Original subtitles

There's been a lot of negative attention that Bitcoin mining has drawn.

Bitcoin absolutely is an industry that consumes a lot of energy.

Mining is big news when it comes to Bitcoin.

A lot of people talk about how dirty Bitcoin is.

These big public mines are using large quantities of energy.

But what if the narrative we've been told is skewed and there's a whole lot

to it? The mining process and Bitcoin shouldn't be feared by the public.

What if Bitcoin mining could actually save the world? Bitcoin mining is

the number one most viable solution to solve some of our major methane issues

this planet.

We meet the local company on a mission to use it to help solve global warming.

I do believe that Bitcoin mining could revolutionise the energy industry.

And with big hopes for the future.

In 10 years, you might not build a renewable energy site without a Bitcoin

To understand how Bitcoin mining could save the planet, we need to explore how

it works.

But my first question is, why is it called mining?

There are all kinds of weird words in crypto land, and mining is definitely

of them.

Early on, people were trying to convey the analogies with gold.

Gold is mined, and there's some reward for doing so. You've got to put in this

work. You have to put in physical effort, energy, in order to extract gold

the ground. So Bitcoin uses the same principle.

You need energy to extract it, and that gets turned into Bitcoin.

Earlier in the series, we learned the purpose of mining is to verify and

all Bitcoin transactions, and it's done by solving tricky cryptographic puzzles.

Computers all over the world are in a race to solve these puzzles.

When the solution is found, another block gets added to the blockchain, and

miner who solved the puzzle gets rewarded with newly minted Bitcoin.

Every time a block is mined, a certain amount of Bitcoin are released.

So it started off with each block, there were 50 Bitcoin.

And every four years, there's what we call the halving, so it drops by half.

So it was 25 and then 12 and a half, and so on like that.

Right now, around 19 million Bitcoin have been mined out of 21 million.

The last Bitcoin is due to be mined in the year 2140.

Gold will be mined for hundreds of thousands of years.

Bitcoin's going to run out.

So it's very unique as a store of value.

In the early days of Bitcoin, the network was really small. You didn't

whole heap of computer power to solve the cryptographic puzzle.

Back in the day, a miner could be one person on their laptop.

But as the number of miners grew, the cryptographic puzzles became more

difficult and a miner became its own type of computer.

As the network has grown, the horsepower that sits behind the machines has

evolved. Now, a miner is an individual machine. It runs automatically.

And the current Bitcoin miners only do one job, and that is solve the Bitcoin

cryptographic puzzles, which means that they can be more efficient in doing

that. And they're powerful.

Each machine consumes three kilowatts of electricity, far more than their

average laptop.

I had a workshop here in Queenstown.

I actually blew out the power in the block.

I just plugged in too many machines and just zapped the whole area.

I realized after a little while that mining is a bit of an arms race.

I got out of it because I realized this is where the big boys are going to play.

And who am I to just be blowing out the power grid here in Frankston,

Queenstown, New Zealand?

How big can mining operations get?

Huge. There can be tens of thousands of machines at an individual site.

But Bitcoin mining isn't guaranteed free money. It's become an industry where it

can cost millions of dollars to buy the infrastructure to mine Bitcoin.

Big public mines are using large quantities of energy. At the moment,

somewhere between Christmas lights and tumble dries in terms of its global

percentage of energy use, so it's relatively small.

But these single operations, they will be consuming a lot of energy to be

supporting and securitizing the Bitcoin network.

It requires energy to securitize the entire network.

What they're really doing is they're continuously keeping this network safe

attack by validating the blocks in the blockchain.

So once that block is added, it can't be altered, it can't be changed, and

that's what gives blockchain or cryptocurrency its robustness.

Once a transaction has been made, it can't be fraudulently changed in any

It's fully trustworthy.

OK.

Bitcoin mining sounds pretty important.

Do other cryptocurrencies mine as well?

So you've got different types of blockchains and they can run on

operating mechanisms.

Ethereum mining was very similar to Bitcoin mining. They both relied on

work. Proof of work is basically another way to describe mining and is the

mechanism Bitcoin uses to verify transactions, which we know is a very

job. but uses lots of electricity.

You have the direct financial incentive to spend lots of electricity to earn

Bitcoin or earn Ether.

In September 2022, Ethereum pivoted from using proof -of -work to a new system

called proof -of -stake.

Proof -of -stake is basically a different way to verify transactions

doesn't use anywhere near as much electricity.

When Ethereum moved to proof -of -stake, it was a huge deal for the crypto

community and the planet.

When that switch happened, it was called the merge.

And that has been years in the making. There was a strong desire for Ethereum

move to a more environmentally friendly way of operating.

