Last week, the Wall Street Journal ran a piece on three recent nuclear-bitcoin deals that may signal a growing trend in the industry. The Journal piece reflects a small but growing sense of excitement expressed by some crypto fans—including Miami mayor and bitcoin fanboy Francis Suarez, who has tried to lure miners to Miami in part by touting a nearby nuclear plant—about the possibilities for a partnership between the two industries. (There was even a meetup for bitcoin fans and nuclear operators held in Austin this week.)
As its popularity has risen, bitcoin’s increasingly heavy energy consumption—and reliance on dirty sources of electricity that could fry the planet—has come under fire. At the same time, nuclear proponents are calling for more investment and support for the U.S.’s largest current source of carbon-free energy. An injection of cash from the cryptocurrency industry to nuclear energy probably isn’t the grand solution crypto adherents and technofuturists think—but there are some interesting possibilities for these two industries to work together.
Nuclear power currently constitutes 20% of the U.S grid, providing a valuable source of carbon-free baseload power. But for a myriad of reasons, the country’s nuclear reactors are increasingly on the verge of shutting down. The main one is high operating costs compared to renewables as well as natural gas. Building new nuclear plants is also an expensive and time-consuming endeavor, which is why there’s only one plant currently being built in the U.S. (And being built with cost overruns and delays at that.)
“Nuclear facilities as we have built them previously are some of the largest infrastructure projects in the country,” said Alex Gilbert, a project manager at the think tank Nuclear Innovation Alliance. Traditional American nuclear projects tend to be enormous, and the costs of delays and mismanagement are hard to overcome when the plant is up and running. While there are efforts afoot to upgrade nuclear technology, the rapid technological innovations other energy sources benefit from simply don’t exist for nuclear power.
“With wind and solar, when you have a very short construction timeframe, you can then build a second plant using the lessons from the first, and that leads to relatively rapid cost reductions,” Gilbert said. “If it takes you 15 years to design, license, and build a power plant before it’s online, by the time you’re going to build a second power plant, the technology has changed so much that you simply start over again.”
Of the three partnerships between bitcoin companies and nuclear energy that the Journal mentioned, two involve bitcoin miners partnering with existing nuclear sources to power their operations. TeraWulf, a company that has branded itself as “next-generation zero carbon bitcoin mining,” announced in April it would be building a facility next to the Susquehanna Steam Electric Station in Pennsylvania, which began operating in the early 1980s. Meanwhile, Standard Mining said in July it would be sourcing energy for a mining center in Ohio from a nuclear plant run by Energy Harbor.
Digging into the history of these two particular plants sheds a little more light on the types of existing nuclear plant owners courting bitcoin miners. The owner of the Susquehanna facility, Talen Energy, has a history of financial problems, including owning two gas plants that have filed for bankruptcy. The company’s pivot to crypto mining was, Bloomberg reported, “unwelcome” news for investors this year, many of whom had bought bonds last year after Talen announced it would stop burning coal and pursue a renewable energy strategy instead. (One analyst told Bloomberg the move “feels like a Hail Mary.”)
Then there’s Energy Harbor Corp. The company used to have a different name: FirstEnergy Solutions. If that name sounds familiar, it’s because its parent company, FirstEnergy Corporation, was brought up on federal charges last year for bribing top Ohio politicians to pass a $1 billion bailout bill for two struggling nuclear plants in the state. FirstEnergy Corporation paid a $230 million fine for its role in the scandal earlier this year and continues to exist while FirstEnergy Solutions filed for bankruptcy in 2018. It has since reemerged as Energy Harbor, which now owns and operates all of FirstEnergy Solution’s old assets. (Energy Harbor itself hasn’t been charged in the bribery case.)
These are not companies investing in the future, but rather companies searching for anything that will help keep the profits flowing using existing power plants. It’s pretty safe to say that some cash-strapped owners of nuclear plants will be using mining partnerships not to make any technological strides, but rather to simply keep the old plants operating.
