Cashing in on Trash

Bitcoin Mining Offers an Economical Solution to Mitigating Methane Emissions from Landfills

TLDR

• Landfills are a significant contributor to global methane emissions, which, if mitigated, could have a greater environmental impact than managing carbon dioxide emissions.
• Conventional methane management methods, such as venting and flaring, are inefficient and environmentally damaging, while waste-to-energy solutions, like selling electricity to the grid or distributing renewable natural gas (RNG) via pipelines, often prove economically infeasible for smaller or remote landfills.
• Bitcoin mining offers a market-based approach to reducing methane emissions from landfills by converting otherwise wasted potential energy into economic value. Bitcoin mining requires minimal investments in infrastructure, and it is geographically flexible, modular, and scalable. In theory, Bitcoin mining can therefore help any landfill, regardless of its size and geographic location, reduce its emissions while benefiting from an additional stream of income.

Disclaimer

This report is provided for general informational purposes only. The opinions expressed in the report may differ from those expressed by Marathon Digital Holdings (“MDH”), its officers, employees, directors or advisors or their affiliates. The information on this report does not constitute investment, legal, accounting or other advice or information by MDH or its officers, employees, directors or advisors or their affiliates. Information has been obtained from sources believed to be reliable, but MDH or its affiliates do not warrant its completeness or accuracy. Outlooks and past performance are not guarantees of future results. The information in the report may be changed without notice and is not guaranteed to be complete, correct or up-to-date, and may not reflect the most current developments.

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Abstract

Landfills worldwide face a growing problem with methane emissions, a potent greenhouse gas (GHG), as they struggle to manage ever-increasing volumes of waste. The traditional methods of dealing with this issue, venting and flaring, are inefficient and often environmentally harmful. Moreover, existing waste-to-energy solutions typically only work economically for larger landfills located near city centers, leaving smaller or remote landfills without a feasible alternative.¹

This article introduces a new solution to mitigating landfill methane emissions: a partnership between landfills and Bitcoin miners that leverages electricity generated from landfill waste for Bitcoin mining on-site (i.e., off-grid). This collaboration could offer a return on investment (ROI) by creating an additional income stream and a return on environment (ROE) by reducing emissions. Additionally, this win-win solution extends a variety of other benefits to all parties involved, presenting a more economically viable and environmentally responsible way to mitigate methane emissions, especially for smaller or isolated landfills.

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The Heap of Trouble Facing Our Landfills

Every year, over 2.0 billion metric tons of waste end up in landfills worldwide.¹ A portion of this waste is organic matter, and as it breaks down, it releases methane – a potent GHG with a global warming potential 80 times greater than carbon dioxide over a 20-year period.² Landfills are currently responsible for 11% of all global methane emissions.³ However, recent satellite data studies on cities like Delhi, Mumbai, and Buenos Aires suggest that methane emissions from landfills might be 1.4 to 2.6 times higher than previous estimates.⁴ Moreover, according to projections by the World Bank, global waste may increase 70% to 3.4 billion metric tons by 2050.⁵

This mounting pile of waste presents a critical environmental issue that must be addressed. According to the Global Methane Assessment, “Achieving methane emissions reductions in the next decade will keep the planet significantly cooler than attempts to cut carbon dioxide emissions alone.”⁶

The situation is particularly concerning in the United States, where municipal solid waste (MSW) landfills contribute to about 14% of human-related methane emissions.⁷ In 2021, US MSW landfills released 3.7 million metric tons of methane, which is equivalent to 66 million gas-powered passenger vehicles or 79 coal-fired power plants, into the atmosphere.⁸

Figure 1: 2021 US Methane Emissions, By Source ⁹

In an attempt to reduce methane emissions, the White House took decisive action in 2021.¹⁰ The administration published revised standards for landfills without methane mitigation implementation plans and mandated that existing large MSW landfills in the US significantly reduce their methane emissions. While larger landfills are the principal focus of this policy, the heightened interest of regulators may have implications that reverberate across the entire landfill sector. As such, it has become imperative for all landfills, regardless of their size, to adopt effective strategies to decrease their methane emissions.

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Venting Frustrations and Burning Issues: The Outdated Methods of Landfill Methane Management

Historically, landfills have relied primarily on two methods for methane management: venting and flaring. However, these methods are inefficient, wasteful, and often environmentally harmful.

Venting, a process in which methane is directly released into the atmosphere, is used by over 50% of US landfills due to a lack of gas collection systems.¹¹ The major downside of venting is its significant environmental impact since methane is more potent than carbon dioxide. Additionally, because it fails to take advantage of the potential energy value of methane, it is a wasteful practice.

On the other hand, flaring, which is the combustion of methane, is considered a more environmentally friendly approach than venting. Flaring reduces the global warming potential of methane by converting it into carbon dioxide (another GHG) and water. However, it is only about 92% efficient.¹² 8% of the methane is still released into the atmosphere. Flaring also brings its own set of environmental issues to local communities, including air pollution, noise, and light disturbances. Moreover, similar to venting, flaring is wasteful as it fails to harness the energy potential of methane. In fact, because of its adverse impacts, the World Bank is advocating for a complete ban on routine flaring by 2030.¹³ While the proposed ban would only apply to the oil and gas sector, it is conceivable that future legislation could include other large methane emitters.

