rally is tied to the launch of spot bitcoin exchange-traded funds in the US, as well as optimism surrounding so-called halved That happened late Friday. That event happens every four years and is designed to cut rewards for bitcoin miners in half, slowing the rate at which new bitcoins enter the market. Previous halving events have been followed by massive price increases in cryptocurrencies.
Adam Sullivan, CEO of Core science, a bitcoin mining company based in Texas. “Bitcoin is at a point where continuing to support the network is more beneficial than trying to disrupt it.”
Analysts at Deutsche Bank wrote in a note on April 18 that they expect the crypto mining landscape to change after the halving as lower margins force miners to Search for cheaper and more reliable forms of energy. The US now accounts for 40% of mining activity, with Russia at 20% and China at 15%, analysts write.
“Latin America, Africa and the Middle East have attracted the attention of cryptocurrency miners due to lower energy costs,” they wrote.
Bitfarms, headquartered in Toronto, currently operates in Argentina, while Digital Marathonbased in Florida, has expanded into the United Arab Emirates and Paraguay.
Hersman, 48, grew up in Kenya and Sudan, where his parents were linguists. Before entering the bitcoin mining industry, he and his two co-founders, Philip Walton and Janet Maingi, spent years building internet connectivity infrastructure in rural and urban Africa.
Gridless operates bitcoin mines in Kenya, Malawi and Zambia using a combination of renewable energy sources. The company's facility in Hell's Gate runs on geothermal energy.
MacKenzie Sigalos
In early 2022, the trio began devising innovative solutions to address the gap between electricity generation and capacity and electricity shortages in Africa. They came up with the idea of mining bitcoin, which could potentially solve a major problem for renewable energy developers by taking their stranded electricity and spreading it to other parts of the continent. land. In Africa, 43% of the population, or about 600 million people, do not have access to electricity.
Gridless currently has eight full-time employees and manages much of its operations remotely using its software.
Turn lava into bitcoin
Hell's Gate is a deep and winding canyon, inhabited by cheetahs, zebras, giraffes and surrounded by cliffs, volcanoes and bushes.
The area was covered in ash and periodic plumes of sulfur-containing steam would emanate from the ground, a reminder of the smoldering craters around which wiped out some of the native Maasai tribes in mid-19th century and threatened others who dared to take over. take up residence there.
Gone are the days of deadly eruptions and spewing lava. Instead, a labyrinthine system of pipes and volcanic plugs comprises multiple geothermal power plants.
A borehole at the Olkaria geothermal power plant in Hell's Gate National Park.
Getty Images/Michael Gottschalk
Mining bitcoin using volcanic energy is not new.
Iceland, El Salvador and other countries have harnessed geothermal energy to mine bitcoin. Nic Carter, founding partner of Castle Island Ventures, which focuses on investing in blockchain, said that to facilitate miners, businesses need a combination of government buy-in. local, abundant and cheap electricity as well as some infrastructure.
“If you have those three components, it can work, but sometimes it's the nation or a national, national energy company that does it,” Carter said. He pointed to the Middle East, which is starting to explore gas, as an example of state-level actors getting involved in the business.
“In some cases, it was because of the clear support of the country like Bhutan, and then in Texas, it was because of the local regulatory agencies and very favorable local conditions,” he said.
Africa is home to an estimated 10 terawatts of solar capacity, 350 gigawatts of hydropower and another 110 gigawatts of wind.
Some of this renewable energy has already been harnessed but much of it remains untapped because building dedicated infrastructure to utilize it is expensive. Even with 60% of the best solar resources globally, Africa has only 1% of installed solar capacity.
Enter bitcoin miners.
Bitcoin gets a bad rap for the amount of energy it consumes, but it can help unlock these trapped renewable energy sources. Mining companies are essentially energy buyers, and partnering with renewable energy sources creates financial incentives to boost production.
“As usual, you will have excess power during the day or even at night and no one to use that power,” Hersman said. He said his company's 50-kilowatt mining container can “accept whatever is surplus during the day.”
Steam pipes at the Olkaria geothermal power plant in Hell's Gate National Park.
Getty Images/Michael Gottschalk
“Within any given second or minute, we will be up and down a certain number of mining machines that are running,” Hersman said. “It could go down to 50 kilowatts, then up to 300 kilowatts, then down to 200 kilowatts, then up another level – and that would happen day and night.”
According to the International Energy Agency, in rural areas of Africa, “where more than 80% of the population lives without electricity, mini-grids and stand-alone systems, largely based on solar power, are the most feasible solutions”.
Demand from bitcoin miners for these semi-fibre assets is making renewable energy in Africa economically viable. Electricity suppliers benefit from selling previously scrapped energy, while power utilities sometimes reduce costs for customers. At one of the Gridless pilot sites in Kenya, a hydroelectric plant reduced electricity prices from 35 cents/kWh to 25 cents/kWh.
Building capacity also electrifies households.
Gridless said its facilities have powered 1,200 homes in Zambia, 1,800 homes in Malawi and 5,000 homes in Kenya. The company's mines also power container cold storage for local farmers, charging stations for electric motorbikes and public WiFi spots.
“It's not really sexy,” Hersman said. “It's a mining container made from a shipping container. It has a bunch of stupid machines inside that run the same equation over and over again, but it's actually what keeps the network secure.”
