Expert: Southeast Asia can convert excess energy into economic value through Bitcoin mining

The global Bitcoin and crypto mining industry has boomed in recent years. At the centre of a less-noticed revolution is Southeast Asia, where growing interest in the industry coincides with an increased commitment to energy transition – a significant combination that could bring economic value to the region in the long term.

Although Southeast Asia still has a long way to go before it can meet its renewable energy targets, there is already a significant growing focus on renewable energy, said Manoj Narender Madnani, managing director for EMEA at cryptocurrency mining giant Marathon Digital. International business hoursHe said the increased focus on switching to renewable energy could lead to higher electricity generation, making the region a suitable location for Bitcoin mining.

In the Bain & Company, GenZero, Standard Chartered and Temasek Southeast Asia’s Green Economy 2024 report, “Moving the Needle,” released in April, Kyung-Ah Park, head of ESG Investment Management and managing director of sustainability at Temasek, said Southeast Asia’s “biodiversity and abundance of natural resources, as well as its strategic importance as an industrial hub, enable the country to leverage nature-based solutions and new technologies, seizing a once-in-a-lifetime opportunity to ride the wave of green growth.”

Most member states of the Association of Southeast Asian Nations (ASEAN) are also riding this wave, with many members showing “a strong commitment to achieving net zero by 2050,” according to the World Economic Forum. The 10-member bloc is waiting for the Philippines to commit to the same goal, and Indonesia has set its target for 2060.

What does Bitcoin mining have to do with Southeast Asia’s energy transition goals? An October 2023 study by a group of Cornell University scientists found that the “strategic” establishment of BTC mining farms can maximize productivity and, in turn, potentially create “a self-sustaining cycle for renewable energy expansion” within the energy-intensive industry.

As Southeast Asian governments push to reduce the region’s carbon footprint, mining rigs have been popping up across the region lately. Lured by cheaper electricity and skilled labor, mining rigs have already appeared in Malaysia, Indonesia, and Laos. Their emergence follows data that showed Bitcoin mining operations using sustainable energy hit a new high of 54.5% in January and also saw a 3.6% increase in calendar year 2023. The data showed that BTC mining was the largest consumer of sustainable energy across several subsectors.

“The current electricity distribution does not match the energy produced. Therefore, Bitcoin mining offers a solution to absorb the excess energy that is produced,” Madnani said.

Furthermore, excess gas can be “captured and converted into economic value.” At a time when Southeast Asia’s economy is battling various headwinds, the economic value that Bitcoin mining can bring could be just what the region needs for continued growth.

For Marathon Digital, Southeast Asia is “a key market,” Madnani said. “We are currently evaluating some opportunities in this key market,” he said.

He acknowledged that Southeast Asian miners seeking a piece of the multibillion-dollar industry face challenges. One way to overcome the challenges associated with building a bitcoin mining infrastructure is to join a global alliance that could allow them to benefit from economies of scale, he said.

Despite these challenges, new trends are also emerging in the region that could help drive the Bitcoin mining industry in Southeast Asia over the next five years. “The demographics are working well and, most importantly, this is a part of the world where cryptocurrency adoption is relatively high,” he stressed.

In blockchain analytics firm Chainalysis’ 2023 Global Crypto Adoption Index, a total of four Southeast Asian countries made it into the top 10, with Vietnam coming in third and the Philippines sixth in the rankings. Just recently, the Philippine Securities and Exchange Commission (SEC) approved a pilot project led by local crypto giant Coins.ph for what could be the country’s first stablecoin, marking another step toward wider crypto adoption.

The region still has a lot of work to do to advance both digital asset adoption and its renewable energy goals, but with the region having “an abundance of untapped bioenergy,” Bitcoin mining in Southeast Asia could well flourish.