Even though the big headline name for what was described in the last example is curtailment– where solar and wind are ordered to produce less power than they otherwise could–the same scenario also describes congestion. And congestion isn’t unique to renewables. It happens any time that cheaper generation can’t get to load due to transmission bottlenecks.
Houston is notorious for its congestion with its high pricing shown in red.
West Texas is notorious for its low pricing, shown in blue.
Curtailment introduces risks and disadvantages to generators.
Risk of Curtailment Prevents New Generators from Being Built
Curtailment Wastes Energy
Unexpected Curtailment Kills Generator Revenue
Bitcoin is a special behind-the-meter load because it:
…is fast to stand-up.
…is transportable with a fungible footprint.
…is location agnostic.
…liquidates the energy immediately on-site.
…is flexible.
…is sensitive to electrical cost input.
…performs a societal good.
As of now, this asymmetry between older generation ASIC pricing compared to their gross revenue is huge.
For now, bitcoin mining is still highly profitable with eye-popping revenue.
It isn’t difficult to imagine the problems that could arise from being able to add hundreds of megawatts of load twice as fast as a commensurate level of generation.
Possible Solutions to Mining Externalities:
- While mining is extremely profitable, bitcoin miners should strive to add additionality of energy to the power system.
- Bitcoin miners should coordinate with grid operators very closely to ensure that they provide maximal benefit to the grid during times of scarcity.
- Bitcoin miners should spend time educating grid operators on their function and advocating for a stronger grid generally.
- Bitcoin miners should spend time educating grid operators on their function and advocating for a stronger grid generally.
Bitcoin miners have one job: mine bitcoin. In this regard, comparing bitcoin miners to battery storage or green hydrogen is not a legitimate comparison because none of those things produce bitcoin.
No one writes articles about how steel mills solve grid problems or how much energy Facebook or TikTok pulls on an annual basis.
Bitcoin mining is threatening to add between 10% and 20% to ERCOT base load. People are going to have questions.