With proof of stake, it really doesn't use that much more power than, say, a

software application on your desktop.

That resulted in a 99 .95 % reduction in energy usage for Ethereum transactions.

Super impressive stuff.

No other industry can make those kinds of claims right now that they're

up their carbon footprint by that degree.

There's been a lot of talk about how much energy Bitcoin mining uses, but is

actually bad for the environment?

There's been a lot of negative attention that Bitcoin mining has drawn when any

industry has spotlight shone on it.

That actually provides an inbuilt incentive to do the right thing.

There's been quite a shift towards renewable energy for Bitcoin mining.

The Bitcoin network uses around 60 % renewable energy, and that number is

growing every year. Bitcoin mining, it's actually doing the opposite of what the

media claim. It's actually encouraging people to find better, cleaner, cheaper

ways to extract energy.

It's actually the number one user of renewable and zero emission energy in

world right now because it has more scrutiny on it.

One of the incredible features of Bitcoin mining is the ability to use

energy that otherwise no one could have used because the wrong time of day,

wrong time of year or the wrong location.

Methane emissions are a large problem we need to solve. There are multiple

sources of methane emissions and they all need to be addressed.

You've got all of this methane, which is not only an environmental hazard, but

it's a tremendous source of wasted energy.

A lot of the sources of that methane are remote.

You can't convert it to electricity and put it into the grid because you're not

necessarily near the grid.

Bitcoin is a geography -independent buyer of energy, and we've never

had that before.

Generally speaking, we have to create energy near to population centers.

That's not the case with Bitcoin. All you need is internet.

You can take that methane, convert it to electricity through gas turbines, and

then use that to power Bitcoin machines.

The energy is 100 % contained within the one site. There's no grid

infrastructure. There's no gas pipelines.

It all happens at the source.

And that's one of the beauties of Bitcoin mining.

It doesn't care where it sits.

Bitcoin miners have this unique capacity to be the dung beetle that solves this

problem, stops it going into the atmosphere, stops that waste, and uses

something which is incredibly valuable to humanity.

Whoa, my mind is being blown here. How else can Bitcoin mining save the planet?

The unique thing about Bitcoin mining is it's a flexible load, so it means we

can actually act as a grid stabilizer.

In a world where there's abundance of renewable energy, you need a mechanism

manage the peaks and the troughs. And Bitcoin mining can be very useful at

And that was really where our story with GridShare began. With that mindset,

balance the grid, share the energy.

Back in 2020, a couple of innovative Kiwis recognised the potential Bitcoin

mining could play in the renewable energy industry in Aotearoa.

My other two co -founders had the idea of using Bitcoin mining to help balance

the grid. Craig has built wind farms and other renewable energy projects.

Sam has come out of the power electronics space, so he worked for a

designed solar inverters.

A year later, Tom joins the team, adding his energy industry knowledge to the

project.

I studied civil engineering. I was an engineer for long enough to realise that

didn't want to design retaining walls for the rest of my life.

So I then transitioned to management consulting.

I had a lot of different clients in and around the energy industry.

That's what actually opened my eyes to some of the challenges that renewable

energies have.

Solar comes on in the middle of the day.

The price is absolutely tank because there's too much energy going into the

grid.

At the end of the day, demand picks up because everyone's arriving back at

So you have this rollercoaster every single day and that's a huge challenge

renewable energy because they have no certainty how they sell their power,

they sell their power to.

New Zealand is abundant with renewable energy.

But renewable energy, in terms of its flexibility to provide the stable

operation for the grid, it's not really that flexible.

Wind and solar, you can't really choose when it generates.

In addition to basically matching supply and demand of power, grids need to

maintain a certain level of frequency.

It's 50 hertz.

The grid operators have to really ensure that that does not deviate too much

from that.

If you're a grid operator, if you have blackout...

You can lose billions of dollars.

You can lose lives of people who are on life support.

So their number one concern is to keep the grid stable.

What changes frequency in a grid is changes in supply and demand.

And so this is the big challenge with renewable energy because a cloud goes in

front of the sun, a solar farm, for example, the supply cuts at that point.

changes the frequency in the grid.

and you have to be able to react very quickly to maintain the frequency at the

right level.

The main way that a lot of grid management currently is through fossil

You take all the fossil fuel side away, you add more uncertainty from renewable

energy, and then all of a sudden you do have a situation where the grid can

become unstable.

A Bitcoin mine can actually switch on and off very, very rapidly to be able to

help balance some of the more technical elements to the grid management.

Also, a Bitcoin mine can be located anywhere, and so that provides a huge

of flexibility.

