Nuclear-powered bitcoin mining appears to be gaining steam.
Compass Mining has signed a 20-year deal with nuclear fission startup Oklo to supply the bitcoin mining and hosting company with 150 megawatts with clean and cheap energy.
The first Oklo reactors will be deployed in 2023 or 2024 and the cost savings will be “considerably lower” than any energy sources Compass plugs into now, said Compass CEO Whit Gibbs. Oklo plans to build mini-nuclear reactors which produce between one and 10 megawatts of electrical energy compared to the hundreds of megawatts produced at conventional reactors.
Currently, Oklo has applied for a 1.5-megawatt plant at the Idaho National Laboratory in Idaho Falls, Idaho, and is working on additional applications.
Nuclear energy is increasingly part of the conversation when it comes to energy sources for bitcoin mining. Mining firms and their vast racks of power-hungry specialized computers have drawn the ire of environmental groups as bitcoin has surged in price in the last year.
Earlier this week, nuclear power company Energy Harbor Corp inked a five-year partnership with Standard Power to fuel bitcoin mining in Ohio. Talen Energy announced plans to attach a bitcoin mining operation to a nuclear power plant in Pennsylvania that it already owns and operates.
Compass is also in talks with the city of Miami, Fla., about taking advantage of the Turkey Point Nuclear Plant, according to Gibbs. Miami Mayor Francis Suarez is said to be offering the plant to crypto mining firms as an inexpensive power source.
Decentralizing power
Compass allows individual miners to shop for a hosting facility and operates their mining hardware for them. In this sense, it operates as the Airbnb for facilities that host mining hardware. Gibbs said Compass aims to have as much of its mining network on carbon-free energy as possible.
Compass has distributed 0.5% of bitcoin’s hashrate into the hands of individual nodes around the world and plans to capture 10% by the end of 2022, Gibbs said.
Currently, Compass uses third-party facilities that hold power-purchase agreements and can dictate power prices.
“While the facility’s power cost might be $0.030-0.035/kWh, they sell to Compass customers for $0.055-0.065/kWh,” Gibbs explained.
With Oklo, however, Compass holds the power-purchase agreement and Gibbs said he anticipates power costs to be between $0.02-0.04/kWh.
Oklo’s view
As Compass takes advantage of cheaper energy, Oklo gains a partner that can take up extra energy supply at various reactors, said Oklo CEO Jacob DeWitte. As time goes on, Oklo could build reactors that are solely dedicated to bitcoin mining.
This is the first cryptocurrency company that Oklo has signed, and the first nuclear energy deal that Compass has secured. The deal could serve as a “beacon” for the future intersection of cryptocurrency and clean-energy development, DeWitte added.
Unlike other commodities, bitcoin doesn’t require a great deal of infrastructure and once the bitcoin is mined the commodity can be instantly transported with no shipping costs.
“As demand might change by a few megawatts here and there, you can put that off into bitcoin mining,” DeWitte said.
Working with several microreactors as opposed to one large reactor also fits more neatly into the bitcoin ethos of decentralization, DeWitte added.
Is nuclear energy the future of bitcoin?
Oklo’s business model aims to buck the traditional economies of scale that conventional nuclear reactors have taken advantage of by building larger reactors over time versus smaller ones.
DeWitte said he believes nuclear fission has the potential to be the cheapest source of alternative energy, despite the complexity and high costs of building conventional reactors.
“When you think about it from cost and sustainability purposes, looking at all the tools at our disposal to make energy, fission requires the least materials over its lifecycle,” he said.
There are some physicists that disagree with him.
Traditional nuclear plants typically cost around $15 billion, and while smaller reactors cost less to build they tend to be proportionally more expensive, said M. V. Ramana, a physicist at the University of British Columbia in Vancouver, Canada. A $15 billion reactor might produce 1,000 megawatts but building a reactor that produces 1 megawatt won’t be a thousandth of the cost of $15 billion, he added.
The costs associated with nuclear energy also pale in comparison to the declining costs of renewable sources of energy such as solar and wind, which are set to become cheaper over the next decade, Ramana said.
“The cost of generating nuclear electricity today is roughly about four times the cost of generating solar or wind power,” Ramana said.
Costs increase over time for large and small plants, Ramana said. Nuclear energy company NuScale Power, which builds reactors that produce about 60 megawatts of power, saw its costs increase significantly after going through the regulatory process with the Nuclear Regulatory Commission, Ramana said.
It’s unlikely that Oklo would be approved to build by 2023 because it’s safety standards are unorthodox, said Edwin Lyman, a physicist with the Union of Concerned Scientists in Washington, D.C.
“The mindset of Oklo and some of these other new reactor companies is they just want the NRC [U.S. Nuclear Regulatory Commission] to accept the reactor is going to be safer, essentially let them do whatever they want,” Lyman said.
DeWitte noted that Oklo has been accepted into the NRC’s review process, which “represents a high bar and therefore is a major step of itself.” Compass’ Gibbs said he sees a recent $2 million award from the Department of Energy as validation that Oklo will build its microreactors on time.
CORRECTION (June 14, 2021, 14:19 UTC): An earlier version of this article stated that Compass had distributed 5% of bitcoin’s hashrate to individual nodes. The company has actually captured 0.5% of bitcoin’s hashrate.