How Bitcoin is reshaping Texas’ renewable energy landscape

Despite a recent cryptocurrency crash, the dedicated base of people who advocate for Bitcoin and its future, is rallying around the asset. In the latest episode of E2B: Energy to Business, host Daniel J. Litwin spoke Ryan Dusekdirector of Opportune LLP’s Commodity Risk Advisory Groupand Cooper LigonConsultant in the company’s Process and technology practice, to discuss why Bitcoin is so popular and how the growing demand is driving an increase in renewable energy.

As Ligon describes it, Bitcoin is a “decentralized peer-to-peer version of electronic cash that allows online payments to be sent directly from one party to another without going through a financial institution.”

The allure of acquiring Bitcoin is that it is a valuable currency that does not require the usual processes of regular bank exchanges. Unlike the dollar, Bitcoin owners do not have the same concerns about loss of value.

READ MORE: Why Renewable Energy Can’t Survive Without Bitcoin

“The Bitcoin supply is also pre-programmed, so there will never be more than 21 million Bitcoins in circulation,” says Ligon. “Unlike the dollar that we have seen, when there is inflation, they will [the Federal Reserve] can just print as much as they want,” Ligon said.

He elaborates: “There’s a predetermined path that contains the supply of Bitcoin. So theoretically, some guy can’t mine it all at once and therefore make it worthless.”

Ligon further explains that privacy and the ability to make digital transactions without a third party has been another major driver in the rise and interest in Bitcoin.

For him, Dusek says the real value of Bitcoin lies in blockchain, a distributed database or ledger shared between the nodes of a computer network. Like a database, a blockchain stores information electronically in a digital format, while maintaining a secure and decentralized record of transactions. The innovation of a blockchain is that it guarantees the credibility and security of a data record and generates trust without the need for a trusted third party.

Going forward, however, Dusek notes that Bitcoin may be a viable one hedge against inflation. Given the recent past, Dusek stands corrected and states that he predicted that there was a solution to fight inflation much earlier.

“I don’t know of anything else that has a fixed supply, so you know in the long run, this is going to be the bet against inflation,” Dusek says. “Honestly, I thought it would happen a lot sooner. Bitcoin looks like it’s still being treated like a technology stock or financial asset, but I feel like there’s going to be a disconnect sooner rather than later.”

However, by nature, Bitcoin is inherently very energy intensive and relies on cheap energy to make money. When it comes to renewable energy, the demand for Bitcoin mining is driving miners to look for cheaper sources of energy to power their complex supercomputers and servers. That in turn fuels greener energy as “about 58.4% of Bitcoin mining is powered by renewable energy,” Ligon says, citing Bitcoin Mining Council’s 2022 Report.

Ligon also adds that miners are very “willing to go anywhere for cheap energy.”

READ MORE: Cryptocurrency in Texas: Why Bitcoin Mining Is Taking Off in the Lone Star State

One of these areas is Texas, which is apparently the destination of choice for Bitcoin mining due to the state’s energy infrastructure that provides access to cheap power from the deregulated power market, increasing source mix of renewable energy (especially wind energy), and its supporting policies and support from decision-makers.

Dusek says initially was one of the biggest draws to the state hydraulic fracking in shale basins such as the productive Permian Basin and the availability of cheap, excess natural gas. The shale boom attracted more miners to the region who wanted to take advantage of low-cost, abundant natural gas. As a result, many Bitcoin mining companies started popping up in Texas. As long as the state fosters an environment that encourages more oil and gas production along with renewable energy innovation, Texas will continue to be the ideal location for Bitcoin mining.

“There are a lot of problems with trying to be 100% renewable because of the erratic energy flow,” says Dusek. “So at some point the Bitcoin miners will be happy to do that, but right now I think everyone is going to be tied to fossil fuels until we have a breakthrough in technology like batteries that are scalable and can work like those” is to a certain degree a tool.”