EXCLUSIVE: Terawulf CSO Talks Zero-Carbon Bitcoin Mining And The Opportunity In AI, HPC

Bitcoin has been on a steady recovery since falling below $55,000 some two weeks ago amid the German government’s massive $BTC selloffs, and along with the digital currency’s gradual climb, the spotlight has also been shining brighter on the industry behind the coin’s life: Bitcoin mining.

Bitcoin mining – the backbone of the network

Mining Bitcoins, which involves the complex process of miners discovering new blocks, verifying transactions, and earning $BTC rewards by competition, has long been under the watchful eye of environmentalists who have accused the industry of dealing a heavy blow to the environment due to its high energy consumption and emissions.

However, a large number of miners have been transitioning toward zero-carbon operations and some, like infrastructure-focused Bitcoin mining company Terawulf, are very close to becoming a 100% zero-carbon operations firm.

In an exclusive with International Business Times, Terawulf Chief Strategy Officer Kerri Langlais shared how the company has been working toward its sustainable operations goals and why diversifying is critical for the industry at this point.

Location is everything

Transitioning to more sustainable mining operations can be very costly, especially for smaller miners. When shifting to renewable energy sources for more sustainable operations, Langlais noted that “location is everything.”

“Most renewable energy sources are situated in remote rural areas where there is typically a supply/demand imbalance, requiring efficient utilization to avoid wastage. Bitcoin mining is location-agnostic and operates independently of time constraints. It optimizes for cost-effective power sources, making it highly adaptable within the grid,” she said.

Powering the hardware working to uncover new blocks is the most expensive part of Bitcoin mining operations. To help reduce transition costs, a path forward is choosing cheaper energy sources.

According to the International Renewable Energy Agency (IRENA), renewable power has become more competitive in recent years. “Around 86 percent (187) gigawatts of all the newly commissioned renewable capacity in 2022 had lower costs than fossil fuel-fired electricity,” it said in a mid-2023 report.

Renewable sources from a strategically chosen location can help optimize Bitcoin mining operations, helping miners balance their expenses with the growing competition since the April halving, Langlais said.

As of July, Terawulf utilizes 95% zero-carbon energy resources including nuclear, hydro, and solar to fuel its operations. The ultimate goal is to utilize 100% zero-carbon energy.

Finding opportunity in power competition

Since the halving that split mining rewards in half, competition has skyrocketed and some small miners have struggled to retain operations due to high operational costs. Another competitive wave has taken over the mining sector as demand for artificial intelligence doubled the work for data centers.

Langlais acknowledged that “competition for energy resources between Bitcoin miners and AI data centers is intensifying.” She said the competition has led AI data centers, as led by “hyperscalers like Microsoft and Google,” to rapidly secure any available power capacities, leaving crypto miners with scarcity and increased costs.

Instead of being caught up in the competition, Terawulf found an opportunity in the chaos. Due to its substantial energy infrastructure at its Lake Mariner facility in New York that is poised for immediate deployment of up to an additional 300 MW (megawatts) – beyond the 200 MW of Bitcoin mining currently in operation – which contrasts with the long development timelines required for new power sources, it has become a sought-after provider by some hyperscalers.

Langlais noted that dabbling into high-computing ventures as the demand around AI skyrockets doesn’t mean Terawulf is refocusing. “We view this not as a strategic shift, but rather as an evolution of our core energy infrastructure competencies,” he said.

“Reflecting on our $BTC mining endeavors, our primary value proposition has always been providing low-cost, zero-carbon energy and scalable data center infrastructure. Historically, we have utilized this infrastructure to convert energy into has power or $BTC. Similarly, we perceive AI and HPC (high-performance computing) as opportunities to provide power, cooling, and fiber infrastructure at a high density and scale, converting electricity into compute power or data tokens. Upon evaluating the potential returns, we find this opportunity highly compelling,” she said.

Eliminating debt for a strategic future

As Terawulf balances its Bitcoin mining operations and converting electricity for computing power ventures, the company looks to expand, especially after it recently made its final debt payment.

The company now has no outstanding debt, and Langlais said it was “a critical milestone” for Terawulf to achieve. It now has the financial flexibility to scale and deploy its low-cost energy infrastructure not just for Bitcoin mining but for HPC and AI applications.

Langlais revealed that the company seeks to expand its operational infrastructure capacity from 250 MW currently to 295 MW, with the goal of further increasing its capacity by an additional 300 MW in the near term.

Toward a sustainable, diversified future

Survival has become a challenge for many miners since the halving. Langlais said some smaller public $BTC miners have explored mergers and acquisitions (M&A) partnerships to stay afloat and keep thriving in the now highly competitive environment.

There is a growing trend among traditional miners to diversify revenue as a means to survive, and for Terawulf, such a route is through integrating HPC and AI applications into its operations.