The problem

770 millions people in the entire world do not have electricity. Many of these people live on the African continent.

There are two main reasons why rural Africa is so poor: a lack of infrastructure and a lack of income. Africans may have electricity, but choose to use their funds to pay for other things like mobile data once a week on their smartphones. Electrical grids are only available in urban areas and do not reach rural populations.

It effectively isolates rural areas from the main grid. Africans have instead adapted microgrids, which provide electricity. Microgrids are electrical grids that contain both energy generation and storage and distribute it to an immediate area. The microgrids are small in size, as the name suggests.

Microgrids that power Africa’s rural areas are used for many years. However, there are still issues. The funding is one of the problems. To get microgrids off the ground, government agencies like USAID provide funding through concessionary funds. Microgrids are unable to sustain themselves financially once they have been launched. Microgrids can also be inefficient, releasing a significant amount of electricity generated as waste heat.

Rural Africa, and rural areas around the world need to expand the main electrical grid. They don’t need a multitude of microgrids which create waste and inefficiency.

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Erik Hersman was born in Kenya, and grew up there. He is focused on bringing value-added businesses to Africa. In an interview with CoinDesk, he referred to the community-oriented approach that most Africans have, because in his opinion, people are more likely to work together than to go it alone. His entrepreneurship viewpoint is one of his most interesting.

Hersman stated that “if you want to make a dent in the universe, it’s really about wealth creation and building businesses which change people’s life… because being a recipient is much better than being treated like a beggar with your begging dish out.”

Hersman’s parents were missionary language specialists who had moved to Africa long before Hersman was even born. Hersman watched as aid and development in Africa brought hope, followed by disappointment. The cycle repeated itself over and over. When he returned to Africa after completing his college education in the United States he chose not to go into development as many other college graduates did.

Hersman has a career that reflects her entrepreneurial nature. The career path of Hersman began with a grant-funded application for community mobilization Ushahidi. Next, a Nairobi technology innovation hub iHub. Finally, a telecommunications company called BRCK.

In March 2022 he founded Gridless along with two other co-founders.

Gridless was not created with the goal of bringing bitcoin mining in rural Africa. The main goal of the company was to provide affordable energy via microgrids. Bitcoin enabled this capability. Gridless is able to benefit from Bitcoin mining because it does not require any specific location to operate.

All you need to mine bitcoin is energy and internet. Rural Africa has both.

Gridless provides the bridge to financial viability. Gridless provides the bridge to financial viability. Gridless works with an energy provider to co-locate bitcoin mining with a production point for a microgrid in a rural area. The electricity that is not purchased by the rural community is used to mine bitcoin. The microgrid will be profitable if it can mine bitcoins.

The community has now access to electricity, and the energy provider can make a profit through bitcoin mining.

Gridless’ business plan includes Bitcoin, and it has two main goals: to help spread the benefits of electrification to rural Africa as well as to decentralize the Bitcoin network. Gridless builds, operates and designs bitcoin mining sites in rural Africa alongside small-scale energy producers. These areas have a lot of potential and untapped energy.

Gridless has been thrust into the Bitcoin Twitter spotlight after Luxor CEO Nick Hansen posted a video of one of Gridless’ micro-hydroelectric plant in rural Kenya in October.

This hydroelectric facility will provide electricity at a reasonable price to the village next door, while being unobtrusive in the environment. Gridless can do this, because the electricity that is not used by the village will be mined for bitcoin. The energy costs to mine bitcoins will offset the losses of providing electricity to the village, since it won’t be wasted.

While a common criticism of Bitcoin is that it uses too much electricity, this example shows how a rural village has access to electricity thanks to bitcoin mining. The Kenyans who now have electricity are doing so because of bitcoin and not because of it. Gridless has a microgrid that uses bitcoin to provide electricity for 770 million Kenyans.

If you’re concerned about the environment, and bitcoin mining’s dependency on energy is often mentioned, then providing electricity to areas where it was not possible before would surely be more important than any moral considerations a critic may have for green energy production. Hydroelectric power is also renewable.

There’s still more to come. Gridless wants to build out its facilities in Kenya and Malawi now that it has new capital. Hersman revealed that Gridless purchased “bucketloads” of mining machines with the $3 million in seed funds raised by Jack Dorsey founded Block and bitcoin-focused venture capital firm Stillmark.

Environmental risks are not what you think

Gridless had lofty goals and a lot of promise, but recently they were brought back to earth. Hersman stated that while political risk and site safety risk are casually viewed by the public as threats to business, “environmental risks are more relevant than any other risks.”

He doesn’t refer to the most common type of environmental threat. The risk is not “Bitcoin’s bad for the environment”, but “rains have been at a 40-year low in Kenya, so hydroelectric production isn’t as productive as expected”.

Gridless has no pure competitors right now, which is as absurd as it may sound. There are many microgrid providers and bitcoin miners in Africa. But who is doing both? Gridless is a relatively new company.

Gridless’ success will certainly attract competitors who do the same. Gridless would face increased competition, which could make it more difficult to succeed. However, Gridless has made at least two concessions.

First, Africa (one of Africa’s largest continents) has plenty of space for entrepreneurs to flourish and spread the benefits of electrification among more Africans. Second, the presence of more bitcoin-mining companies will lead to greater decentralization in bitcoin mining.

Gridless’ objectives are perfectly aligned with both of these concessions.

Jeanhee Kim is the editor.