Mining With Impact? Why Plural Energy’s Second Renewable Asset Joins the Bitcoin Treasure Hunt
Plural Energy sits at the intersection of crypto and renewable energy — two industries that aren’t exactly known for crossing paths.
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Plural Energy
Plural Energy sits at the intersection of crypto and renewable energy — two industries that aren’t exactly known for crossing paths. Although we’ve gotten used to fusing the two (our entire mission revolves around creating/optimizing the overlap), our latest deal confronts an ugly truth: crypto isn’t always compatible with the planet, and sometimes, it can actually harm the climate. Well, with Sangha and Plural, that doesn’t have to be the case.
Earlier this month, we opened investment for equity in Sangha Renewables’ “Genesis Phase One,” a 19.9MW bitcoin mine powered with excess energy from a nearby solar project.
If you come from renewables, you’re probably wondering why bitcoin mining? If you’re a crypto person, the question is likely, why solar energy bitcoin mining? If you’re an investor, you definitely have questions on both fronts.
Here’s a closer look at three problems Genesis Phase One solves and how it contributes to a better financial future for renewables.
Problem #1: Bitcoin mining’s environmental track record isn’t great
Bitcoin mining gets a bad rep among environmentalists, and we can’t blame them. Take it from the stats:
In 2019, Bitcoin mining required nearly as much energy as powering all the lights and TVs in the U.S.
From 2020 – 2021, Global Bitcoin mining consumed 173.42 Terawatt hours of electricity. If BTC were a country, it would rank 27th for electricity consumption.
The water footprint during this same time period amounted to about 1.65 cubic kilometers, equivalent to filling over 660,000 Olympic-sized swimming pools.
In 2022, Bitcoin's estimated greenhouse gas emissions were about 68.02 MTCO2E, comparable to Singapore's emissions.
The worst part? As of 2021, coal produced 45% of the overall electricity used for global bitcoin mining, and just 28% came from renewables.
In case you missed the memo, coal harms the environment (primarily by driving CO2 emissions). And to offset those emissions of Bitcoin mining in 2021-2022, 3.9 billion trees would need to be planted — that’s enough to cover all of the Netherlands.
Still, bitcoin mining is showing no signs of slowing. In fact, its popularity is accelerating every year, now accounting for .6% to 2.3% of total electricity consumption in the United States.
Will climate advocates curb or halt bitcoin mining’s popularity in time to minimize its impact? We wish we could say yes, but the momentum remains in bitcoin’s favor.
Problem #2: Solar power producers vs. negative energy pricing
Hitting pause on the bitcoin mining equation, let’s unpack a separate issue plaguing the climate solutions industry: negative energy pricing.
When renewable energy is produced, it doesn’t immediately translate into usable electricity. Power producers must first sell their energy to the grid, and there are not enough grid-scale batteries to reliably store all the excess electricity.
So, when solar electricity becomes ‘stranded’ — meaning the grid doesn’t need it the moment it’s produced —its producers often have to pay the grid to take it off their hands.
Short term, renewable energy companies lose revenue. Long term, renewable energy’s financial viability comes into question.
And the harder it is to earn the trust and confidence of financial backers, the harder it is to accelerate the widespread adoption of clean energy infrastructure.
Problem #3: More financing solutions are required
Price volatility is a problem for solar project developers who have debt to service, expenses to pay, and more. In general, our team has observed that receiving bank debt or tax equity partnerships is challenging if a solar project has exposure to price volatility.
The original solution to this is the Power Purchasing Agreement. Essentially, instead of riding the wholesale power market price roller coaster, solar developers enter into power purchasing agreements that set a fixed price per megawatt hour produced. Under this business model, solar asset owners avoid the lows, but also avoid the highs.
If a solar project chooses to forego a PPA or cannot find a counterparty for one, it becomes what’s called a “merchant project.” Merchant projects are exposed to price volatility, but often partner with power traders or other players to provide some price hedging.
In Texas, negative pricing and grid congestion have become particularly troublesome in 2024. The frustrating result is that renewable power often goes to waste.
A classic win-win-win: solving all three problems with one West Texas partnership
Finally, enter Genesis Phase One from Sangha Renewables. The project directly addresses the negative energy dilemma for the solar company by turning excess electricity into Bitcoin revenue for both the power producer and Plural investors — solving two persistent problems with a forward-looking solution.
For renewable energy companies, this style of partnership means new revenue streams with zero upfront costs (and a kiss goodbye to stress over negative grid prices).
For Plural investors, this means:
The chance to choose between USD or BTC distributions, which can then be collected directly from the Plural platform.
Because the mine is powered with electricity below average US industrial rates, the mine can acquire bitcoin for 25%-50% cheaper than market prices (1 2)
Hypothetical return model shows investor returns >150% IRR and >500% ROI over 10 years (3). Class B investors receive 99% of distributions until achieving a 15% cumulative preferred return, then 87.5% thereafter, maximizing early-stage returns (4).
The ultimate goal: Building a brighter, BTC-backed financial future for renewable power producers
Plural was built to help fund the $4 trillion in renewable energy investments needed to achieve 2050 climate goals. Though we primarily support small and mid-sized projects struggling to access financing and investors, even established projects face systemic hurdles like negative pricing, illustrating once again that the old way of energy financing just doesn’t work.
Sangha’s approach to bitcoin mining demonstrates how much Plural can do — and how much change we can drive — through tokenization. Put simply, our platform aims to makes renewable energy infrastructure easier, cheaper, and safer to invest in, passing along benefits that have the potential to enhance the sector’s financial appeal:
Lower transaction costs, with the cost savings passed along
Transparent information on due diligence, basic financials, and production data
Portfolio diversification that offers stable returns and tax incentives
Upcoming deals in our pipeline do the same: widening our investors’ wallets and creating valuable incentives to support a clean energy future.
Footnotes
Bitcoin Spot Price and Electricity cost analysis available in Genesis Phase One Data Room (available upon signing NDA)
Genesis Phase One Operating Agreement available in Genesis Phase One Data Room (available upon signing NDA)
Hypothetical Financial Returns available in Genesis Phase One Data Room (available upon signing NDA)
Genesis Phase One Operating Agreement available in Genesis Phase One Data Room (available upon signing NDA)
