A waste stream having anaerobically biodegradable components is fed to an anaerobic reactor where the components react with microorganisms to biodegrade the components and produce biomass and biogas. Mixing occurs in select portions of the anaerobic reactor, particularly the bottom and top portions of the reactor. Relatively heavy solids settle to the bottom and are mixed with the mixed liquor while relatively light or fine solids float to the top portion of the anaerobic reactor where they are mixed with the mixed liquor. Mixed liquor is pumped from an intermediate portion of the anaerobic reactor to a membrane separation unit where the mixed liquor is separated into a permeate stream and a retentate stream that is concentrated with solids.