Negative publicity about the energy consumption of Bitcoin mining is nothing new. Some groups see this method of digital asset production as a major negative, but such appraisals may be premature. Bitcoin mining can be an extremely helpful way to strengthen energy infastraucture. Here is why.
Bitcoin mining provides a way to use surplus electricity that would otherwise go to waste. When demand for electricity is low, such as during off peak hours, miners can provide grid operators with much-needed flexibility. This helps avoid blackouts and brownouts, and keeps the electrical grid running smoothly.
This also applies to when electrical grids are facing increased loads. For instance, Riot’s Whinstone mining farm powered down operations during the February 2022 winter storms, reducing its power consumption by 99 percent. The reduced load made it easier for the state to continue supplying regular homes.
Texas senator Ted Cruz sees Bitcoin mining as a boon to the state’s energy needs. “A lot of the discussion around Bitcoin views it as an energy consumer. The perspective I’m suggesting is very much the reverse – which is as a way to strengthen our energy infrastructure.”
How Bitcoin Mining is Helping the Texas Grid
Bitcoin mining’s growing prominence in Texas as a power supply buffer comes from moves by the Electricity Reliability Council of Texas (ERCOT) to improve supply reliability. The network, responsible for powering 90 percent of the state’s energy needs, is working with miners to adjust their energy consumption according to consumer demand.
For ERCOT, excess power drainage is just as bad as too little. If it cannot supply enough electricity, it risks rolling brownouts. If it supplies too much, it could damage infrastructure and equipment.
A Mutual Beneficial Solution
Bitcoin mining is a valuable counterweight, according to the organization. Operators, it says, could increase hash rates when Texas’ power demands are low, and reduce them when they are high.
Data suggest that electricity prices in Texas were negative between 10 and 20 percent of the time as supply outstripped demand. Paying people to use electricity was the only way for the system to equalize. On the other side, prices were extreme (above $100) 5 percent of the time in an attempt to get people to slash consumption during peak episodes.
For ERCOT, Bitcoin miners are the ideal solution. They provide energy demand when the network is strong but are willing to power down at a moment’s notice if there is a supply issue. Operations can unwind in a matter of seconds, preventing wild price spikes.
Another important factor to consider is that Bitcoin mining facilities located near renewable generators can also provide baseload consumption for solar and wind. Along with this, they can also consume natural gas that would have to otherwise be flared at oil drilling operations, saving precious resources that otherwise are wasted as part of the energy generating process.
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