“The plants themselves are pretty well-run, and they know what they’re doing,” said Gilbert. “It really is a matter of the economics. There’s a certain point where you’re definitely unprofitable, and you’re going to be likely to close because you’re not getting enough money in power markets. But if a bitcoin operation takes 10 to 15 to 30 percent of your power at a reasonable price, that tips you into profitability.”
This profitability means the plants can stay open, giving miners a little carbon-free energy as a treat while keeping the U.S.’s biggest source of zero-emissions power operational. This is especially a good idea while we wait for more renewables—and policies that favor them—to come online, in what could be the first real-world proof bitcoin is doing some societal good instead of being a waste of energy and resources.
If bitcoiners simply have to mine for magic internet money, it’s better that they do it without fossil fuels. If mining centers can do this, then that’s great news in terms of emissions. But these examples aren’t exactly the techno-futurist dream of shepherding in the next generation of nuclear technology; it’s more like getting chemo to a patient with Stage 4 cancer.
And there’s a valid question of how many miners will voluntarily sign up to get power from nuclear plants and provide these much-needed “tipping-points” for struggling plants across the country, especially when it’s almost certainly more expensive than other options. Bitcoin adherents like to tout that miners go to where energy is cheapest. Nuclear is, bluntly, not that: The 2019 World Nuclear Industry Status Report found that nuclear was one of the most expensive forms of energy in the U.S.
While some mining operations may think that the value of running on carbon-free nuclear power is worth the PR, many are certain to go on choosing cheaper sources of power, including both fossil fuels and renewables. Neither TeraWulf nor Standard Mining responded to questions about what rates they were paying for nuclear power, if they received a discount, and whether they had shopped around at different power plants or considered other forms of carbon-free technology.
The third example in the Journal is a little different, but almost more interesting—it’s not about keeping old and dying plants alive, but rather helping new technology develop. Hardware and hosting firm Compass Mining announced in July that it had inked a 20-year supply deal with Oklo, a startup that’s developing what are known as fast nuclear reactors. Oklo is one of a myriad of smaller companies and startups that say they’re on the verge of rolling out these smaller kinds of nuclear reactors, which theoretically wouldn’t have the scale of construction and cost issues of larger plants.
This is largely a greenwashing PR win for Compass in the present. Oklo’s technology won’t be ready for another few years at minimum, and the company can keep using who-knows-what to power its mining operations in the interim while raking in kudos for the nuclear deal. Nuclear critics point out that the industry has promised fast reactor technology before and has never managed to deliver, and there are many safety hurdles facing designs like Oklo’s.
But Gilbert said that the technology could finally be on the horizon. A few small-to-medium reactors should be ready for licensing in a few years and some over the next decade, he said, helped along by private and federal funding. To actually get to a point where the kinds of smaller reactors could be developed that would be competitive with the (rapidly falling) price of renewables, Gilbert said, would take a significantly larger bump from private capital—as well as more customers.
“Providing early demand for advance reactors, especially microreactors, that’s how bitcoin can most help the nuclear sector,” he said. “The biggest thing [about the Oklo deal] is showing that there is a potential demand that you can then go to investors and get funding for.”
I’m not a technofuturist who dreams of a libertarian paradise, but I have to admit that there’s kind of a cool idea here. If the bitcoin community really believes cryptocurrencies are the money of the future, let them be the first to invest in a budding technology that could be the energy of the future. In the interim, however, they shouldn’t be allowed to rest on their greenwashing laurels while continuing to churn out emissions as they wait for fast reactor technology to become feasible in 10 years. Government regulations are, of course, anathema to crypto true believers. But a mandate that any new mining facilities source power from nearby nuclear plants could go a long way toward cleaning up bitcoin’s act and ensuring the carbon-free energy we desperately need stays on the grid while fancy fast reactors come online.
“I don’t particularly like bitcoin, but it’s here, and it’s going to have a huge energy impact, so I don’t want that energy impact served by coal,” said Gilbert. “If that can be served by nuclear that keeps more nuclear around that then prevents us from using natural gas, that’s great.”
Update, 10/11/21, 9:25 a.m.: This post has been updated to clarify the distinction between FirstEnergy Corporation and FirstEnergy Solutions.