Bitcoin Mining Firm Compass Inks Deal With Nuclear Microreactor Company Oklo

Bitcoin mining is booming in North America.

Nuclear-powered bitcoin mining appears to be gaining steam.

Compass Mining has signed a 20-year deal with nuclear fission startup Oklo under which Oklo will supply the bitcoin mining and hosting company with 150 megawatts of energy.

The first Oklo reactors will be deployed in 2023 or 2024 and the costs will be “considerably” less than the energy sources Compass plugs into now, Compass CEO Whit Gibbs said. Oklo plans to build mini-nuclear reactors that produce between one and 10 megawatts of electrical energy compared with the hundreds of megawatts produced at conventional reactors. 

Related: China’s Bitcoin Mining Share Was in Decline Even Before Crackdown

Oklo has applied for a 1.5-megawatt plant at the Idaho National Laboratory in Idaho Falls and is working on additional applications.

Nuclear energy is increasingly part of the conversation when it comes to energy sources for bitcoin mining. Mining firms and their vast racks of power-hungry specialized computers have drawn the ire of environmental groups as bitcoin has surged in price in the last year.

Earlier this week, nuclear power company Energy Harbor Corp. signed a five-year partnership with Standard Power to fuel bitcoin mining in Ohio. Talen Energy announced plans to attach a bitcoin mining operation to a nuclear power plant in Pennsylvania that it already owns and operates. 

Compass is also in talks with Miami about getting power from the Turkey Point Nuclear Plant in Homestead, Fla., according to Gibbs. Miami Mayor Francis Suarez is said to be offering the plant to crypto mining firms as an inexpensive power source.  

Decentralizing power

Related: 3 More Chinese Provinces Shutter Crypto Mines as Clampdown Continues

Compass allows individual miners to shop for a hosting facility and operates their mining hardware for them. In that sense, it operates as the Airbnb for facilities that host mining hardware. Gibbs said Compass aims to have as much of its mining network on carbon-free energy as possible.

Compass has distributed 0.5% of bitcoin’s hashrate into the hands of individual nodes around the world and plans to capture 10% by the end of 2022, Gibbs said.

Compass now uses third-party facilities that hold power-purchase agreements and can dictate power prices.

“While the facility’s power cost might be $0.030-0.035/kWh (kilowatt hours), they sell to Compass customers for $0.055-0.065/kWh,” Gibbs explained. 

With Oklo, however, Compass holds the power-purchase agreement, and Gibbs said he expects power costs to be between $0.02-0.04/kWh. 

Oklo’s view

As Compass takes advantage of cheaper energy, Oklo gains a partner that can take up extra energy supply at various reactors, said Oklo CEO Jacob DeWitte. Oklo could eventually build reactors that are solely dedicated to bitcoin mining. 

This is the first cryptocurrency company that Oklo has gained as a customer and the first nuclear energy deal that Compass has secured. The deal could serve as a “beacon” for the future intersection of cryptocurrency and clean-energy development, DeWitte added. 

Unlike other commodities, bitcoin doesn’t require a great deal of infrastructure. Once the bitcoin is mined, the commodity can be instantly transported with no shipping costs. 

“As demand might change by a few megawatts here and there, you can put that off into bitcoin mining,” DeWitte said. 

Working with several microreactors as opposed to one large reactor also fits more neatly into the bitcoin ethos of decentralization, DeWitte added. 

Is nuclear energy the future of bitcoin? 

Oklo’s business model aims to buck the traditional economies of scale that conventional nuclear reactors have taken advantage of by building larger reactors over time versus smaller ones. 

DeWitte said he believes nuclear fission has the potential to be the cheapest source of alternative energy, despite the complexity and high costs of building conventional reactors. 

“When you think about it from cost and sustainability purposes, looking at all the tools at our disposal to make energy, fission requires the least materials over its lifecycle,” he said. 

There are some physicists who disagree with him. 

Traditional nuclear plants typically cost billions to build, and while smaller reactors cost less to build, they tend to be proportionally more expensive, said M. V. Ramana, a physicist at the University of British Columbia in Vancouver. A $15 billion reactor might produce 1,000 megawatts, but building a reactor that produces 1 megawatt won’t be a thousandth of the cost of $15 billion, he added.

The costs associated with nuclear energy also pale in comparison with the declining costs of renewable sources of energy such as solar and wind, which are set to become cheaper over the next decade, Ramana said.

“The cost of generating nuclear electricity today is roughly about four times the cost of generating solar or wind power,” Ramana said. 

Costs increase over time for large and small plants, Ramana said. Nuclear energy company NuScale Power, which builds reactors that produce about 60 megawatts of power, saw its costs increase significantly after it went through the regulatory process with the U.S. Nuclear Regulatory Commission (NRC), Ramana said.

It’s unlikely that Oklo would be approved to build by 2023 because its safety standards are unorthodox, said Edwin Lyman, a physicist with the Union of Concerned Scientists in Washington.

“The mindset of Oklo and some of these other new reactor companies is they just want the NRC to accept the reactor is going to be safer, essentially let them do whatever they want,” Lyman said. 

DeWitte noted that Oklo has been accepted into the NRC’s review process, which “represents a high bar and therefore is a major step of itself.” Compass’ Gibbs said he sees a recent $2 million award from the Department of Energy as validation that Oklo will be able to build its microreactors on time.

CORRECTION (June 14, 14:19 UTC): An earlier version of this article stated that Compass had distributed 5% of bitcoin’s hashrate to individual nodes. The company has actually captured 0.5% of bitcoin’s hashrate.

Related Stories

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for Smart Investing to get the latest news, strategies and tips to help you invest smarter.