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Brazil's energy surplus due to wind and solar investments

outpacing infrastructure

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Renova plans $200 mln crypto mining project in Bahia

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Penguin, Enegix and Bitmain explore crypto opportunities

in

Brazil

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Concerns over water use and lack of regulations for crypto

mining in Brazil

By Leticia Fucuchima

SAO PAULO, Sept 30 (Reuters) - Crypto mining companies

are actively negotiating contracts with Brazilian electricity

providers, such as Renova Energia, that would benefit

from the South American country's surplus renewable power

without burdening the grid during peak times.

Following crypto heavyweight Tether, which announced in

July

an investment

in the South American country, there are at least six

negotiations for small and medium-sized enterprises, as well as

one for a larger project of up to 400 megawatts (MW), people

from six different companies told Reuters.

Mining machines that solve complex mathematical problems to back

crypto transactions have overloaded grids in multiple countries.

However, in Brazil, where crypto mining hardly exists today,

they could help address a chronic clean electricity oversupply

problem, which has cost energy companies almost $1 billion in

the last two years, according to wind and solar industry groups

ABEEolica and Absolar.

Tether, the world's largest digital assets company, said it

is leveraging its recent acquisition of Adecoagro ( AGRO ) to

tap its renewable energy, such as the electricity coming from

sugarcane mills, to power a bitcoin mining operation in Brazil.

Renewable energy supplier Renova told Reuters it is making one

of the first major investments in the crypto sector, a $200

million mining project for an undisclosed client in the state of

Bahia in the northeast of Brazil. The 100-MW venture consists of

six data centers that will draw power from a wind farm.

"We aim to expand the company and enter new markets,"

Renova CEO Sergio Brasil said. "We realized that by providing

all the infrastructure (for crypto mining), we were one step

ahead of our competitors."

Crypto miners can rapidly scale operations up or down based

on energy availability, providing a flexible consumer base for

excess energy without straining the grid during peak demand

periods.

Brazil's energy oversupply stems from years of government

incentives that spurred a boom in wind and solar investments.

But the pace of development has outstripped the expansion of

transmission infrastructure, and some plants now waste as much

as 70% of the power they generate.

"There's tons of potential," John Blount, one of the

founders of Enegix, a crypto miner based in Kazakhstan, told

Reuters. "We will try somehow to elaborate mobile data centers,"

he added, that would be plugged directly into power plants.

Enegix is looking into deals in Brazil's northeast, the

region suffering from the biggest energy surplus, including

tapping into solar and wind power in the state of Piaui.

Penguin, which is based in Paraguay, one of the world's

biggest crypto hubs, said it is negotiating projects too, but

declined to share any details.

And China's Bitmain, one of the largest manufacturers of

mining equipment, is also exploring opportunities, according to

an executive who asked not to be named.

MINERS SEEN AS 'DIAMONDS'

Energy providers have also expressed an interest in crypto

projects. Casa dos Ventos, which partners with France's

TotalEnergies on wind power, and U.S.-based investment

firm Global Infrastructure Partners' (GIP) Atlas Renewable

Energy confirmed their intentions to Reuters.

French utility Engie's subsidiary in Brazil and

Auren Energia, the joint venture between Votorantim Energia and

CPP Investments, Canada Pension Plan's global investment arm,

are also looking into projects to monetize their unused energy,

three sources told Reuters. The companies declined to comment.

Providers look "at consumers like this as if they were

diamonds," said Raphael Gomes, a lawyer who has been working on

several crypto projects.

Companies are assessing different models, including buying

equipment to mine on their own. In Bahia, electricity provider

Eletrobras, the biggest in the country, is installing

ASIC mining machines, along with a microgrid fed by a wind

turbine, solar panels and batteries, for a pilot project.

"We want to understand how this industry works," said Juliano

Dantas, Eletrobras' vice president for innovation.

The work could help energy providers prepare to enter the data

center industry, which the Brazilian government is trying to

attract as a strategy to grow the clean energy economy.

There are concerns about the industry's water use, as some

of the regions with the biggest amount of unused energy also

suffer from droughts. Brazil also has infrastructure problems

and lacks regulations for cryptocurrency mining.

"We went after 400 MW - it was like a Sisyphean journey, a

bit difficult," said Bruno Vaccotti, an executive at Penguin.

"We're still exploring Brazil, but it's not that easy."