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.
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