Our Investment in MintGreen
Greening Bitcoin Mining by Selling Heat
We are excited to share that CoinShares Ventures has invested in MintGreen, a CleanTech company using bitcoin mining to monetize heat generation.
MintGreen is focused on addressing two of the primary concerns related to cryptocurrency mining — sustainability and power costs. MintGreen builds, manages, and maintains industrial bitcoin mining systems co-located with utilities and industrial plants to produce guaranteed income from two revenue streams — cryptocurrency and the sale of heat, with a potential third revenue stream in the form of tax credits.
The North American mining ecosystem is growing rapidly, and with more American corporations, asset managers, and financial institutions allocating to Bitcoin, building onshore capabilities is becoming increasingly important. We feel MintGreen is well-positioned around the North American mining narrative and the sustainability narrative, and has an opportunity to carve out a unique niche in this sector.
Selling Heat — From Undesired Output into Salable Asset
At CoinShares, we believe Bitcoin is the catalyst for an energy revolution the likes of which we have never seen before.
In cyberspace, miners use specialized hardware like ASICs and power to mine cryptocurrencies like Bitcoin, but in the real world, they mostly produce a lot of heat. Today, miners view heat as an undesired output, and facilities have invested in industrial operations including venting and cooling infrastructure to remove this heat. MintGreen has built a proprietary solution to capture this heat and sell it to buyers of heat. The MintGreen immersion bitcoin mining system allows for efficient capture and transfer of the heat generated by crypto mining servers to industrial scale hot water utilities known as District Energy (DE) via long-term off-take agreements.
District energy systems use networks of hot water piping to efficiently deliver industrial scale heating and hot water, utilizing a lot of electricity in the process. Cryptocurrency mining works synergistically with district heating due to its consistent, predictable loads and scalable year-round energy intensity.
MintGreen is able to sell district energy companies and companies that need industrial-grade heat this lowest priced*, fully managed, and integrated low carbon heat source, MintGreen also profitably mines bitcoin at extremely low power prices, often nearing $0.00kW and sometimes even trending negative.
Bitcoin is a Catalyst for Sustainable Energy Infrastructure
There have been many discussions about Bitcoin’s energy usage, which our team at CoinShares has spent significant time researching in order to better understand what type of energy is being used to mine bitcoin. Our 2019 Mining Report found that 73% of bitcoin mining is doing utilizing renewable energy sources. This is evidenced by where bitcoin mining happens — miners are still largely confined to regions dominated by cheap hydro-power, such as Scandinavia, the Caucasus, the Pacific North West, Eastern Canada and Southwestern China.
With concerns around sustainability and use of renewables, district energy is a rapidly growing part of the global energy infrastructure grid. Like bitcoin mining operations, district energy networks are very diverse and variable in terms of size and load, and seek out low cost, low carbon sources of energy to generate the heat needed. Similarly, heating and cooling networks are based on economies of scale, as the generation of heat in one large plant can often be more efficient than production in multiple smaller ones. A growing number of cities worldwide are adopting modern district energy solutions, as the best way to bring sustainable heating and cooling in dense urban environments.
Like other parts of the energy grid, district heating is trending towards low carbon heat sources. Jurisdictions like British Columbia have put a zero emissions plan into place to get to 100% low carbon heating by 2030. Environmentally progressive countries like Norway are exploring regulatory mandates to utilize waste heat from data centers within their district energy footprint.
According to District Energy Magazine, the size of the global district energy market is currently $177B, and is projected to reach $250B by 2029. The electricity consumed by district energy plants around the world could power the bitcoin network several times over. Taken together, the demand for cheap, green heat for district energy and the growing demand for energy to power the security of the bitcoin network translate to a robust and growing market for MintGreen.
By providing heat from a source that is low-cost and renewable, MintGreen’s solution is an ideal alternative to the high-cost green sources (geothermal, biomass, hydro) or low-cost carbon sources (natural gas) that are most popular today. Coupled with the narrative around ESG investing, CoinShares believes this product will also help shift the narrative around crypto mining as wasteful because it can leverage existing electricity usage that is directed towards heating. As an added benefit, we also see opportunities for MintGreen to open non-traditional crypto-mining markets, as carbon regulation and heating costs will attract a different set of market participants than industry miners looking to optimize for power price alone.
The growing popularity of sustainability coupled with growing investor appetite for highly profitable bitcoin miners is driving demand for these types of deals amongst investors. For example, Square announced the launch of a Bitcoin Clean Energy Initiative to focus on sustainable bitcoin mining as part of its broader drive towards zero emissions. MintGreen is well positioned to meet these investment mandates for both district energy companies and bitcoin-focused investors and firms.
Building for the Long Term
One of the more interesting aspects of coupling bitcoin mining with industrial energy infrastructure is the benefits of long term contracting. Heat offtake contracts in the district energy sector tend to be long term, with a lifespan of 5 to 20 years, and provide stable demand that allows for long-term capital planning and infrastructure development. The fixed nature of these contracts means revenues will scale with deployed capacity, and any bitcoin mined accrues to the bottom line and investors.
We have met with dozens of mining companies, and we have been impressed by Colin, Jenn, and Kurt — the MintGreen executive team. Their innovative approach to greening bitcoin mining is built on strategic relationships and insights related to a growing and increasingly carbon regulated market — district energy — where they can build a strong foothold and build a very profitable business in a short period of time and use this stable capital base to scale laterally into other energy markets. Having a strategic focus and domain expertise will be critical to ensuring early success and proving scalability of their pilot deployments, and subsequently, revenues.
Following our recent investment in Compass Mining, our team at Coinshares Ventures is excited to back more innovative solutions in the Bitcoin mining space. We are excited to work with MintGreen, where we will join the board, and the like-minded investors we brought into this deal alongside us to help transform the bitcoin mining landscape and its image in the mainstream media. We firmly believe bitcoin mining is compatible with sustainability, energy efficiency, and the growth of a more resilient, low-carbon global energy grid.
* MintGreen can say with confidence, at least in British Columbia, that they are the lowest priced low carbon heat source for district energy.
Note: Meltem Demirors and Russell Newton are both investors in MintGreen alongside CoinShares Ventures
