Although Bitcoin (BTC) mining remains a controversial topic, it is becoming more common to hear how Bitcoin mining can help balance grid demand. This is demonstrated in the state of Texas, as Bitcoin miners can participate in demand response programs that encourage miners to shut down their operations during peak demand.
A spokesperson for the Electric Reliability Council of Texas (ERCOT) – the organization that operates the Texas power grid – told Cointelegraph that crypto loads can have effects on the grid just like any large load. However, they noted that crypto miners can help stabilize the network by shutting down their demand for electricity in real time:
“Crypto mining is extraordinarily responsive and can shut down in a fraction of a second and stay shut down for as long as needed. We work closely with the crypto mining industry and have established a large flexible load task force to ensure we move forward with grid reliability and Texas load growth in mind .”
On March 25, ERCOT established a temporary process to ensure that new large loads, such as Bitcoin miners, can be connected to the ERCOT network. While evaluations for large load interconnections are not a new process, ERCOT explained that the timeline under which most crypto miners operate requires a new process to ensure that existing standards for interconnecting new large loads are met. ERCOT’s Technical Advisory Committee approved the creation of a “Large Flexible Load Task Force” on March 30 to assist in the development of a long-term process that will replace the current interim process.
Software providers want to help miners balance the grid
While it’s notable that ERCOT is helping Bitcoin miners connect to the Texas grid faster, software providers have also begun working with miners to ensure they have the tools needed to properly enable grid balancing.
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Michael McNamara, co-founder and CEO of Lancium – a Texas-based energy and infrastructure company – told Cointelegraph during the Texas Blockchain Summit that in 2020 Lancium demonstrated how a Bitcoin mine could work as a verifiable load:
“For loads to qualify as a controllable load resource in ERCOT, customers must be able to do two things. First, they must reach a target energy consumption level – either more or less – as directed by ERCOT in less than 15 seconds. Second, they would have to provide ‘primary frequency response.’ This means that miners must be able to react to a loss of generation event – for example, the unexpected trip of a thermal power station – within 15 seconds.
With these demands in mind, McNamara shared that Lancium has licensed software to certain Bitcoin miners to act as verifiable loads within ERCOT to provide grid stability services. Known as Lancium Smart Response, McNamara explained that this software works by automatically responding to power grid conditions and signals in seconds.
“When it comes to meeting ERCOT’s requirements, software like Lancium Smart Response is essential to meeting the time required by ERCOT. Controllable load resources provide more surgical and precise grid stabilization benefits than other demand response programs – and customers are compensated at a higher level for providing these more valuable services to the grid,” he explained.
For example, McNamara pointed out that miners using Lancium’s software can become certified by ERCOT to participate in its various grid stabilization programs, which could help operators earn higher revenue by reducing electricity costs by 50%.
Speaking specifically, the ERCOT spokesperson told Cointelegraph that ERCOT has a program for any load to participate in providing support services. According to ERCOT, these programs require loads to qualify to provide these services. “Some crypto miners have qualified to offer these services similar to other loads that participate in these existing programs. These programs are often referred to as ‘demand response programs’ and operations voluntarily choose to participate ‘to limit,'” stated ERCOT.
While McNamara could not comment on which miners will apply Lancium Smart Response, Dan Lawrence, CEO of Foreman Mining, told Cointelegraph that Bitcoin miner CleanSpark uses his company’s software to manage its operations.
Taylor Monnig, vice president of mining technology at CleanSpark, told Cointelegraph that Foreman allows miners to limit operations effectively instead of flipping breakers. “Charges can then be directed where needed, essentially acting as a battery,” he said.
Indeed, automation is important for Bitcoin miners participating in load response programs. To put this in perspective, Sam Cohen, head of business development at Foreman, told Cointelegraph that software enables a miner to be on target at scale.
“For example, if a Shortage Service Provider asks a miner to reduce their consumption by 10 MW, Foreman can reduce their load in less than a minute without operator intervention,” he explained.
Monnig added that Foreman allowed CleanSpark to program its machines to stop hashing when necessary. “For example, an S19 mining machine will go from 3,000 watts down to 90 watts in ‘sleep mode’. Then when the grid doesn’t need the power, the machines turn back on. This is all automated.”
Unlike Lancium, however, Foreman is not currently working directly with ERCOT. “We would like to work more closely with ERCOT and I believe we are set up to do that. However, there is a lot of relief that comes with working in ERCOT,” he said.
With this in mind, Foreman worries that the growing Texas mining industry may be controlled by a few players rather than a few software providers. “Foreman is promoting decentralization of Bitcoin mining. If things continue the way they are headed, it is possible that all large-scale verifiable mining loads in Texas could be controlled by a handful of providers, which points to a source of centralization,” he noted.
Bitcoin mining as a verifiable means of charging
Centering aside, Gideon Powell, CEO and president of Cholla Petroleum Inc. – a Texas-based research company focused on the energy sector – told Cointelegraph that he believes that Bitcoin mining is the highest burden for demand response programs, such as those pioneered and developed. of ERCOT.
“When we run out of power on the grid, we have two options: fire up more generators or simply turn down our electricity use. As individuals this is hard to do. But Bitcoin miners and software companies enable ERCOT to see and control these loads for to provide a demand response that much more closely matches the operation of a traditional generator (reverse),” he said.
Powell added that Bitcoin mining can help power the Texas grid as wind and solar power become more common. For example, he noted that historically grids were considered from the thermal generation perspective because thermal generation allows for rotating mass to equal generation and load at all times. However, he noted that wind and solar resources are intermittent, which makes load balancing difficult because these renewable resources are constantly up and down.
“Many companies have developed the technology to enable Bitcoin miners and other data centers that contain latency agnostic computing to respond to instructions from ERCOT or respond to real-time prices on the grid. When power is scarce, prices rise and Bitcoin miners and many others can limit ,” he explained.
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Powell further asserted that ERCOT is the most free-market grid in the world, with a regulatory framework needed to encourage bottom-up solutions. “This is why Texas will continue to attract energy entrepreneurs needed for increasingly complex energy markets.”
Although noteworthy, it is important to point out that Bitcoin continues to see an increase in energy consumption per year, which may result in stricter regulations. McNamara remains optimistic however, noting that Bitcoin mining continues to be a friendly resource for the Texas grid, which also demonstrates the potential this technology could have within other regions.