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Could Bitcoin mining boost Kenya’s energy sector?

Use of renewable energy for mining bitcoin is gaining pace around the world. In a rather unexpected manner, it seems like sustainable bitcoin mining is also a way to expand bitcoin into mainstream adoption while at the same time driving innovation in the renewable energy sector. In May, while president of Kenya was on US tour, he made announcement that the energy ministry was partnering with Marathon Digital Holdings (MDH) to expand their bitcoin mining operations to Kenya.

According to the announcement, MDH will invest $80 million in establishing green data centers to boost renewable energy utilization and optimization in Kenya. This simply means that the company will tap into Kenya’s renewable energy to mine bitcoin in a sustainable manner. To do this, it is likely that the company will try to optimize renewable energy production and use some of it to mine bitcoin.  Some of the energy generated is likely to be fed to the national grid. Most of the Kenya’s renewable energy sources are geothermal and wind.  The green data centers MDH is referring to could mostly tap into these energy sources improving the harnessing, storage and distribution of energy. The agreement goes further stating that a steering committee would be set up comprising officials from MDH and Ministry of Energy and Petroleum (MOEP). The committee’s role would be ensuring implementation of energy-related projects in the country. This could expand MDH’s role to further play a bigger role in how energy is harnessed and distributed in Kenya.  

MDH is essentially a bitcoin mining company. It is a publicly listed company (NASDAQ: MARA) with current market cap of over $5.7Billion. Bitcoin mining is core to bitcoin network because it is the process that enables production of new bitcoins through a distributed network of miners. It is the process that enables bitcoin to be decentralized without control of a single entity since anyone can join the network and become a miner. However, as the network has grown, it is very energy intensive to mine bitcoin profitably. Therefore companies have set up large mining operations to do this.

MDH currently has operations in North America. In what seems to be a global expansion strategy, the company is seeking to go a step further and partner with governments for energy optimization.  For many years, critics have opined bitcoin mining as wasteful and contributing to continued reliance on fossil fuels to mine and thus increasing carbon footprint.

However, players in the industry have pushed back and various reports have shown that most of bitcoin mining is using renewable energy. They are finding ways of utilizing stranded or otherwise underutilized energy and turning it into economic value. Bitcoin mining companies are going even further showing that they can better utilize and stabilize power grids in the countries they operate. In order to set up viable and profitable mining operations with renewable energy sources, such companies are investing in energy optimization and utilization through new technologies in energy sector. This is turning out to be a viable proposition for governments and they are willing to partner as part of boosting their national grids. Bitcoin companies on the other hand help maintain the bitcoin network by mining efficiently and diversify mining operations. Bitcoin mining could be the key to catalyze growth in renewable energy industry. We are most likely to witness more companies adopting this approach.

Chris Kariuki

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