Green Hydrogen Is Integral to Making Bitcoin Green

Bitcoin is a decentralized digital currency that was created in 2009. The process by which new Bitcoins enter circulation is called Bitcoin mining. Bitcoin mining is also the way the network confirms new transactions and is a critical component of blockchain ledger maintenance and development. Bitcoin miners receive Bitcoin as a reward for digitally verifying transactions, which are then added into the blockchain.

Mining Bitcoin Requires a Significant Amount of Energy

The downside of Bitcoin mining is that a significant amount of energy is used to run the mining algorithm. Per the University of Cambridge, the annual electricity consumption of the Bitcoin network (125.1 TWh) is equal to the annual consumption of a country like Sweden. A single Bitcoin transaction consumes as much electricity as an average American household over 23 days.

Electricity Consumption for Mining Bitcoin: 2017-2022

(Source: Cambridge Bitcoin Electricity Consumption Index)

Making Bitcoin Green

Driven by the increasing popularity (and subsequent increase in electricity demand) of cryptocurrencies and other digital innovations, data centers represent the fastest growing consumer energy segment. Data centers have also become important players in the US electricity market, where they work closely with utilities and energy brokers to acquire renewable energy through virtual power purchase agreements.

Nonetheless, there are misconceptions pertaining to how data centers could be made green. In 2021, Jack Dorsey’s firm Square released a white paper that stated that Bitcoin is a key driver for renewable energy’s future. The main argument of the paper hinges on the concept of the “duck curve.” However, data centers require uninterruptible power supply and cannot rely on variable renewable energy alone.

Another option is to convert the excessive renewable power to green hydrogen, which can be stored and passed through hydrogen fuel cells to power data centers. Fuel cells are increasingly being adopted to generate high quality reliable power. The main advantage of fuel cells is that they can be configured as a primary power source and use the electricity grid for backup power. As fuel cells also generate excess heat, they can provide cooling for servers located within the data center.

Adoption of Hydrogen-Powered Fuels by Data Centers

Due to these benefits, several companies have started investing in fuel cells for powering their data centers. In 2011, Apple installed a 10 MW fuel cell coupled with solar panels to power its North Carolina iCloud data center. In 2021, Caterpillar launched a 3-year project in collaboration with Microsoft and Ballard Power Systems to produce reliable power for data centers. This project is backed by the U.S. Department of Energy under the H2@Scale initiative.

Fuel cells are also being adopted in the Netherlands for powering data centers. The data center firm NorthC plans to replace its current backup power generators with a 500 kW fuel cell that will run on green hydrogen, marking the first such project in Europe. Lastly, the European Eco Edge Prime Power project aims to demonstrate synergies between fuel cells and batteries to provide primary power for critical infrastructure including data centers. With electricity demand from data centers and Bitcoin only expected to grow, increased integration of green hydrogen-powered fuel cells will likely be required for green data centers.