PROJECT

Say Watt
Now?

Can Bitcoin mining

accelerate the rollout ofrenewable energy in Japan?

Bitcoin mining never quite found a welcome mat in Japan. High electricity costs,
coupled with the volatility of cryptocurrencies and concern about its environmental
impact, mean that today thereʼs a negligible amount of Bitcoin mining in the country.
That may be about to change.

NEW
ENERGYPROPOSAL

Agile Energy X, a unit of TEPCO, one of Japanʼs largest power companies, claims thatthe advent of Bitcoin mining in the country can spur a new boom in renewables. The
ﬁrm is moving ahead with a Proof of Concept (PoC) model that will see Bitcoin mining
create the kind of ﬂexible electricity consumer that new solar and wind projects need tosolve their growing problems with grid access.
The timing is fortuitous. After the latest Bitcoin halving event in April 2024, the crypto
market looks possibly primed for another bull run. To capitalize, Agile Energy X wants to
install a nationwide distributed computing network capable of monetizing excess
renewable energy via Bitcoin mining.
This network would soak up electricity from the hundreds of solar farms that get cut oﬀ
from the power grid when thereʼs too much energy being produced. Solar operators
would get a new income stream; the grid would ﬁnd a ﬂexible oﬀtaker to help itbalance; and the TEPCO unit would monetize green electricity that would otherwise be
wasted. With fewer grid “chokepoints,” thereʼd be more of an incentive to invest in new
renewables capacity.
Agile Energy X claims this approach can be more eﬃcient than batteries or hydrogen asa means of mopping up and storing surplus electricity. It would also be cheaper andless cumbersome than existing energy management systems. And, of course, thereʼs
the payoﬀ of earning digital value in Bitcoin.
The approach has attracted the interest of the government. The Ministry of Economy,
Trade and Industry (METI) is already in the study group phase of developing a trading
market for distributed energy. Japanʼs Minister for Digital Transformation Kono Taro has
also inquired about the potential to apply Agile Energy X technology to renewables
other than solar and wind.
While the premise is enticing, it also opens a number of questions, not least of which isthe need to mine cryptocurrencies in the ﬁrst place. Yet with the Bank of Japan andother central banks piloting use of digital currencies, the idea is no longer niche. And
Agile Energy X itself is fully backed by the top power grid operator in the country.
Can Bitcoin turn around its image as a drain on sparse power resources and become aclimate ally, ushering billions of dollars of new investment into renewables to help
reduce global emissions?
This report, the ﬁrst in the GxxD series of case studies into the nexus between clean
energy and digitalization, will lay out the main parameters of the approach.

A lot of people see Bitcoin mining as a waste ofelectricity, but we took the opposite approach. We
combined Bitcoin mining, which consumes a large amountof electricity, with renewable energy that is often
wasted. This introduces a far more profitable use ofrenewable energy.

‒ Agile Energy X CEO, TATEIWA Kenji

1￨Say Watt Now?

While nothing is straightforward in cryptography, the literal meaning of which is“unintelligible,” there is fundamental software code that dictates how digital currencies
work. One event run by the code suggests to many in the market that the most popular
cryptocurrency, Bitcoin, is poised for a bull run.
On April 20, 2024, Bitcoin had whatʼs known as a “halving event” which describes a
once-every-four-year procedure built into the software code of the Bitcoin protocol.
More on this later, but simply put the halving reduces supply of Bitcoin and such past
events have been followed by price increases.

