Three Gridless co-founders at one of their mining sites in Kenya.
Erik Hersman
ACCRA, GHANA – Until February, Janet Maingi didn’t think much of bitcoin. Born and raised in the Kenyan capital Nairobi, Maingi has spent over 20 years focused on trying to solve one of Africa’s biggest problems: connectivity. To that end, she has spent more than 20 years working in the telecommunications industry, from companies specializing in internet and wireless networks to cable and satellite TV. But earlier this year, the 45-year-old mother decided to tackle the continent’s second biggest problem: the energy problem.
Africa is a renewable energy mecca. There is an estimated 10 terawatts of solar capacity, 350 gigawatts of hydro and another 110 gigawatts of wind power, according to data from Energy, Capital & Power, an investment platform focused on Africa’s energy sector.
Some of this renewable energy has already been tapped, but a lot of it is untapped, because it is very expensive to build the kind of specialized infrastructure needed to harness it. Although Africa boasts 60% of the best solar power globally, the continent has only 1% of installed solar capacity, according to the report. International Energy Agency.
“When you sit back and look at rural Africa and rural Kenya, one of the things that’s very common in homes – I’m talking about 50% without electricity – is that kids have to do their homework using use paraffin lamps or candles,” Maingi told CNBC on the sidelines of the Bitcoin Africa Conference in Accra.
“Think of their eyesight, think of their health,” she said.
netless
Maingi is frustrated by the divide between generation and capacity, as 43% of Africa’s population, or 600 million people, has no access to electricity. So in February, she started coming up with creative solutions with two friends, and the three of them came up with an unusual idea: bitcoin mining.
Mining the world’s largest cryptocurrency is a process known as proof of work. Miners around the world run powerful computers to collectively validate transactions and simultaneously generate new tokens. This process requires a lot of electricity, and since it is the only variable cost in the low-margin industry, miners tend to look for the world’s lowest-cost sources of electricity.
Philip Walton, Gridless Co-Founder and CFO, sets up a small-grid hydroelectric site for mining with 20 kilowatts of electricity in Kenya.
Erik Hersman
Bitcoin has a bad reputation for the amount of energy it consumes, but it can also help free up these trapped renewable energy sources. Bitcoin miners are essentially energy buyers, and as they co-position with renewable energy, it creates a financial impetus for building and improving the core economy of energy production. renewable quantity. The IEA said that in rural areas “where more than 80% of people live without electricity, small grids and stand-alone systems, mainly relying on solar energy, are the most viable solutions.”
By May, Maingi and two colleagues decided to try it out. They formed a joint venture called netless to see if bitcoin miners’ additional demand for these semi-stranded assets could make Africa’s renewables economically viable — and importantly, whether Can additional energy sources power communities previously out of reach of the microgrids that power parts of Africa.
Gridless also plans to expand into other parts of Africa with the help of a new cash injection.
by Jack Dorsey Digital payment company Block and Alyse Killeen’s bitcoin-focused venture Markled a $2 million seed investment in the company, which Gridless said it plans to use to open new mines.
Maingi is the chief executive officer and her two friends turned co-founders, chief executive officer Erik Hersman and chief financial officer Philip Walton, have spent the past few months rolling out pilot programs across Kenya, where they work with small grid hydro and solar generators. to use their excess capacity for mining.
“We spent many years building internet connectivity infrastructure in rural and urban Africa, and realized that you can’t have a 21st-century economy without both,” Hersman told CNBC. strength and connection.
New 533 kilowatt site in Kenya where 300 kilowatts will be used for bitcoin mining.
Erik Hersman
“As we looked at the next problem to solve, we realized that bitcoin mining solved a big problem for renewable mini-grid energy developers, of which we have could become their industrial buyer for stranded electricity, wherever they are, thus making them more sustainable and increasing electrification across Africa,” continued Hersman.
Gridless currently has three pilot sites operating in Murang’a, a rural town a 90-minute drive northeast of Nairobi. Each mine runs on hydroelectric power from HydroBox, an energy company based in the continent. Two of the mines have a capacity of about 50 kilowatts, and by Thursday the third will expand to 300 kilowatts.
To put those numbers into perspective, 30 kilowatts would power around 500 homes. 50 kilowatts is closer to 800 households.
In January, Gridless plans to open another 50 kilowatt hydroelectric field in Malawi and the first solar-powered site in West Africa will have a capacity of 30 kilowatts.
Reduce energy costs
So far, economics has made a lot of sense to everyone involved. Gridless served as a kind of anchor tenant. The company funds the construction and operations management of data centers in rural communities where there are no traditional commercial or industrial customers, according to a company statement released Tuesday. Three.
Gridless opens a new solar-powered mine in January 2023 in West Africa.
Erik Hersman
Because the electricity supplier benefits from selling energy that was previously phased out, power plants will sometimes reduce costs for the end user. For example, at one of their pilot sites in Kenya, the hydroelectric power station reduced the price of electricity from 35 cents per kilowatt-hour to 25 cents.
The capacity building is also providing electricity to households. Gridless says it has seen this translate into containerized cold storage for local farmers, electric scooter charging stations and public WiFi spots.
Once those types of needs are met, Gridless said in a statement that the remaining electrical capacity is used to power the bitcoin mine.
“Bitcoin and mining are really tools. We don’t do bitcoin for bitcoin,” said bitcoin mining and wallet team leader at Block, Thomas Templeton. “The whole goal is really to empower these villages. Bitcoin is a means to that end.”
Unit previously announced in April it will partner with Blockstream to mine a solar and battery powered bitcoin mine in Texas, using solar and storage technology from Tesla.
Block is also working on a project to make bitcoin mining more decentralized and efficient.
According to Templeton, making mining more accessible is more than just creating new bitcoins. Instead, he said, the company sees it as a long-term need for a completely decentralized and permissionless future.
The company is addressing a major barrier to market entry: mining rigs are hard to find, expensive, and deliveries can be unpredictable. Block says it is looking at creating a new ASIC, which is specialized equipment used for bitcoin mining.
Democratizing access to the mining process is huge for Block. Right now, Africa accounts for about 0.2% of the global bitcoin hash rate (an industry term used to describe the collective computing power of the entire network), according to the Cambridge Center for Alternative Finance. Much of the hashing power has moved from China to the US in the past 18 months after Beijing banned crypto mining. Many in the industry told CNBC that this kind of centralization is a problem.
“Decentralized mining is essential to bitcoin’s resilience,” Templeton said, adding that Block has launched its mining initiative to make mining accessible. more user-friendly and reliable, so that more people can exploit.
It was a sentiment echoed by Dorsey in Accra on Tuesday morning. The Block CEO, who said he still plans to move to Africa in six months, added that Block wants to work with other companies on the continent to make it easier for people to access bitcoin.
“We are working on a hardware miner to make it more accessible and effective for people around the world and especially on this continent to engage in cyber security and make it more resilient. more active in the form of something useful as well. for other things, not just mining.”
Supporting the rise of bitcoin mining across Africa also means another big goal of Block: Help accelerate the global renewable hash rate.
“Gridless represents a strong strategic alignment with our vision of ensuring the bitcoin network is increasingly powered by clean energy, in conjunction with bitcoin compute centers around the world,” said Templeton. .
