Gate.io Blog Comments: Nuclear-powered Mining? Is that Serious?

Comments: Nuclear-powered Mining? Is that Serious?

27 May 16:46

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In February 2018, three scientists from the Russian Federal Nuclear Center were arrested by the Russian Federal Security Service on suspicion of treason charges after using the lab's supercomputer to illegally mine bitcoins. The nuclear lab is reportedly located in a secretive Russian city. To ensure security, the lab's supercomputers were not networked, and when connecting the computer to the internal network, the three were discovered.

In July 2019, the Special Service of Ukraine (SBU) arrested an employee for unauthorized mining with energy from nuclear power plants. Documents show that the employee was mining with 11 AMD Radeon RX 470 graphics cards. Mining undermined the safety of the nuclear power plant infrastructure.

The use of "inexhaustible" nuclear energy to mine with the help of supercomputers has always been a popular story on the Internet. But, in principle, is nuclear energy mining economical and feasible?

Environmental Protection and Cost

On May 13, Tesla CEO Musk tweeted, slamming the Bitcoin mining industry for causing a serious energy burden and fossil fuel consumption, sparking a social discussion on Bitcoin energy issues. Currently, Bitcoin consumes 129 TWh of electricity per year, more than even the energy consumption of the entire country of Argentina.

Throughout the Bitcoin industry chain, the three parts of Bitcoin mining, trading, and services correspond to the upper, middle, and lower reaches of the industry chain. For upstream mining, the revenue lies in the output of bitcoins, while the cost lies in the cost of mining machines, electricity, maintenance fees, and labor costs, among which electricity price is the most significant cost. Driven by the cost, the crypto mining industry already has a tendency to move to energy surplus regions.

In terms of energy attributes, nuclear energy is actually a highly efficient and clean energy source, which is very suitable for Bitcoin mining. From an environmental point of view, the greenhouse gas emissions of nuclear power are only one percent of those of coal power of the same size, and there are very few pollutant emissions such as sulfur dioxide, nitrogen oxides, and soot; from a cost point of view, nuclear power is more expensive to build, but the operating costs are very low, and in large countries such as the United States and France (where nuclear power accounts for nearly 80 percent of the country's total electricity), the cost of nuclear power is already lower than thermal power. In addition, after a nuclear power plant is put into operation, it only needs to be inspected once every few years, and the rest of the time it can provide a large and stable power output, which is also conducive to the smooth operation of the mining.

"Energy buyer of last resort"

In a collaborative paper by financial services firm Square and Ark Invest, researchers call the Bitcoin mining industry "the energy buyer of last resort". The mining industry has a number of characteristics. First, the Bitcoin mining industry has an "infinite appetite" for low-cost energy in order to arbitrage between electricity and Bitcoin. Third, Bitcoin mining loads can be flexibly adjusted, both in terms of ease of migration and the ability to turn on and off at any time. These features allow Bitcoin mining to serve as both a load balancer and an added benefit for the grid.

The power output of renewable energy sectors such as wind, solar and tidal energy is affected by time and weather, with higher power on sunny days (or when there is wind) and lower power on cloudy days (or when there is no wind). Miners can be turned on when there is excess power and turned off when power is tight, improving the efficiency of energy use and the profitability of the renewable energy sector, thus promoting the development of renewable energy.

The "Duck Curve" of Daily Variation in Commercial Renewable Energy Generation

Similar to renewable energy sources like wind, solar, and hydropower, nuclear power is not evenly distributed. Especially in Eastern European countries, the nuclear energy industry is more developed due to the inheritance of Soviet-era nuclear power plants. Ukraine alone has 15 nuclear power plants in operation. Due to the weak economy and the impact of the shutdown brought about by the pandemic, there is a surplus of nuclear power. Even if nuclear power plants are unlikely to be dedicated to powering miners, the mining industry can use the "waste power" to bring added value to the plants.

Compared to thermal power plants, nuclear power plants are more difficult to adjust power. After reaching full power, adjusting power requires frequent adjustment of the control rods, which affects the life of the unit and poses many safety risks. In mature power systems, nuclear power plants tend to pursue full power operation and basically do not assume the responsibility of rapid peaking. In this case, the mining industry can be a good complement to the nuclear power plant system, absorbing excess power capacity when the demand for power is low. Or, more recently, the mining industry could be integrated into a nuclear power plant infrastructure, so that in the event of a power crisis (such as the Texas power crisis in February 2021 or the Taiwan power crisis in May), the miners could be temporarily shut down and serve as a "reserve pool" of power.

Promising but controversial future

Nuclear power is clean and efficient, making it an ideal energy source for the development of the mining industry; at the same time, mining efforts are flexible and controllable and can bring objective additional revenue to nuclear power plants. As of 2020, the total installed capacity of nuclear power plants worldwide reached 391.7 GWe, which far exceeds the power demand brought by Bitcoin mining. The use of Bitcoin to regulate the grid and help the development of the emerging energy industry is a promising future.

Currently, countries with excess electricity, such as Russia, Belarus, and Ukraine, are already considering moving forward with mining on a national level. In September 2017, Alexander Drozdenko, governor of Russia's Leningrad Oblast, threw an olive branch to the miner community, inviting them to build an industrial-scale crypto coin mine at the old Leningrad nuclear power plant. In December 2017, President Alexander Lukashenko reiterated his government's commitment to promoting the country's cryptocurrency industry by using its excess nuclear energy to build new mining facilities. The digital currency industry could be a lifesaver for the country's sluggish economy since the financial crisis, as the country's surplus nuclear energy is used to power new mining sites.

Despite the advantages of combining nuclear energy with the mining industry, there is still much controversy surrounding the matter. Nuclear power plants have great safety requirements. The use of nuclear energy for large-scale mining is also prone to public protest. Researchers believe that for countries with insufficient grid regulation or frustrated economic development, using nuclear power to develop mining is a mutually beneficial path to development. But for mature economies such as the United States and China, the use of nuclear energy for mining still needs more discussion.

Author: Gate.io Researcher: Edward.H
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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Comments: Nuclear-powered Mining? Is that Serious?

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