KenGen to provide clean energy to bitcoin miners

Friday, June 10th, 2022 05:50 | By
KenGen Company. PHOTO/Print
KenGen Company. PHOTO/Print

Leading power producer KenGen plans to sell excess geothermal power to bitcoin miners as it seeks to diversify its revenues while reducing risks.

The move could attract large scale crypto mining firms to Africa given that companies which use supercomputers to deal with the algorithms are concentrated in countries with low power prices.

It will entail miners setting up operations at the Olkaria site to reduce transmission costs as KenGen seeks to maximise its sales and reduce over-reliance on Kenya Power as the only client. “We have the space and the power is near, which helps with stability,” Peketsa Mangi, KenGen’s geothermal development director said.

The power producer said miners have been reaching out to them about buying its energy. It is not clear which companies have reached out to Kengen but it is believed that they are either from the US or Europe seeking cheap power and to diversify their locations.

Cheap electricity

Michael Ndege, communications lead for Masinga Data Centre said crypto mining needs a lot of cheap electricity which does not pollute the environment, adding that it also needs plenty of water.

“These are conditions that geothermal producers are able to meet very well, that is why there is a lot of interest from mining companies,” he added. According to Tesh Durvasula, CEO of Africa Data Centres, which is also setting up a 30MW capacity in Accra, Ghana, the sector is a massive growth opportunity on the continent.

“We are witnessing an unprecedented demand for digital services, apps, broadband, cloud technologies, and more, all of which are seeing data demand soar to unimagined levels,” he said.

Crypto mining has come under intense scrutiny over whether mining is causing more carbon emissions and developers have been pushing a shift in favour of proof of stake rather than proof of work which needs a lot of energy to mine bitcoins and other cryptocurrencies.

The plan is to have miners set up in an energy park at the company’s main geothermal power station in Olkaria, Naivasha, 123 km from the capital Nairobi.

The move could be a step in addressing the escalating carbon emissions from crypto mining, whose energy use rivals that of whole countries.

Cambridge’s Bitcoin Electricity Consumption Index suggests that Kenya currently houses no known Bitcoin mining operations, but it appears to be ideal for miners due to the region’s estimated potential 10,000 MegaWatt (MW) of geothermal energy capacity.

KenGen is currently running at a maximum generating capacity of 863MW after installing another geothermal power plant in April according to the Kenyan financial news outlet. By inviting miners to the country, KenGen may be able to accomplish several goals at once. It can increase miners’ environmental sustainability, which has come under great scrutiny around the globe.

Mining consumes 119.5 Terrawatt hours (TWh) per year, more than the entire country of the Netherlands. Overall, 80 per cent of KenGen’s power generation comes from renewable sources, including hydro and wind in addition to geothermal, but the company does not disclose its excess power capacity.  Mwangi said power requests from miners have varied so far, adding:  “Some have requested to start with 20 MW and upscale later.”

Power consumption

Bitcoin production consumes 204.50 terawatt-hours of electricity annually, comparable to the power consumption of Thailand, and is estimated to generate between 22 and 22.9 million tonnes of carbon dioxide emissions a year.

At 35 per cent, the US now accounts for the largest share of global bitcoin mining after China banned crypto. Ether, the second-largest cryptocurrency, uses as much electricity as the Netherlands. However, the Ethereum blockchain has adopted the proof-of-stake system it believes reduces its energy consumption by 99 per cent.

KenGen says by offering clean energy, will contribute to the reduction of carbon emissions caused by bitcoin mining.

Kenya's government, meanwhile, is considering creating a central bank digital currency but maintains its stance against the crypto trade because of the scams that arise from it.

More on Business