Mercuria CEO eyes renewable energy for Bitcoin miners, rise of ‘green’ crypto – S&P Global

Highlights

Plans for renewable power supply to Bitcoin miners

‘Very good potential’ for commodity market blockchain tech

Half of Mercuria capex to be transition-related in five years

Trading house Mercuria is working with Bitcoin producers to supply them with renewable energy and curb the high CO2 emissions associated with cryptocurrencies, CEO Marco Dunand told an S&P Global Platts conference June 16, predicting the emergence of “green” cryptocurrencies.

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Speaking at the Global Executive Petroleum Virtual Conference, Dunand said the Geneva-based company had been advancing into low-carbon energy and commodities, with oil now less than 50% of the company’s trading. He said the energy trader now wanted to be part of efforts to reduce the emissions associated with mining and trading of cryptocurrencies.

“We’re working with some Bitcoin producers in order to supply them with renewable power,” Dunand said. He also added that Mercuria had established a number of blockchain-related ventures while playing down the chances of the company using Bitcoin as a currency itself.

Bitcoin consumes large quantities of non-renewable electricity and contributes to global warming. At its peak this year in May, Bitcoin miners were consuming more electricity than the whole of Germany, according to the University of Cambridge Judge Business School. Tesla CEO Elon Musk last month said the electric vehicle maker would stop accepting bitcoin as payment due to environmental concerns over emissions linked to mining the cryptocurrency.

Green crypto

According to the University of Cambridge, China accounts for over 65% of the computational power, or “hasrate”, used to mine Bitcoin, followed by the US and Russia each with around 7%.

“To create Bitcoin you need technology and you need energy. You can produce them from anywhere in the world so there’s no reason why you cannot move your production somewhere where you have abundant renewable energy,” Dunand said, without going into details of Mercuria’s work in the area.

“Some people will argue that this renewable energy is also needed for other purposes so at some point that may create tension… some people are looking for instance at gas flaring to see why don’t we use the gas being flared to transform that into power. There’s a lot of… ideas coming across and I have very little doubt that we’re going to see a green-type Bitcoin, but I don’t know how soon,” he said.

Dunand praised the possibilities of blockchain technology, while saying regulatory risk would prevent the company using Bitcoin in its own accounts. “We think there’s very good potential to streamline operations in our markets and make them more efficient” using blockchain, he said.

“There’s a lot of uncertainty about regulation coming around and the way to certify that in your balance-sheet,” he said, noting cryptocurrencies were likely to remain a “massive market,” but “I don’t think we’ll be that much involved with it.”

Transition ‘urgency’

Dunand went on to say the “urgency level” around the energy transition had increased with growing scientific knowledge, availability of data and political support, and Mercuria is confident 50% of its investments will be in the energy transition sphere within five years.

He said he saw growing political “alignment” on the issue, while praising efforts by Platts and others to provide low-carbon benchmarking.

“You have a better alignment politically — it’s probably one of the very few items on which the US, China and Europe want to cooperate. In all these places you see a bigger sense of urgency. There’s a better chance today to move forward than there was a few years ago.”

“From developed countries there’s also a better understanding of how to help developing countries. The US for instance is coming up with a very interesting program to help India develop more renewable power sources.”

“But I also think that we’re running out of time and therefore it’s very important to me to be able to focus on this with the energy this company has,” he said.

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