Can bitcoin be sustainable? Inside the Norwegian mine that also dries wood

Authors: Norway, Daniel Boffey in Hønefoss

Source: The Guardian

A line of large blue skips full of chopped wood sit at the back of a site belonging to Norway’s biggest bitcoin mining operation, a 5,000 sq metre warehouse on the outskirts of Hønefoss, a small town 40 miles west of Oslo.

Hot air is being pumped into the 12 skips through bendy corrugated pipes curling out from the warehouse. Despite the snow, it will take a few days for the logs to be dried out, after which a local lumberjack, grateful for the free service, will take them away for sale.

The wood is being warmed by some of the so-called waste heat being emitted from thousands of stacked-high computer servers, known as miners, working away inside the warehouse. It is one of two such sites owned by the Norwegian company Kryptovault. The company expects its mining to account for just under 1% of the computing and process power in the global bitcoin network later this year.

Bitcoin mining, the process of earning cryptocurrency by solving complex computational math puzzles and verifying transactions in the process, is famously energy-intensive. The latest calculation from Cambridge University’s bitcoin electricity consumption index suggests that as a result, the sector consumes more energy in a year than many countries, including Argentina, Pakistan and Poland.

Heat is an inevitable waste byproduct. Despite noise from ventilation fans so loud that the company had to spend about £1.5m on insulation after complaints from neighbours, the hot areas in the Hønefoss warehouse can reach 55C.

For many, at a time of rocketing energy prices, this may be further evidence of the unsustainability of a business that was recently described by Robert McCauley, a senior fellow at Boston University’s global development policy centre, as “worse than a Madoff-style Ponzi scheme”.

The critics are certainly circling. Russia’s central bank has proposed outlawing all cryptocurrency operations in the country, and China has already done so. Swedish regulators have called for something similar in Europe. Norway’s regional development minister, Bjørn Arild Gram, told the Guardian his government was reviewing its options.

“Although crypto-mining and its underlying technology might represent some possible benefits in the long run, it is difficult to justify the extensive use of renewable energy today,” Gram said. “The ministry of local government and regional development is currently reviewing potential policy measures in order to address the challenges related to extensive energy usage caused by crypto-mining.”

But there is a fightback brewing in the sector, of which Kryptovault, which uses only renewable energy, is a part. This week, the billionaire Michael Novogratz, the owner of Galaxy Digital, a digital assets company that seeks to become “the Goldman Sachs of crypto”, launched a sustainability programme on energy use and social responsibility, saying the industry needed to tackle a “false narrative around it being bad for the environment”.

It has been described by some critics as greenwashing, but within a world that has until now been less than transparent over its activities, preferring secrecy over sympathy, this was a shift.

Kjetil Hove Pettersen, 39, Kryptovault’s chief executive, who founded the company with friends after deciding to turn a hobby into a business, said he also believed it was time for the sector to push back at the prevailing narrative.

“If you look at the total energy cost, globally, for any given thing, it’s always going to be huge – I think we can always compare to that of a small European country,” he said. “That includes also traditional gold mining, which takes more than four times the amount of energy as bitcoin mining.”

Advocates for bitcoin argue that it offers the opportunity to exchange value with someone instantly without using a third party such as a bank, without permission and virtually for free. They say it is being adopted at a faster rate than the internet in the 1990s, with El Salvador having become the first country to adopt it as legal tender, alongside the US dollar, in spite of misgivings from the International Monetary Fund.

Pettersen said people wanted bitcoin, and mining operations provided economic returns through tax and employment. Mining is further said to offer a way for countries with excess renewable energy supply from hydro, wind or solar power at certain times and seasons to make value of it within their own borders and without transfer costs. Estimates of what proportion of the energy used in mining is renewable vary from 25% to 57%.

“Mining is not polluting in itself,” said Pettersen. “If you are running coal to run mining then that’s another story, that’s what you don’t want. Mining should be done in more than places like Norway – and it can be a way to save trapped energy. For example, in northern Norway where there is excess, or in El Salvador where they are now using energy from volcanoes, setting up production when it wasn’t there before.”

Kryptovault aims to have 15,000 miners at work by this autumn. Otto Him, 37 and Martin Mikalsen, 26, who manage the Hønefoss mine, have nicknamed one area between two huge walls, or pods, of 6,500 computers as “the cathedral”, in recognition of its awesome scale.

The company is transitioning from older bitcoin miners to new ones shipped from China that are said to be three times more efficient. There will be plenty more waste heat to use. The company is in early talks to dry seaweed for a local firm. Pettersen says the narrative will change.

“At some point, country after country will adopt bitcoin as legal tender and at some point it will be obvious that it is going to change the world,” he said. “Just as it became obvious that the internet was here to stay.”

Top 10 countries for bitcoin mining activity 

  • 1) Kazakhstan 
  • 2) Russia 
  • 3) Ireland* 
  • 4) Germany* 
  • 5) Sweden 
  • 6) Norway 
  • 7) Iceland 
  • 8) UK 
  • 9) France 
  • 10) Georgia  

*Evidence of activity probably inflated owing to redirected IP addresses via the use of VPN or proxy services.

Data from the Cambridge Centre for Alternative Finance’s Cambridge bitcoin electricity consumption index. Table based on the latest data from August 2021.


This article was written by Norway and Daniel Boffey in Hønefoss from The Guardian and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to