By Leticia Fucuchima
SAO PAULO – Crypto mining operations are actively engaging in discussions with Brazilian electricity suppliers, including Renova Energia, to leverage the nation’s abundant renewable energy resources without straining the power grid during periods of peak consumption.
Following a substantial investment announcement by crypto giant Tether in July, multiple sources from within the industry confirm that at least six negotiations are underway, involving small and medium-sized crypto mining ventures, alongside a significant project boasting a capacity of up to 400 megawatts (MW).
While crypto mining, which relies on powerful computers solving complex calculations to validate crypto transactions, has overwhelmed power grids in other nations, it could potentially offer a solution to Brazil’s excess clean energy problem. Industry groups ABEEolica and Absolar estimate that this oversupply has cost energy companies close to $1 billion over the past couple of years.
Tether, a leading digital asset organization, is reportedly utilizing its recently acquired Adecoagro assets to harness renewable energy sources, such as electricity derived from sugarcane processing facilities, to fuel Bitcoin mining activities in Brazil.
Renova, a renewable energy provider, disclosed that it is making a substantial initial investment in the crypto space, with a $200 million mining initiative located in Bahia, a northeastern state. The company is partnering with an unnamed client. This venture, with a 100-MW capacity, comprises six data centers powered by a local wind farm.
“We are focused on company growth and market diversification,” stated Sergio Brasil, CEO of Renova. “By providing all necessary infrastructure for crypto mining, we are gaining a competitive advantage.”
Crypto miners can rapidly adjust their energy consumption based on availability, offering a flexible outlet for surplus energy without impacting the grid during peak demand.
Brazil’s energy surplus stems from government incentives promoting wind and solar investments over the past several years. However, the growth of clean energy production has outpaced transmission infrastructure development, resulting in some facilities wasting as much as 70% of their generated power.
John Blount, co-founder of Kazakhstan-based crypto mining company Enegix, noted, “The potential is vast.” He added, “We are exploring the development of mobile data centers” designed to connect directly to power generation plants.
Enegix is considering opportunities in Brazil’s northeast region, which faces the most significant energy surplus, particularly utilizing wind and solar energy in the state of Piaui.
Paraguay-based Penguin, a major player in the crypto industry, also indicated that it is negotiating projects, but refrained from providing specific details.
According to an unnamed executive, Bitmain, a major crypto mining equipment manufacturer headquartered in China, is also evaluating potential business ventures in Brazil.
MINERS VIEWED AS VALUABLE ASSETS
Energy providers are actively signaling their interest in crypto mining projects. Casa dos Ventos, a wind power company partnered with TotalEnergies, and Atlas Renewable Energy, an investment firm managed by Global Infrastructure Partners (GIP) both confirmed their intentions.
Subsidiaries of French utility Engie in Brazil, and Auren Energia, a collaborative venture between Votorantim Energia and CPP Investments, the Canadian Pension Plan’s global investment division, are also exploring avenues to monetize their surplus energy resources, sources revealed. These companies declined to issue public statements.
According to Raphael Gomes, a lawyer specializing in cryptocurrency projects, energy providers view crypto miners “as highly valuable assets”.
Companies are evaluating various operational approaches, including direct investment in mining equipment. Eletrobras, Brazil’s largest power utility, is implementing a pilot project in Bahia. It involves installing ASIC mining hardware in conjunction with a microgrid that utilizes wind turbines, solar panels, and battery storage.
“Our goal is to gain a comprehensive understanding of the crypto mining industry,” stated Juliano Dantas, Eletrobras’ vice president of innovation.
This research initiative will enable energy providers to prepare for future participation in the data center sector, which the Brazilian government aims to attract as a key component of its clean energy development strategy.
However, concerns remain regarding the industry’s water consumption, as areas with abundant surplus energy also experience drought conditions. Brazil also faces infrastructure constraints and lacks specific cryptocurrency mining regulations.
Bruno Vaccotti, an executive at Penguin, commented, “Our efforts to secure 400 MW were challenging. We are still evaluating opportunities in Brazil, but it isn’t straightforward.”
(Reporting by Letícia Fucuchina in Sao Paulo; Additional reporting by Elizabeth Howcroft in Paris and Samuel Chen in Shanghai; writing by Manuela AndreoniEditing by Marguerita Choy)