The rapid rise of cryptocurrencies, particularly bitcoin, has sparked widespread debate on their environmental impact. Bitcoin mining in particular often receives significant scrutiny, with critics arguing the energy-intensive process of mining strains electrical grids and wastes energy.
This could not be further from the truth. Bitcoin miners increase the resilience of energy grids, incentivize renewable energy development and create jobs in rural regions. Bitcoin miners are flexible, location agnostic loads that can respond to grid frequency events with unparalleled granularity.
This story is part of CoinDesk’s 2023 Mining Week, sponsored by Foundry. Lee Bratcher is president and founder of the Texas Blockchain Council.
Mining’s energy use spurs its most visceral critiques but, it is this aspect of mining that will have the more significant transformational effects. We must embrace the nuance of this concept in our conversations with the media, policymakers, elected officials and the general public.
One of the primary advantages of bitcoin mining lies in its potential to provide a demand response mechanism for electrical grids. Demand response, also known as “ancillary services” in the Electric Reliability Council of Texas (ERCOT) marketplace in my home state of Texas, allows the grid operator to adjust electricity consumption during peak hours, preventing grid instability.
In December 2022, ERCOT reported that 96% of all large flexible loads (i.e. bitcoin miners) curtailed their energy consumption during a winter weather event that generated significant demand for electricity to heat homes. Nearly 2,000 megawatts of bitcoin mining came off the grid shaving off peak demand by that amount.
Further, by using energy during times of day and in locations where there is stranded energy, miners are able to significantly improve the economics for generators like wind, solar and natural gas plants. This improvement in economics for those generators helps ensure that generation resources (power plants, wind and solar farms) can expand their capacity.
This process shaves off the peaks of energy consumption and pulls up the troughs in times when energy demand is negligible (think overnight).
Brad Jones, the former ERCOT Interim CEO said it best when he stated at the 2022 Texas Blockchain…
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