A more productive alternative has emerged in the form of waste-to-energy conversion. But this alternative is not a viable option for all landfills.

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The Constraints of Waste-to-Energy Conversion

Waste-to-energy conversion technologies have shown potential for mitigating methane emissions, particularly for larger landfills located near urban hubs. These sites can convert captured methane into two forms of sustainable energy: 1) electricity, which can be sold to the grid, and 2) renewable natural gas (RNG), which can be distributed through pipelines. Despite the high upfront costs of installing these mitigation systems, the potential return on investment can make them worthwhile if financed with a low cost of capital.

However, this option has limitations. Selling electricity to the grid, although less costly upfront relative to producing RNG, contends with slim profit margins and extended interconnect queues. In this context, “interconnect queues” refers to the waiting list for gaining access to the transmission lines needed to transport electricity from the source to the grid. Conversely, refining landfill gas into RNG is potentially more profitable, but it demands considerable capital and involves building new pipelines.

Moreover, not all large landfills are located near cities, and for smaller or remote landfills, the economics of waste-to-energy conversion are often untenable. The combination of lower waste volumes and logistical limitations may inhibit their ability to generate a profitable return from energy sales.

As a result of these challenges, the number of landfills converting landfill gas to energy has been declining since 2016.

Figure: 2 LFG to Electricity Trending Down Since 2016¹⁴

This disparity between large and small (or remote) landfills underscores an urgent need for cost- effective, scalable solutions. Ideally, these solutions would be both environmentally friendly and economically viable; they would cater to the diverse needs of different landfill sizes and locations.

Figure 3: Large vs. Small to Medium Landfills¹⁵

1. The number of operational landfills in the US with more than five million tons of waste in place as of July 2023.
2. The number of operational landfills in the US with less than five million tons of waste in place as of July 2023.
3. Not all large landfills are located near urban hubs.
4. Not all small to medium landfills are located in remote areas.
5. The feasibility of waste-to-energy conversion may only be applicable to some large landfills due to a variety of factors, including but not limited to proximity to city centers, waste composition, and volume.
6. The estimation of potential power generation is derived from an EPA guideline, which posits that each million tons of MSW in landfills can generate approximately 0.78 megawatts of power. This figure is an approximation, and actual power generation may vary based on factors such as waste composition and landfill operations.

Source: EPA Landfill Methane Outreach Program (LMOP), Marathon Digital Holdings

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From Trash to Digital Treasure: Bitcoin Mining’s Unique Solution

This is where Bitcoin mining can step in and provide a practical solution today for landfills struggling to rationalize the economics of waste-to-energy conversion. Bitcoin mining can help even the smallest landfills transform their waste into a valuable resource. This solution, in turn, supports landfill owners in implementing strategies to reduce methane emissions and comply with regulations.

How would this work?The process begins by capturing methane from landfill waste and utilizing it to power generators or microturbines, which in turn supply electricity to Bitcoin mining rigs. This process converts what was previously a GHG into a source of renewable energy and a revenue source for the landfill.

Figure 4: Landfill With an On-Site Bitcoin Mining Data Center

1. Landfill:The process begins in the landfill, where organic waste decomposes and produces methane.
2. Backup Flare:The flare can burn off excess methane if there is more than what is needed for power generation. However, sizing the data center optimally could minimize the reliance on a backup system.
3. Gas Compression and Conditioning Skid: The captured methane is then sent to a gas compression and conditioning skid. This component is responsible for refining the methane, removing impurities, and pressurizing it to the required level.
4. Modular Gas Microturbine:The compressed and conditioned methane gas is fed into a modular gas microturbine, which utilizes the gas to generate electricity.
5. Containerized Bitcoin Mining Data Center:The electricity generated by the microturbine is used to power a containerized Bitcoin mining data center. The data center houses specialized computers (ASICs) designed to secure and process transactions for the Bitcoin network. As a result, a once harmful GHG is converted into a valuable digital commodity.

But why Bitcoin mining? It offers several unique advantages that no other solution in the marketplace can provide today, in particular:

