Going Nuclear: Bitcoin Mining’s Potential Energy Future

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Though the preva­lence of bit­coin min­ers using nuclear ener­gy at scale could take years to mate­ri­al­ize, sev­er­al play­ers in the space are bull­ish on the prospect. 

Volatil­i­ty around bit­coin and the gen­er­al slow pace of move­ment in an often risk-averse pow­er indus­try could serve as bar­ri­ers though, indus­try par­tic­i­pants said. 

Bit­coin min­er Ter­aWulf recent­ly revealed it is set­ting up oper­a­tions at a nuclear ener­gy-pow­ered data cen­ter in Susque­han­na, Penn­syl­va­nia, as part of a part­ner­ship with Tal­en Ener­gy forged in 2021.

The com­pa­ny is tar­get­ing 50 megawatts (MW) of min­ing capac­i­ty at the site, with a hashrate capac­i­ty of about 1.6 exa­hash­es per sec­ond (EH/s). 

Ter­aWulf began oper­a­tions at its oth­er site in upstate New York last March, using hydro and solar pow­er at the facil­i­ty. It is now set to com­mence min­ing at the nuclear plant by the end of the quarter. 

Nuclear, nat­ur­al gas and coal pro­vide base load — a min­i­mum lev­el of pow­er on a grid over a peri­od of time. Renew­able ener­gy, such wind and solar sources, have inter­mit­tent load, mean­ing they are not continuous. 

“Giv­en the sig­nif­i­cant pen­e­tra­tion of renew­ables, what’s been hap­pen­ing with a lot of these base-load facil­i­ties is they’re not run­ning at base load any­more,” Nazar Khan, TeraWulf’s co-founder and chief oper­at­ing offi­cer, told Block­works. “They were look­ing and say­ing the opti­mal way to run a nuclear facil­i­ty is for it to just run.”

Khan added that the set-up allows for a bit­coin min­er to be an asset to a sys­tem that rarely uses peak demand. While Ter­aWulf gets a reli­able and car­bon-free ener­gy source to mine bit­coin, the nuclear plant can guar­an­tee a num­ber of megawatts com­ing off their gen­er­a­tors each day. 

“If we could do five more deals like Tal­en, we would,” he said. “We’ve had dis­cus­sions with the largest nuclear oper­a­tors in the coun­try down to folks who have a cou­ple of sites.”

Khan said the con­ver­sa­tions are ongo­ing, declin­ing to share the spe­cif­ic nuclear oper­a­tors Ter­aWulf is in talks with. 

How do other miners view nuclear energy sources?

Ter­aWulf is not the only min­er bull­ish on using nuclear power.

While Marathon Dig­i­tal has not yet made nuclear pow­er a major part of its strat­e­gy, it sees the ener­gy source as a poten­tial key part of the future. The com­pa­ny dou­bled its hashrate in 2022 to 7 EH/s and expects to have 23 EH/s of capac­i­ty installed near the mid­dle of 2023. 

“When we, and I think a lot of oth­er bit­coin min­ers, real­ized how much strand­ed or wast­ed wind and solar [ener­gy] there was…that became a pret­ty good tar­get for bit­coin min­ers,” said Char­lie Schu­mach­er, Marathon’s vice pres­i­dent of cor­po­rate com­mu­ni­ca­tions. “Because you’re look­ing for strand­ed, wast­ed ener­gy; you don’t want to com­pete with con­sumers for electricity.

“So I think that was low-hang­ing fruit ini­tial­ly, but long-term nuclear makes a ton of sense,” he told Blockworks. 

UK-based Lake Parime, a com­pa­ny focused on trans­form­ing ener­gy into zero-car­bon com­put­ing pow­er, revealed in Novem­ber that it launched a site in Ohio using 100% nuclear energy.

The 20 megawatt (MW) site’s host­ing clients are Marathon and TAAL, a com­pa­ny that offers blockchain ser­vices and infrastructure. 

Schu­mach­er said the Ohio site is a good way for Marathon to “test the waters” about poten­tial­ly using nuclear ener­gy on a larg­er scale.

“We’re def­i­nite­ly inter­est­ed if we can find a site that works for us,” he said. “If you just think of the nuclear sites that exist today, we would be hap­py to co-locate next to one and serve as a base-load cus­tomer for them.”