BITCOIN
STEPS UP

Bitcoin miners have been referred to as auditors, using specialized computers andsoftware to validate transactions on the Bitcoin network, add new blocks to theblockchain, and provide overall security and stability to the network. For these services
they unlock and receive newly minted Bitcoin.
More speciﬁcally, prior to April 20 when a miner successfully generated, or mined, a
new block for the Bitcoin blockchain, which happens about every 10 minutes or so, theyreceived 6.25 Bitcoins. That added up to about 900 Bitcoin a day that miners competed
for. The average price of Bitcoin in the ﬁrst three months of this year was about
US$57,000, which means the network was generating the equivalent of more than
US$51 million a day. Of course, with Bitcoin trending around US$70,000 in early April,
the pot then was in the region of US$63 million a day.
As the name suggests, the amount of Bitcoin awarded to miners for generating new
blocks on the blockchain network was cut in half on April 20, in this case to 3.125
Bitcoin. While this seems like bad news for Bitcoin miners, it also speaks to the age-old
business maxim: supply and demand.
One of the developments that has sent Bitcoinʼs price to record highs this year isdemand.
The U.S. Securities and Exchange Commission (SEC) in January approved a pile of
Bitcoin Exchange Traded Funds from Wall Street heavyweights such as BlackRock Inc.,the worldʼs biggest money manager, and Fidelity Investments ̶ no slouch itself whenit comes to managing assets worth trillions of dollars.
What normally happens when demand jumps at the same time as supply slides, or getscut in half, is the reason Bitcoin ̶ and the ﬂock of cryptocurrencies that seem to follow
in its jet stream ̶ is said to be ready for a bull run, if it isnʼt already in one.

2 ￨Say Watt Now?

BITCOIN MINING AND JAPAN

Bitcoin mining is a notoriously energy intensive industry. If it were a country, Bitcoin mining would be theworldʼs 24th biggest consumer of electricity at 170.5 Terawatt hours (TWh) a year, slightly less than South
Africa and more than Egypt. It also emits 86.4 metric tons of carbon dioxide equivalent (MtCO2e) ofgreenhouse gasses a year, just less than Morocco and slightly more than Israel.
Source: Cambridge Data Bitcoin Electricity Consumption Index

Annual electricity consumption
250

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Japan accounts for just 0.23% of the global hashrate, orthe amount of computing power employed by Bitcoinminers on the blockchain. That compares to 37.84% in
the U.S. and 21.11% in China. (Note that Beijing
oﬃcially banned crypto trading and mining in China in
2021, but clearly not everyone got the memo.)
3￨Say Watt Now?

The global Bitcoin mining industry generates
roughly $13.4 billion in rewards annually. Japanʼscurrent level of mining activity means it is taking
just a $31 million sliver of that pie a year.

After the Fukushima nuclear disaster in 2011, Japan embarked on a massive promotion
program for renewable energy. The government introduced the worldʼs most lucrative
tariﬀ for green projects, which saw about 72 GW of solar capacity installed since 2012,
making Japan the worldʼs No. 3 in terms of energy produced via photovoltaic panels.
But the solar boom came at a cost. Japanʼs energy infrastructure, as in most countries,
was built for traditional power utilities, which relied on a few large thermal power
plants to deliver electricity to consumers. Suddenly, the power grid was tasked withaccommodating a large volume of smaller, intermittent, and distributed power sourcesin the form of solar and wind farms.

TWIN
the expanded energy system with the additional variations determined by
PROBLEMS Managing
weather, the systems, and other factors has proved very challenging. And yet, nottransitioning from fossil fuels to renewable energy is not an option. Japanʼs 2050
carbon neutrality target is enshrined in law.
There are two main issues that the power grid has struggled with in this transitional
period: congestion and curtailment.

