Clean energy glut draws cryptocurrency miners to Brazil 

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By Leticia Fucuchima

SAO PAULO (Reuters) -Crypto mining companies are actively negotiating contracts with Brazilian electricity providers, such as Renova Energia, that would benefit from the South American country’s surplus renewable power without burdening the grid during peak times.

Following crypto heavyweight Tether, which announced in July an investment in the South American country, there are at least six negotiations for small and medium-sized enterprises, as well as one for a larger project of up to 400 megawatts (MW), people from six different companies told Reuters. 

Mining machines that solve complex mathematical problems to back crypto transactions have overloaded grids in multiple countries. However, in Brazil, where crypto mining hardly exists today, they could help address a chronic clean electricity oversupply problem, which has cost energy companies almost $1 billion in the last two years, according to wind and solar industry groups ABEEolica and Absolar.

Tether, the world’s largest digital assets company, said it is leveraging its recent acquisition of Adecoagro to tap its renewable energy, such as the electricity coming from sugarcane mills, to power a bitcoin mining operation in Brazil.

Renewable energy supplier Renova told Reuters it is making one of the first major investments in the crypto sector, a $200 million mining project for an undisclosed client in the state of Bahia in the northeast of Brazil. The 100-MW venture consists of six data centers that will draw power from a wind farm.

“We aim to expand the company and enter new markets,” Renova CEO Sergio Brasil said. “We realized that by providing all the infrastructure (for crypto mining), we were one step ahead of our competitors.”

Crypto miners can rapidly scale operations up or down based on energy availability, providing a flexible consumer base for excess energy without straining the grid during peak demand periods.  

Brazil’s energy oversupply stems from years of government incentives that spurred a boom in wind and solar investments. But the pace of development has outstripped the expansion of transmission infrastructure, and some plants now waste as much as 70% of the power they generate. 

“There’s tons of potential,” John Blount, one of the founders of Enegix, a crypto miner based in Kazakhstan, told Reuters. “We will try somehow to elaborate mobile data centers,” he added, that would be plugged directly into power plants. 

Enegix is looking into deals in Brazil’s northeast, the region suffering from the biggest energy surplus, including tapping into solar and wind power in the state of Piaui. 

Penguin, which is based in Paraguay, one of the world’s biggest crypto hubs, said it is negotiating projects too, but declined to share any details.

And China’s Bitmain, one of the largest manufacturers of mining equipment, is also exploring opportunities, according to an executive who asked not to be named.

MINERS SEEN AS ‘DIAMONDS’ 

Energy providers have also expressed an interest in crypto projects. Casa dos Ventos, which partners with France’s TotalEnergies on wind power, and U.S.-based investment firm Global Infrastructure Partners’ (GIP) Atlas Renewable Energy confirmed their intentions to Reuters.

French utility Engie’s subsidiary in Brazil and Auren Energia, the joint venture between Votorantim Energia and CPP Investments, Canada Pension Plan’s global investment arm, are also looking into projects to monetize their unused energy, three sources told Reuters. The companies declined to comment.

Providers look “at consumers like this as if they were diamonds,” said Raphael Gomes, a lawyer who has been working on several crypto projects.

Companies are assessing different models, including buying equipment to mine on their own. In Bahia, electricity provider Eletrobras , the biggest in the country, is installing ASIC mining machines, along with a microgrid fed by a wind turbine, solar panels and batteries, for a pilot project. 

“We want to understand how this industry works,” said Juliano Dantas, Eletrobras’ vice president for innovation. 

The work could help energy providers prepare to enter the data center industry, which the Brazilian government is trying to attract as a strategy to grow the clean energy economy.  

There are concerns about the industry’s water use, as some of the regions with the biggest amount of unused energy also suffer from droughts. Brazil also has infrastructure problems and lacks regulations for cryptocurrency mining.

“We went after 400 MW — it was like a Sisyphean journey, a bit difficult,” said Bruno Vaccotti, an executive at Penguin. “We’re still exploring Brazil, but it’s not that easy.” 

(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)