Since its founding in 2017, HIVE Digital Technologies has built its business with a focus on hydroelectric energy. The Company’s data centers in Canada, Sweden and Iceland are all located near hydro power plants. In fact, HIVE’s data center in Boden, Sweden is located just 500 meters from the local hydro plant.
Hydro power is an ideal energy source for data centers. It is clean, renewable, low-cost, and frequently provides surplus energy to the grid.
For these reasons, it is fairly obvious why data center operators would choose hydro. Interestingly enough, it is also surprisingly good for the power plant operators.
The National Hydropower Association (NHA), a nonprofit industry group, explains the symbiotic relationship in an article titled “Why Hydropower Owners Need to Talk with Bitcoin Miners”.
While the reasons that Bitcoin miners are pursuing deals with hydro generators are clear, generators should understand how they can benefit, as bitcoin mining can act as another revenue stream for hydropower owners, provide a stable revenue source, assist with energy demand management, price arbitrage, and diversifying revenue sources.
I believe this is an excellent list of reasons why mining Bitcoin with hydro makes sense for both parties. I especially want to highlight the point that Bitcoin miners can “assist with energy demand management” from the perspective of the plant operators. This is an important part of the relationship.
The NHA article explains further, “Bitcoin mining operations can help hydroelectric plants manage energy demand by utilizing excess electricity during periods of low demand.” That’s one part of the equation.
Perhaps more importantly, during periods of high demand miners can quickly shut down. In many cases, HIVE has agreements with its power providers to automatically curtail and cease pulling energy from the grid during periods of high demand. The HIVE team has built advanced systems which can shut down mining operations in 5-30 seconds during demand spikes or grid problems. HIVE is compensated for curtailments as part of its agreements with local utilities.
This advantage of being able to shut down quickly is one of Bitcoin mining’s unique benefits. Traditional data centers require nearly 100% uptime. Bitcoin miners, on the other hand, can shut down for a few hours, if required, to balance the grid. And typically, HIVE is compensated for that action.
In this way, responsible Bitcoin miners like HIVE help balance the electrical grid, making them ideal partners for hydro companies. HIVE offers steady but flexible energy demand. And for a utility, steady but flexible is the ideal customer.
The benefits for hydro plants are clear. Bitcoin mining has allowed at least two hydroelectric plants in Costa Rica and New York to continue operating when they otherwise would have permanently closed. There are almost certainly many more.
If you’re interested in this topic, I invite you to watch this presentation on YouTube by Johanna Thornblad, president of HIVE Sweden. In the video, Johanna discusses how HIVE utilizes stranded hydro power, sells energy back to the grid and is working to recycle its heat to warm local businesses.
Cheers,
Adam Sharp
The HIVE Newsletter