Curtailment

Curtailment is the act of shutting down a power source at times of oversupply. In
theory, clean energy options and especially renewables are supposed to be prioritizedwhen the grid operator decides on which power plants should temporarily close. In
practice, ﬂipping the on-oﬀ switch on older, large thermal power plants is impractical.
Nuclear reactor operations, for example, are planned months in advance.
And so it is the most ﬂexible power sources, such as solar and wind, that get
temporarily cut oﬀ from the grid. The panels still absorb sunlight and the turbines still
turn, but itʼs not converted into electricity. Particularly in spring when demand is low,
solar power suﬀers high levels of curtailment. Electricity generation via solar reaches apeak during daytime hours, causing repeated temporary surpluses. This waste of viableenergy is a cost burden for solar farms, and can impact investment decisions.
Japan Solar + Wind Curtailment Rate by Power System
FY 2023e

Japan Solar + Wind Curtailment
FY 2018-FY 2023e
2.0

8
6.7

7

1.58
1.5

6
5

1.0

4

0.46

0.40

0.53

2
1

0.10
0.0

2018

%

TWh

0.5

2019

2020

2021

3.1

3

0.57

2022

2023

Japan lost a record 1.58 TWh in renewable energy
to curtailment in 2023.

00.01
Hokkaido Tohoku

0.26

0.55

0.20

0.14

Chubu Hokuriku Kansai Chugoku Shikoku Kyushu Okinawa

Kyushu, the area most suited to solar energy
generation in the country, records the highest levelsof curtailment nationally.
Source: METI, ‘Efforts to Reduce Renewable Energy Curtailment’ (March 2024)

4￨Say Watt Now?

Congestion

Congestion occurs due to issues with grid conﬁguration or equipment performance.
Transmission lines sometimes struggle to transport electricity from a particular supplier
to a buyer due to overheating or a loss of system stability. The transmission operator
may then advise the supplier to limit their dispatch levels, obstructing the transmissionof electricity to a willing buyer, which can then lead to increased costs for the
consumer.

Japanʼs Power Grid Interconnections

The siloed nature of Japanʼs 10 general electricity utilities and the diﬀerent frequency
standard splitting the east and west of the country causes a number of chokepoints inthe power grid. Transmission infrastructure is also lacking between renewable energy
supply centers in Kyushu and Hokkaido and the major demand centers of Tokyo andOsaka. The quasi-governmental Organization for Cross-regional Coordination of Transmission Operators (OCCTO) estimates that ¥6-7 trillion (over US$ 40 billion) of investment is needed to plug these ineﬃciency holes and meet the governmentʼs renewableenergy targets.
5￨Say Watt Now?

SOLUTIONSAgile Energy X tackles both issues with what it calls reverse logic. Rather than reducing
power supply at source (i.e. curtailment), it proposes boosting demand at the user end
through installation of Bitcoin mining operations throughout the country at points
critical to the grid. As a self-styled "solutions integrator" and the supplier of both theoperating system and the mining sites and rigs, the company would control thisnetwork of Bitcoin mines using distributed computing technology.

Problem 1: Financial losses from renewable energy curtailment

Solution: Waste renewable energy powers crypto mining, producing Bitcoin
Steady Demand

Excess of Electricity

Bitcoin mining rigs installed within the vicinity of a renewable energy plant
Instead of shutting down the power source at times of oversupply,
excess energy is directed toward Bitcoin mining
The higher the market price of Bitcoin, the greater the reward
A portion of this revenue is returned to local governments for use in decarbonized
town development, local production, and the revitalization of regional economies
with “green technology”

Problem 2: Higher consumer costs caused by grid congestion
Solution: Mining creates ﬂexible demand, consuming excess energy
anytime and anywhere at points of oversupply
Distribution lines deliver power to Bitcoin mining rigs at points of congestion
Pressure valve mechanism of distributed mining operations manages supply
and demand
Consumption of excess electricity for Bitcoin mining reduces losses, lowering costs
for power ﬁrms
Unrelated to Bitcoin market price

Demand for a solution is real and growing with each year. OCCTO predicts that
renewable energy could account for 50-60% of Japanʼs power mix by 2050. If thatﬁgure proves correct, Agile Energy X anticipates that under the current infrastructurearrangement, there would be a renewable energy surplus of 240 TWh per year.
Based on the example of renewable Bitcoin mining operations in the U.S., the company
believes they could direct 10% of that surplus energy to Bitcoin mining. Earning around¥15/ kWh in mining rewards, depending on the price of Bitcoin, the operation could
generate revenue of ¥360 billion per year.
The company has yet to calculate total projected costs. However, it argues that costs
should be considered part of the ¥6-7 trillion investment needed to optimize the gridfor 50-60% share of the energy mix that renewables would occupy by 2050.

