A Tokyo Electric Power Co. subsidiary is tapping into bitcoin mining, banking that it can prevent renewable energy from being wasted and prompting its widespread use. 

Agile Energy X Inc., based in Tokyo, is experimenting with drawing on renewables to mine bitcoins.

“What we are doing has few parallels in Japan,” said Kenji Tateiwa, president of the company, who has built a career in TEPCO’s nuclear power division. “Success of our framework would prompt more green energy to be introduced.”

Tateiwa got the inspiration for the project in 2018, when issues were being raised about the large-scale “output control” that was put into practice by Kyushu Electric Power Co.

The supply of power should always be balanced with demand, because an imbalance could disturb the power frequency and thereby prompt a large-scale blackout.

Kyushu Electric therefore requested renewable energy producers in its service area to control their output, or temporarily stop generating power, to pre-empt power oversupply, typically when photovoltaic power generation peaked in the daytime.

That means that what precious power generation capacity there was had to be wasted.

Unlike in conventional currency systems, the bitcoin has no central authority. Bitcoin transactions are checked for authenticity and verified by fellow participants of the cryptocurrency network.

A participant receives bitcoins in remuneration for authenticating similar transactions. That process is called bitcoin mining by analogy with gold mining.

Bitcoin mining requires fast computers called mining machines and also consumes huge amounts of electric power.

The popularity of bitcoins was undergoing a crash in 2018 when Tateiwa got his brainchild.

Cryptocurrencies were facing criticism worldwide for their reported “waste” of power, as bitcoin mining uses, according to some estimates, more than the annual power consumption of a single European country.

And it occurred to Tateiwa that he could combine the two things.

He proposed a new in-house project for fleshing out his idea and conducted extensive demonstration tests.

He went on to found Agile Energy X in 2022, as a wholly owned subsidiary of TEPCO Power Grid Inc., in hopes that doing so would allow the know-how to be shared with other power utilities.

PIONEERING CASES IN U.S.

Agile Energy X has installed mining machines in Gunma and Tochigi prefectures, including next to a solar farm.

The company is currently experimenting with operating the mining machines to mine bitcoins in circumstances where power is likely to be generated in excess of demand and therefore be wasted.

The practice of output restrictions, which Kyushu Electric was the first to implement, has so far spread to nine regional utilities of Japan except TEPCO.

An Asahi Shimbun survey has found a total of 1,920 gigawatt-hours of power were subject to output control across Japan in 2023, an equivalent of the annual power consumption of 450,000 households.

The government has set the goal of achieving carbon neutrality, or net zero greenhouse gas emissions, by 2050, with green energy assumed to account for 50-60 percent of Japan’s total power supply.

Photovoltaic power, however, is not generated during the night. The output of wind power varies significantly with the weather. Wasted power is expected to only increase with a further growth in renewables.

Agile Energy X’s simulations based on open data showed that 240,000 gigawatt-hours of power would be wasted if green energy were to be introduced to account for 50 percent of the total power supply.

That surplus power would be too enormous to be stored realistically in storage batteries.

The simulations also showed that using 10 percent of that power would allow 360 billion yen ($2.5 billion) worth of bitcoins to be mined every year, company officials said.

Tateiwa said he believes that, if bitcoin mining were to produce profits that could be fed into corporate earnings, that would stabilize corporate management, prompting more green energy to be introduced.

A growing number of businesses in the U.S. state of Texas are mining bitcoins by using power from renewable energy sources that cannot be transmitted to where there is demand and would otherwise have not been utilized. That has led the United States to rise to the world leader status in terms of the bitcoins mined.

PROFITABILITY IN SIGHT

As things now stand, too little power is subject to output control in Japan to warrant profitability of bitcoin mining with surplus power.

Similar practices, however, are expected to become profitable as more green energy is introduced and more surplus power becomes available, Tateiwa said.

“Green energy producers have to operate their businesses on the assumption that part of the power they generate is wasted,” he said. “If bitcoins were to provide a new source of income for similar power producers, who are being exposed to overinvestments, that would prompt more green energy to be introduced.”