The Future of Energy? Brooklyn's Bitcoin-Heated Bathhouse

Behind the scenes of a traditional bathhouse in Brooklyn, something extraordinary is taking place: The pools, heated to 104 degrees, are not warmed by conventional means but by computers mining for bitcoin.

A profit-seeking drive for energy efficiency has caused bitcoin miners to pop up in unexpected places, such as Jason Goodman’s New York bathhouse, where the cost of heating his pools is about the same as it was before he plugged in the bitcoin miners, but now with the bonus of earning bitcoin.

Goodman credits traditional bathhouses for helping him through a tough time when he first moved to New York City. He started Bathhouse in 2019 because he wanted to re-create the life-changing experiences he underwent for the “hardcore sauna-heads, for those who are trying to optimize their performance, longevity, and overall health.” 

And then he had a cutting-edge idea of how to make it better.

“It kind of clicked in my mind,” Goodman adds. “Bitcoin mining is really important. Bitcoin mining produces heat as a byproduct. I buy energy to create heat. That’s interesting.” 

Instead of cooling the mining computers with fans, Goodman submerges them in a specially engineered fluid that doesn’t conduct electric current but, instead, absorbs the heat that the computers produce. A heat exchanger then transfers it into hot water that moves directly into the pools. “I was able to make hot water very easily,” Goodman explains. 

Bitcoin mining wasn’t designed for heating hot tubs. It was designed to facilitate a new type of digital money with a supply that no single entity can alter or control. A central bank cannot create new ones—they can only be mined by computers scattered around the world running the bitcoin protocol, and there will only ever be 21 million bitcoin. These computers compete to solve a cryptographic puzzle that the protocol makes just hard enough to ensure it’s solved roughly every 10 minutes. Solve the puzzle, unlock a block of transactions to be validated and added to the blockchain, and earn bitcoin. 

The more computing power someone has, the better their chances of earning bitcoin. But more computing power means using more energy. 

“Bitcoin miners are in a relentless, unquenchable search across the globe for the cheapest possible energy,” explains Alex Gladstein, chief strategy officer at the Human Rights Foundation and author of Check Your Financial Privilege.

“Be energy neutral and earn bitcoin. That was what we wanted to prove to ourselves,” Goodman tells Reason. “A dream scenario would be that every hotel, every major residential building, every major office building starts converting their boiler system or their heating system or their hot water system over to a system…like we’re using and have a massively distributed hard-to-control mining network.”

For bitcoiners, keeping the process distributed and hard to control is the whole point. As Caitlin Long, founder of bitcoin-focused Custodia Bank, explains, the main purpose of bitcoin is to have an honest ledger where people can store value that cannot be manipulated.

Bitcoin mining ties the world’s first decentralized digital currency to the physical world. But bitcoin remains borderless, seeking to exploit inefficiency wherever it can, whether that’s a Brooklyn bathhouse, an unmarked warehouse in Venezuela, or the small rural town of Washington, Georgia. 

Mayor Bill DeGolian of Washington welcomed CleanSpark, one of America’s largest bitcoin miners, to his town because it allowed the miner to buy energy at a bulk discount. 

“They’re buying a lot of power from the city. And that’s what helps the city…with what we’re selling to CleanSpark, the amount of power they buy per month from us is more than all of our other commercial and residential customers combined,” DeGolian said. 

At its Norcross operation, an 87,000-square-foot facility on the outskirts of Atlanta, CleanSpark is using the same immersion cooling technique that Goodman uses in his bathhouse to cool 4,300 bitcoin miners. The technique allows the company to spend less money to power the A.C. needed to cool the giant rooms where they keep the computers.

“We’re removing that environmental factor where ambient temperature goes up and down and we constantly fight the environmental curve,” Bradley Audiss, senior director of operations at CleanSpark in Norcross, tells Reason. “Immersion is very much a flat line as compared to air cooled that has the fluctuations which are primarily tied to hot temperatures.”

For some, bitcoin is the real Green New Deal. According to Gladstein, bitcoin subsidizes renewable energy because “the projects are made profitable by the ability to monetize that energy right away….So rather than monetizing [public] debt [by printing money], we can have the market kind of power this process.”

But critics still consider the energy that is going to mining to be a complete waste. Some countries have banned bitcoin mining, and the Biden administration wants to tax it heavily. Even Goodman felt the backlash when he announced he was heating the bathhouse with bitcoin mining. 

 Bitcoiners say the ability of miners to sponge up and then release energy at a moment’s notice makes the grid more reliable, which is why utilities partner with them. Take Texas bitcoin miner Marshall Long. His mining company’s partnership with Texas’ grid manager helped avert a summer blackout.

“What makes miners particularly good is because I’m not only a large user, I’m a granular user. So I don’t have to turn off my entire load at once,” Long said. “I can just turn off one miner or 200 miners or 2,000 miners in order to respond to certain things that are going on in the grid throughout the day.”

“We’re starting to see with…bulletproof scientific evidence that…bitcoin miners are actually helping and not hurting,” Long added. 

Miners aren’t shutting down during peak hours out of altruism but because of market incentives. CleanSpark, for example, monitors energy prices on a minute-by-minute basis and shuts down the moment its operation starts to become unprofitable, freeing up power for the rest of the grid. 

Even in places like Venezuela, where bitcoin mining boomed thanks to the government subsidizing energy to near-zero cost, bitcoin is forcing energy innovation. Miners are taking responsibility for fixing power lines that the government fails to maintain. 

“We take care of the electrical infrastructure so that it is not damaged,” explained a major Venezuelan bitcoin miner who fled to Miami and asked to remain anonymous. “For example, if we see that we have a voltage problem or an electrical factor in the area that affects us and can affect the community or the area where we are, we will try to improve it as much as possible, because if we do not improve it, our miners will not work well.” 

Bitcoin is too decentralized and too enriching for even the most powerful governments to stop at this point. The choice America faces isn’t whether to allow mining to exist or not, but whether to welcome it here in a vibrant market economy where it can bootstrap new energy sources and its byproducts can create economic value.

Music by “Isolated” by Theevs via Artlist; “Vuelta al Sol” by Tomas Novoa via Artlist; “Density Wave” by Aviad Zinemanas via Artlist; “Better on the Other Side” by Flint via Artlist; “Outrun” by WEARETHEGOOD via Artlist; “Full Access” by Jimmy Svensson via Artlist; “Timelines” by Charlie Ryan via Artlist; “Light Reflection” by Luke Melville via Artlist; “Beer House” by Alex Grohl via Artlist; “Secret Weapon” by Evgeny Bardyuzha via Artlist; “Left Unturned” by Jamie Bathgate via Artlist

  • Editor: Danielle Thompson
  • Camera: Jim Epstein
  • Graphics: Isaac Reese
  • Graphics: Adani Samat
  • Camera: Eric Hernandez
  • Camera: Richard Sanborn

Originally posted 2023-11-14 16:30:59.