The purpose is not to earn money with Bitcoin,but to consume electricity efficiently.
‒ Agile Energy X CEO, TATEIWA Kenji

6￨Say Watt Now?

DISTRIBUTEDENERGYRESOURCE

The banks ofcomputers, or rigs,
used in Bitcoin mining
typically use a graphics
processing unit (GPU) or an
application-speciﬁc integrated
circuit (ASIC) to execute cryptographic
hash functions at high speed. Remote
operators control when and where the rigs in a
network are operational. The ability to turn them on
and oﬀ at will creates a ﬂexible source of electricity
demand, maximizing the potential use of renewable energy
produced by the grid.
Distributed energy market
opportunities
Microgrid
DER aggregation trading
Operation of local generation
Next-generation supply ＆demand management
Balancing capacity trading
RE aggregation trading

Bitcoin mining is compatible with distributed energy
market plans proposed by Hitachi Energy and others.
These plans include functions for trading on the Japan
Electric Power Exchange (JEPX) and for submitting
generation schedule to OCCTO. These platforms
provide services such as balanced capacity trading andgeneration planning primarily for small and medium-sized operators of distributed energy, enablingthem to operate and monetize these resources.

The distributed energy market concept aims to mitigate grid congestion
issues through market mechanisms. Agile Energy X could be a very usefulplayer that can provide flexible, distributed energy resources from ademand point of view. But it will be up to one of the critical market
players to set up a liquid enough market to make it work.
‒ Agile Energy X CEO, TATEIWA Kenji

Agile Energy X partnered with fabless semiconductor ﬁrm Triple-1
to transform Bitcoin mining into a Distributed Energy Resource. The
Kamikaze chips used in the system are based on TSMCʼs cuttingedge 7 nanometer technology.
7￨Say Watt Now?

– Agile Energy

PROOF OF
CONCEPT

Agile Energy X started life as the so-called MegaWatt To MegaHash project at TEPCOPower Grid oﬃces in 2020 and was spun oﬀ as a company in 2022. Since then, it has
gradually increased the overload capacity of its mining rigs. With the introduction of
distributed computing technology that's controlled using Triple-1 semiconductors, theadvanced stages of the POC process demonstrate an increased ability to ﬂexibly
monitor and manage grid capacity through remote Bitcoin mining operations.

June 2022 to March 2024

TEPCO Power Grid

Kisarazu Branch, Chiba Prefecture
Approximately 1,300 mining devices deployed in 7 portable shipping containers

Conﬁrmed the impact on the actual grid of a 1.5 MW overload countermeasure system
Demonstrated the possibility for remote control, monitoring, and management

Aug 2023 to present

TEPCO Renewable Power Solar Panel Plant (50 kW)
Showa Village, Gunma Prefecture

Containerized data center ﬁtted with Bitcoin mining devices
Demonstrated possibility of monitoring solar power generation in real time + load
capacity of Bitcoin mining equipment
Through automatic control, demonstrated ability to use all solar power generated
by the plant, without it ﬂowing back into the grid

8￨Say Watt Now?

Additionally, Agile Energy Xʼs latest POC demonstrations conﬁrm a capacity to convert
heat and CO2 emissions from the mining process into additional green value, such ascarbon capture and aquaponics, which further reduces the environmental impact of
Bitcoin mining.