Lili Rhodes, a senior min­ing ana­lyst at Com­pass Min­ing, called nuclear pow­er an ide­al pow­er source for bit­coin min­ers in a Sep­tem­ber 2021 blog post — not­ing that it is ener­gy effi­cient and cheap.

William Fox­ley, Com­pass Mining’s direc­tor of media and strat­e­gy, told Block­works that Com­pass Min­ing has a few mines con­nect­ed to larg­er grids par­tial­ly run on nuclear energy. 

The com­pa­ny secured a 20-year part­ner­ship with Oklo, a fis­sion com­pa­ny that had a pro­posed pow­er plant being reviewed by the US Nuclear Reg­u­la­to­ry Com­mis­sion. But Fox­ley said Com­pass Mining’s deal with Oklo is on pause until its part­ner receives more reg­u­la­to­ry clarity. 

The cur­rent pow­er strat­e­gy of Riot Blockchain, mean­while, focus­es on hav­ing a large, flex­i­ble load in Texas’s ERCOT grid, accord­ing to CEO Jason Les. This includes var­i­ous emis­sion-free ener­gy sources, includ­ing wind, solar and nuclear.

Les did not return a request for fur­ther comment. 

Hive Blockchain, anoth­er pub­licly trad­ed min­er, does not use nuclear ener­gy, CEO Aydin Kil­ic said.

“Our focus has been hydro and geot­her­mal, which do not pro­duce waste,” he told Block­works. “Nuclear is treat­ed as non-emit­ting but it is not a renew­able green ener­gy source like hydro and geothermal.”

Barriers to overcome

Schu­mach­er called the nuclear ener­gy indus­try an “intense­ly reg­u­lat­ed space” with few new sites. 

Rhodes wrote in the 2021 blog post that nuclear pow­er is demo­nized by the main­stream media and feared by the gen­er­al pub­lic. Many peo­ple asso­ciate the word nuclear with bomb, Schu­mach­er added, fur­ther slow­ing the pace of adoption.

The newest reac­tor to enter ser­vice is Tennessee’s Watts Bar Unit 2, which began oper­a­tion in 2016, accord­ing to the US Ener­gy Infor­ma­tion Admin­is­tra­tion (EIA). The next-youngest oper­at­ing reac­tor is Watts Bar Unit 1, also in Ten­nessee, which opened in 1996. 

Over­all, there were 92 nuclear reac­tors oper­at­ing at 54 nuclear pow­er plants in 28 states, as of July 2022, EIA data shows. Nuclear pow­er plants have sup­plied about 20% of total annu­al elec­tric­i­ty used in the US since 1990.

While nuclear ener­gy is a great source of pow­er for bit­coin min­ers in the­o­ry, Schu­mach­er said, it takes two sides to form a partnership.

“I think like many folks in the pow­er indus­try, they’re risk-averse,” he added. “They think in terms of decades and bit­coin thinks in terms of months or days sometimes.”

Jonathan Cobb, senior com­mu­ni­ca­tion man­ag­er at the World Nuclear Asso­ci­a­tion, told Block­works that bitcoin’s volatil­i­ty in recent months could pose an issue. 

Bitcoin’s price is down 66% from its all-time high reached in Novem­ber 2021, and var­i­ous min­ers have strug­gled to pay back debt it took on to expand dur­ing the bull run. Com­pute North and Core Sci­en­tif­ic have filed for bank­rupt­cy in recent months, and indus­try watch­ers have said they expect more casu­al­ties in the space this year.

“Will bit­coin min­ers be in a posi­tion to agree to sup­ply con­tracts that would be mutu­al­ly ben­e­fi­cial?” Cobb said. “This would be less of an issue for oth­er types of data cen­ters with more cer­tain busi­ness models.”

Khan said the dras­tic fluc­tu­at­ing mar­gins of the bit­coin min­ing indus­try through mar­ket cycles has turned off some nuclear pow­er exec­u­tives. Oth­ers in the pow­er indus­try aren’t sold on bit­coin as an asset more gen­er­al­ly, he added. 

Still, Khan said he believes as the bit­coin min­ing space con­sol­i­dates and matures, it has a place in the nuclear ener­gy segment. 

“We would love for it to be the major­i­ty,” he said of nuclear ener­gy as a pow­er source for Ter­aWulf long term. “It’s a zero-car­bon base-load resource, so in terms of how it fits into what we’re doing, it’s a won­der­ful resource to have.”

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