Bitcoin mining can also really help renewable energy by buying their power

no one else needs it.

and really actually bolstering the business cases for a lot of renewable

funds.

The GridShare team could see that with the abundance of renewable energy in New

Zealand, Bitcoin mining could be a huge support to the industry and grid

stability. So they took their first steps.

Okay, well, how do we actually start a business? Well, we need a power contract

and we need a location and then we need investment.

So I picked up the phone and called many, many people.

The bias was, well, you guys are just Bitcoin miners.

There's quite a lot of nervousness with it being linked to cryptocurrency. Some

people just won't entertain the subject.

There were some skepticism along the way, for sure.

I had to then convince them of what we were trying to achieve, and so that was

hard slog.

I called energy companies, I called network companies, private people that

thinking about building energy.

Eventually, a CFO of a large energy company in New Zealand did pick up my

and was keen to take it further.

I cold -called the CFO even in the first conversation.

I didn't mention Bitcoin mining.

You never really know how people are going to react, but he got onto it very

quickly. He's like, you're talking about Bitcoin mining, aren't you?

Really what we proposed to him was to build a data centre at one of his energy

sites and that data centre would buy power directly from their energy

site but would also switch off when the power was needed on the grid.

They loved the concept.

The next step was to decide the best location.

We discussed several different sites, and there were several things to

One was land, to put the containers and the infrastructure away from the local

communities as well. It does make a little bit of noise.

And internet connection, having good connectivity to power the mining.

A remote site in Southland ticked all the boxes and was given the green light.

The dam itself, the hydro, is about several kilometres back upstream.

And it's diverted over the land and actually comes all the way up here and

down those pipes there. And basically the falling motion or the flowing water

spins the turbines and that creates electricity.

There's cables underground and that flows back up the hill and into the

substation, which converts it to power to go onto the grid.

I put two megawatts of power on the table. Two megawatts of power is...

Still relatively small, but it's far larger than, like, you would plug into

house or even into a decent -sized commercial building.

Throughout the build, there was a bunch of stressful moments. We were trying to

construct this during COVID.

We had infrastructure that was coming from various parts of the world as well

locally here in New Zealand, which kept them getting delayed.

It was a pretty big gamble, I think.

Although I believed in the vision, I knew the economics pretty well. I knew

downside risks pretty well.

And I put a bunch of money into this.

Some days I would wake up, how are we going to make this work? Where am I

to find the investment from?

Are we going to deliver the project?

Personally, there were lots of things that were going through my head. I have

two young kids.

sort of up and leave a decent job to attempt a start -up in the

energy business.

I always joke around that that's sort of my midlife crisis.

We ran into lots of challenges along the way.

The power station is about 100 years old. It's very remote.

There's three sets of infrastructure, so we had to essentially build and install

all the infrastructure to get the power.

from the power station into the miners.

The second set was the actual containers.

And then the third set of infrastructure were the miners themselves.

We fit about 200 machines into a container, so it's about three

to power two megawatts.

When we switched it on, it was a pretty big relief, actually.

We have remote controls for the operation.

We can control the data centres remotely.

So I monitored the phone app pretty much continuously for the next 24 hours,

making sure that nothing was going to fall over. That since calmed down a

bit.

The actual mechanism of the mining is really straightforward.

The computer servers are running. We get Bitcoin paid into a digital wallet

every day. We basically then sell that every day for New Zealand dollars.

We don't hold Bitcoin for any length of time.

So the money that we earn goes to paying the power bill and then the rest of

it's just running the business, paying salaries, insurance, other things that a

regular business does.

We had a lot of feedback after going live and so we went and had a meeting

the locals, explained the vision, explained that we're just three Kiwi

we're not some nefarious international conglomerate sort of thing and actually

had a really good outcome.

You know, I think we're quite a big benefit to the generator here. We do

about a third of the capacity of the power station.

However, we can switch off within a moment's notice. And so if there is

required on the grid, we switch off. That power goes into the grid when it's

needed.

Pretty proud, actually, of what we've done so far. We've only been doing this

for a couple of years, and so I think we've come quite a long way in that

Was it stressful?

Yes. It was very stressful.

We're a start -up. We've got family and friends, investment money that has

basically built this. We still don't have much money. So, yeah, every day I

challenge myself on why I did this, but I think it's a success.

I definitely don't think Satoshi had the energy -useful Bitcoin in mind when

they wrote the white paper, but that's another evolution of Bitcoin, right,

which is the ability to help us transition to a more renewable world.

I do believe that Bitcoin mining could revolutionise the energy industry.

So much so that in something like 10 years, you might not build a renewable

energy site without a Bitcoin mine.

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