01011
11001








July 2023 to February 2024

Misato Town Hall
Saitama Prefecture

Renewable energy powers Bitcoin mining
Waste heat from mining equipment powers CO2 recovery process in DAC (Direct
Air Capture)
In a process called molten salt electrolysis (MSE), recovered CO2 is turned into a
molten salt, with graphite and diamond synthesis possible upon further
processing
Aquaponics (a circular agricultural method that combines land-based aquaculture
and hydroponic cultivation) uses the exhaust heat from the mining equipment for
heating and for growing vegetables using the CO2 recovered by DAC
The nutrient rich aquaculture water is then used in ﬁsh farming
The circular nature of this small-scale farming/ﬁsh cultivation operation combineswith the renewable Bitcoin mining process. It provides economic opportunities forrural communities struggling with socioeconomic diﬃculties, such as depopulation

9￨Say Watt Now?

IMPLICATIONSAgile Energy X aims to provide a solution to the two major obstacles to Japanʼsrenewable energy development: curtailment and congestion. If applied nationally, thecompanyʼs distributed computing system has the potential to act as a relief valve forJapanʼs power grid, channeling excess renewable energy into Bitcoin mining at timesof oversupply.
Not only does the method prevent waste of energy, it monetizes it. This creates an
incentive to invest in more renewable energy since it oﬀers solar and wind farmoperators a backup client in case they cannot deliver their electricity to the grid. Greater
renewables investment and a balanced grid would, in theory, allow Japan to rely lesson fossil fuels to generate its electricity. It also provides additional motivation forrenewable energy adoption in other value-added businesses, such as carbon capture
and aquaponics.
The ʻside eﬀect,ʼ of course, is that the new system would encourage greater adoption ofdigital currencies such as Bitcoin. Developments in the global ﬁnancial system suggest
this is already happening. Net inﬂows for Bitcoin ETFs stand at $13 bln over the four
short months of their existence. And with the worldʼs leading money managers buying
into Bitcoin as the eﬀect of the halving hits, itʼs not unreasonable to suggest global
demand for Bitcoin is likely to be an up arrow story for the time being.
So, is that an opportunity for Japan? Considering the countryʼs currently negligible
presence in Bitcoin mining, there is potential for considerable ﬁnancial reward byboosting domestic capabilities in the ﬁeld. The argument could be that harnessing thecircular carbon capture techniques proposed by Agile Energy X could help oﬀset the
carbon footprint of expanded crypto mining operations.
Of course, there is a big “but,” mostly to do with the sizable investment needed forinfrastructure building to take the project beyond the POC stage.
Company CEO Tateiwa Kenji says billions of dollars are needed to build a national
Bitcoin mining network with the kind of load bearing capacity he envisages for Agile
Energy X. A stable national system ‒ such as a distributed energy market, still in theembryonic stages of development in Japan ‒ is also a necessary precursor to eﬀectively
monetize the rewards obtained by renewable Bitcoin mining.
The potential is there. If Japan can overcome its aversion to Bitcoin mining, there isdigital gold aplenty waiting to be accessed, and in a way that makes the most of thenation's renewable energy resources. But challenges remain.
Are Japanese policymakers ready to accept Bitcoin mining on any meaningful,nationwide level? What would further scandal and volatility in the wider crypto market
do for the project's proﬁtability? Is Agile Energy X's parent company TEPCO reallycommitted to embracing renewables ahead of other energy sources, particularly
nuclear?

Once people come around to the idea that Bitcoin
mining, this power guzzler, can be used to solve
energy issues, it becomes an ‘Aha!’ moment. Those
people are increasing by the day.
‒ Agile Energy X CEO, TATEIWA Kenji

10￨Say Watt Now?

Say Watt Now?

The GxxD reports series covers the megatrends,
business models, and innovations at the crossover
between digital and clean energy. With stories onareas as diverse as AI, the CO2 economy, robotics,
and fusion, we share intelligence that anyone withan eye on Japan will want to explore further.

For further details about the GxxD project:

info@yuri-group.co.jp

www.yuri-group.co.jp/gxxd
linkedin.com/company/yurigr/

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Editor:

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