• Monetization with Lean Infrastructure:Bitcoin mining can monetize methane directly on-site without requiring expensive investments in grid transmission or pipeline connections. This direct approach means rapid deployment and revenue generation. With an additional income stream, landfills can invest in other LFG-to-energy projects while retaining the Bitcoin miner as an offtake for excess energy not sold.
• Limited Involvement from Landfill Owner:By partnering with a large, reputable miner, a landfill owner can reap several benefits with very low additional effort. The miners do the work.
• GHG Emission Reduction:Bitcoin mining offers a market-based approach, without regulatory intervention, to reduce methane emissions by converting otherwise wasted potential energy from landfills into economic value.
• Geographical Flexibility:Bitcoin miners can operate anywhere in the world; they only need an internet connection. This location agnosticism opens up opportunities for even the most isolated landfills, transforming previously overlooked sites into valuable sources of energy.
• Modular Capacity:Bitcoin data centers offer a high degree of customization and scalability, accommodating energy loads of varying magnitudes. This flexibility aligns well with landfills of different sizes and waste capacities. Nearly any landfill, regardless of its size, can host Bitcoin mining operations to take advantage of their methane emissions.
• Portability:Bitcoin data centers can be constructed in purpose-built containers. This configuration offers exceptional mobility. Mining operations can be relocated to new sites on an as-needed basis.
• Interruptible Operations:Bitcoin miners have the unique advantage of being able to power down and rapidly reboot within a brief 10-minute window. This capability is ideal for landfills where gas production might fluctuate due to variables like waste volume and composition.

These advantages make Bitcoin mining a mutually beneficial, win-win solution for both parties.

Economically, landfills can establish an additional income stream with minimal investment in infrastructure, while Bitcoin miners gain access to a low-cost source of renewable energy.

Environmentally, the solution converts a harmful GHG gas into energy. It reduces landfill emissions and simultaneously helps Bitcoin miners reduce their reliance on grid energy. By increasing their sustainable energy mix and reducing GHG emissions, Bitcoin miners could, in theory, make their operations CO2 neutral or even negative.¹⁶

Operationally, landfills can quickly implement an effective means of mitigating their methane emissions, while Bitcoin miners can diversify their energy sources and site locations.

Figure 5: Landfills + Bitcoin Mining: A Win-Win Collaboration

Figure 6: Solutions Available to Landfills: Comparative Analysis

In short, by offering an effective solution to the pressing issue of landfill methane emissions, Bitcoin mining can transform what was once a troublesome waste product into a valuable resource.

References

1. “What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.” The World Bank. Accessed August 7, 2023.https://datatopics.worldbank.org/what-a-waste/trends_in_solid_waste_management.html#:~:text=The%20world%20generates%202.01%20billion,from%200.11%20to%204.54%20kilograms.
2. “Methane: A Crucial Opportunity in the Climate Fight.” Environmental Defense Fund. Accessed August 7, 2023.https://www.edf.org/climate/methane-crucial-opportunity-climate-fight.
3. Dickie, Gloria. “Landfills around the World Release a Lot of Methane - Study.” Reuters, August 11, 2022.https://www.reuters.com/business/environment/landfills-around-world-release-lot-methane-study-2022-08-10/#:~:text=Landfill%20waste%20%E2%80%93%20responsible%20 for%20about,according%20to%20the%20World%20Bank.
4. Arasu, Sibi. “Satellite Data Finds Landfills Are Methane ‘Super Emitters.’” Phys.org, August 13, 2022.https://phys.org/news/2022-08-satellite-landfills-methane-super-emitters.html.
5. “What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.” The World Bank. Accessed August 7, 2023.https://datatopics. worldbank.org/what-a-waste/trends_in_solid_waste_management.html#:~:text=The%20world%20generates%202.01%20billion,from%200.11%20 to%204.54%20kilograms.
6. “What a Waste 2.0: A Global Snapshot of Solid Waste Management to 2050.” The World Bank. Accessed August 7, 2023.https://datatopics. worldbank.org/what-a-waste/trends_in_solid_waste_management.html#:~:text=The%20world%20generates%202.01%20billion,from%200.11%20 to%204.54%20kilograms.
7. "Global Methane Assessment: Benefits and Costs of Mitigating Methane Emissions." UN Environment Program, May 6, 2021. https://www.unep.org/resources/report/global-methane-assessment-benefits-and-costs-mitigating-methane-emissions
8. "Trashing The Climate: Methane from Municipal Landfills." Environmental Integrity, May 18, 2023. https://environmentalintegrity.org/reports/trashing-the-climate
9. "Basic Information about Landfill Gas." Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/basic-information-about-landfill-gas
10. "U.S. Methane Emissions Reduction Action Plan." The White House, November 2021. https://www.whitehouse.gov/wp-content/uploads/2021/11/US-Methane-Emissions-Reduction-Action-Plan-1.pdf
11. "LMOP Landfill and Project Database." Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/lmop-landfill-and-project-database
12. "Gas Flaring." IEA. Accessed August 7, 2023. https://www.iea.org/energy-system/fossil-fuels/gas-flaring
13. "Zero Routine Flaring by 2030 (ZRF) Initiative." The World Bank. Accessed August 7, 2023. https://www.worldbank.org/en/programs/zero-routine-flaring-by-2030
14. "LMOP Landfill and Project Database." Environmental Protection Agency, August 3, 2023. https://www.epa.gov/lmop/lmop-landfill-and-project-database
15. Ibid.
16. Daniel. "35 LANDFILLS MINING BITCOIN = A NET ZERO EMISSION BITCOIN NETWORK." Batcoinz, May 28, 2023. https://batcoinz.com/50-landfills-mining-bitcoin-a-zero-emission-bitcoin-network