Bitcoin Mining Load Flexibility Can ‘Significantly Mitigate Power Shortages’ in Texas

Can bit­coin min­ing mit­i­gate pow­er shortages?

A paper pub­lished in the Insti­tute of Elec­tri­cal and Elec­tron­ics Engi­neers thinks it’s a pos­si­bil­i­ty. The doc­u­ment, which was first pub­lished back in April, looks at the use of ener­gy by bit­coin min­ers in Texas. 

“We show that the flex­i­bil­i­ty of min­ing loads can sig­nif­i­cant­ly mit­i­gate pow­er short­ages and mar­ket dis­rup­tions that can result from the deploy­ment of min­ing loads,” the paper said. This could allow pol­i­cy­mak­ers to “facil­i­tate the par­tic­i­pa­tion of large min­ing facil­i­ties in whole­sale mar­kets and require them to pro­vide manda­to­ry demand response.”

Accord­ing to a sur­vey from Pay­less Pow­er, 58% of the 727 Tex­ans sur­veyed expressed con­cern about the Texas pow­er grid han­dling mining. 

Texas is home to a num­ber of bit­coin min­ing com­pa­nies — includ­ing Marathon and Riot Plat­forms. In the past, both Gov­er­nor Greg Abbott and Sen­a­tor Ted Cruz have expressed their desires to make Texas more bit­coin and cryp­to friendly. 

The Texas pow­er grid, how­ev­er, has shown an inabil­i­ty to keep up with surg­ing demand dur­ing win­ter storms and heat waves. 

Through demand response pro­grams, the Elec­tric Reli­a­bil­i­ty Coun­cil of Texas, or ERCOT, gives finan­cial incen­tives to min­ers so that they cut pow­er when the grid is fac­ing “high sys­tem demand.” When the min­ers shut down, the pow­er gets redi­rect­ed to the grid. 

“Con­sid­er­ing the fast inte­gra­tion of new min­ing facil­i­ties, offer­ing prop­er finan­cial incen­tives could poten­tial­ly encour­age the new facil­i­ties being built in loca­tions with low­er car­bon foot­print and high soci­etal ben­e­fit,” the researchers wrote.

Pay­less Pow­er found that 48% of those sur­veyed are con­cerned about the strain that cryp­to min­ing places on the pow­er grid. 

Accord­ing to researchers, the mod­el shows “that while the reli­a­bil­i­ty of elec­tric sys­tems with high­er renew­able pen­e­tra­tion is more sus­cep­ti­ble to the inte­gra­tion of min­ing loads, full flex­i­bil­i­ty at all times can sig­nif­i­cant­ly avoid the reli­a­bil­i­ty con­cerns cre­at­ed by the min­ing loads.”

Leg­is­la­tors in Texas intro­duced Sen­ate Bill 1751, which could remove tax breaks while also requir­ing min­ers using more than 10 megawatts to reg­is­ter as flex­i­ble load oper­a­tors with ERCOT – the state’s largest ener­gy operator. 

As Block­works pre­vi­ous­ly report­ed, ancil­lary ser­vices would be the demand response impact­ed by the bill — which is when min­ers sell the right to ERCOT to bal­ance the grid by cur­tail­ing the min­er load.

Both min­ing com­pa­nies and blockchain advo­cates have pushed back against the bill, with the head of devel­op­ment at Texas Blockchain Coun­cil say­ing that bit­coin min­ing “is unique­ly capa­ble of address­ing the needs of the grid, unlike any oth­er industry.” 

In an inter­view with Block­works, Lee Bratch­er, pres­i­dent of the Texas Blockchain Coun­cil, said that the coun­cil will con­tin­ue to advo­cate for min­ing in the state. While Bratch­er does not believe that Sen­ate Bill 1751 will pass, he and the coun­cil will con­tin­ue to push back against the bill. 

Accord­ing to the paper, dif­fer­ent loca­tions present dis­tinct advan­tages and dis­ad­van­tages. It says that finan­cial incen­tives could “poten­tial­ly encour­age the new facil­i­ties being built in loca­tions with low­er car­bon foot­print and high soci­etal benefit.”

When look­ing to build in Texas, some cryp­to min­ers have set­tled in rur­al towns, caus­ing eco­nom­ic booms in gen­er­al­ly over­looked areas — an argu­ment used by pro­po­nents of min­ing to advo­cate for friend­ly legislation.

“Both loca­tion and flex­i­bil­i­ty are crit­i­cal fac­tors that pol­i­cy­mak­ers and grid oper­a­tors should con­sid­er when design­ing ancil­lary ser­vice pro­grams that take advan­tage of the unique char­ac­ter­is­tics of the min­ing loads and enhance their grid-sup­port­ing capa­bil­i­ties,” the researchers wrote. 

A num­ber of states are cur­rent­ly weigh­ing leg­is­la­tion both for and against cryp­to min­ing. States includ­ing Mon­tana, Arkansas, Mis­souri and Mis­sis­sip­pi have either intro­duced or passed leg­is­la­tion in favor of min­ers. New York, on the oth­er hand, paused all proof-of-work cryp­to min­ing oper­a­tions last November.

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