The Economics of Mining Bitcoins Using Small Nuclear Reactors

Small modular nuclear reactors mining bitcoins for localities around the world could be the fastest path toward an energy transition.

The research paper

This year in October, researchers at Cornell University published a paper detailing how Bitcoin mining is one profitable venture to help hasten a transition to renewable energy around the world.

Bitcoin mining does not need the energy to be transmitted to any place, nor have it stored for later use, key challenges with scaling renewable energy technologies today.

Renewable green energy today suffers from a plethora of problems, among them being a non-zero carbon footprint, intermittency and energy storage inadequacies. Inadequate energy storage is not good if you want to use in the night your renewable energy captured during the day.

Of all the green energy resources we have on the planet, nuclear power is the best. It has the smallest carbon footprint created during construction, it can quickly offset its carbon footprint, it has the smallest number of deaths per TWh, and it produces adequate electricity 24/7 while occupying much less space than a comparable farm of photovoltaic solar panels.

Small Modular Reactors

What do you know, Poland has authorized the construction of 24 small modular nuclear reactors at six sites across the country – Reuters.

This move is backed by research showing that building small modular nuclear fission reactors (SMRs) would be a better investment direction for nuclear energy away from conventional pressurized water reactors (PWRs) with sky-high silos.

It goes against conventional economics-of-scale and thermodynamics-of-scale thinking, but smaller modular reactors are easier to build on an industrial scale, just like smartphones. They are also easier to maintain because the modules are replaceable.

So economics-of-scale is replaced by the economics-of-maintenance, and thermodynamics-of-scale is replaced by we-are-not-in-a-hurry-to-fiss-thank-you.

Not being in a hurry to do fission in bulk, however, means there will be larger quantities of nuclear waste produced when compared to big nuclear reactors. Therefore, fast breeder technology will have to advance in step with the roll-out of small modular reactors if we are NOT to have a nuclear wasteland on our hands.

The threat of reactor meltdown is also much reduced with smaller reactors. A key challenge with scaling nuclear fission technology today because we fear the damn things. We incorrectly think they could go kaBOOM, you know, like a nuke.

The Financials

While we cannot predict Bitcoin mining profitability at spotted points in time, we can make use of Bitcoin’s annualized ROI over the past 10 years, which has been calculated to be a 41.81% compound annual return.

Let us assume we had borrowed our entire investment fund and sunk it into small modular reactors in Poland or anywhere. It means we shall need to double our money if we are to break even. By the rule of 72, we shall need to hodl our bitcoins for 72/41.81 = approximately 2 years. But we know Bitcoin has made sure profits after four years because of the halvings. So we should wait at least five years and be sure to make 100%+ profit.

Alright.

We still have to build a nuclear reactor.

Data from the 2022 World Nuclear Industry Status Report shows that building a nuclear reactor takes approximately 7 years. That is good news because we shall wait only 5 more years to make money, but it is not good news because you will miss two halvings and only start producing power for mining when Bitcoin rewards are very small. But no matter, full steam ahead.

Why it takes so long, in case you are wondering, is because of regulations and public confidence. Both to ensure and be assured you will not build a nuke instead of a nuclear reactor.

Thankfully, the data shows these reactors usually operate for more than 31 years. So that is a relief.

That leaves us with 19 years in which to make a profit in Bitcoin mining. Enough time to double profits a few times over especially when Bitcoin gets to be used by major corporations and governments trading with each other.

Do it Now

Accelerating the growth of renewable energy technologies with Bitcoin is not only profitable to the companies, it is a major drive towards an energy revolution for the whole planet. This is because the energy used to mine bitcoins can always be channeled towards other things.

It will be channeled towards other things.

On some days, mining Bitcoins may not be profitable. With the coins dwindling every other halving, five or so halvings from today, mining Bitcoins will likely become too expensive for individual users of Bitcoin wanting to transact on-chain. Hence, unprofitable for mining companies using their hard-earned nuclear reactors to mine BTC for profit. For all its wonders, Bitcoin is not an infinity stone or something.

If the world jumps aboard right now when the time is ripe, this idea could supercharge the energy transition so that by the time Bitcoin is no more, maybe replaced by Bitcoin v2.0, we have a clean green world and our fossil fuels are still under the ground. A reserve asset for hard times.

(Resetting Bitcoin will create hard times. Forget ideas like replacing it with Ethereum. Bitcoin is a scarce asset and Ethereum is a copy-and-paste of how dollars are made. There is no second best).

Otherwise, if major investors wait 20 to 30 years to start mining Bitcoins with nuclear reactors, they shall be in for a big disappointment. The Bitcoin blockchain is fast becoming one big immutable block of lost coins and zero mining rewards. It will be of little use to many individuals who seek self-custody and trust-based transacting.

This is a window of opportunity if there ever was one. And it is closing fast.