Bitcoin miners turn to software to help balance Texas network

Bitcoin miners turn to software to help balance Texas network

Although bitcoin (BTC) mining remains a controversial topic, it is increasingly common to hear how bitcoin mining can help balance network demand. This is demonstrated in the state of Texas, as Bitcoin miners can participate in demand response programs, which incentivize 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 charges can impact the network just like any heavy load. Still, they noted that crypto miners can help stabilize the grid by cutting off their demand for electricity in real time:

“Crypto mining is extraordinarily responsive and can shut down in a fraction of a second and stay off for as long as needed. We are working closely with the crypto mining industry and have set up a large task force on Flexible Loading to ensure that we move forward with grid reliability and load growth in Texas in mind.

On March 25, ERCOT established an interim process to ensure that large new loads, such as Bitcoin miners, can be connected to the ERCOT network. While large load interconnect assessments are not a new process, ERCOT explained that the timeline in which most crypto-miners operate necessitates a new process to ensure that existing standards for interconnecting new loads important are respected. ERCOT’s Technical Advisory Committee approved on March 30 the creation of a “Large Flexible Loads Working Group” to help develop a long-term process that will replace the current interim process.

Software providers want to help miners balance the network

While it’s worth noting that ERCOT is helping Bitcoin miners connect to the Texas network faster, software vendors have also started working with miners to ensure they have the tools they need to properly activate. network 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 act as a controllable load:

“For loads to be considered a controllable load resource in ERCOT, customers must be able to do two things. First, they must reach a target power consumption level – more or less – as indicated by ERCOT in less than 15 seconds. Second, they must provide “primary frequency response”. This means that miners must be able to react to a loss of production event – ​​for example, the unexpected tripping of a thermal power plant – within 15 seconds.

Given these requirements, McNamara shared that Lancium has licensed software to certain Bitcoin miners to act as controllable loads within ERCOT to provide network stability services. Known as Lancium Smart Response, McNamara explained that this software works by automatically responding to power grid conditions and signals within seconds.

“When it comes to meeting ERCOT requirements, software like Lancium Smart Response is key to meeting ERCOT’s required deadlines. Controllable Load Resources provide more surgical and accurate network stabilization benefits than other demand response programs – and customers are compensated at a higher level for providing these more valuable services to the network,” he said. he explains.

For example, McNamara pointed out that miners using Lancium’s software can be certified by ERCOT to participate in its various network stabilization programs, which could help operators generate higher revenue while reducing energy costs. by 50%.

Specifically, the ERCOT spokesperson told Cointelegraph that ERCOT has a program for any charge to participate in the provision of ancillary services. According to ERCOT, these programs require the qualification of loads to provide these services. “Some crypto miners have qualified to offer these similar services to other payloads that participate in these existing programs. These programs are commonly referred to as demand response programs and operations voluntarily choose to participate ‘reduce,’” ERCOT said.

While McNamara was unable to say 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 enables miners to efficiently scale down operations instead of flipping circuit breakers. “The loads can then be directed where they are needed, essentially functioning like a battery,” he said.

Indeed, automation is important for Bitcoin miners participating in load response programs. To put that into perspective, Sam Cohen, head of business development at Foreman, told Cointelegraph that the software allows a miner to be targeted at scale.

“As an example, if a reduction 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 said. Explain.

Monnig added that Foreman allowed CleanSpark to program its machines to stop hashing if necessary. “For example, an S19 mining machine will go from 3,000 watts to 90 watts in “sleep mode”. Then, when the grid no longer needs electricity, the machines turn on again. Everything is automated. »

Unlike Lancium, however, Foreman does not currently work directly with ERCOT. “We would love to work more closely with ERCOT and I think we are ready to do so. However, there is a lot of paperwork that comes with working at ERCOT,” he said.

Given this, Foreman worries that the growing mining industry in Texas is being controlled by a handful of players rather than a number of software vendors. “Foreman promotes decentralized Bitcoin mining. If things continue on the path they are on, it is possible that all controllable large-scale mining loads in Texas will be controlled by a handful of suppliers, demonstrating a source of centralization,” he noted. .

Bitcoin mining as a controllable load resource

Centralization aside, Gideon Powell, CEO and chairman of Cholla Petroleum Inc. — a Texas-based exploration company focused on the energy sector — told Cointelegraph that he believes Bitcoin mining is the peak load of demand response programs, such as those launched and expanded. by Ercot.

“When we run out of electricity on the grid, we have two options: run more generators or simply reduce our energy consumption. As individuals, it’s hard to do. But Bitcoin miners and software vendors allow ERCOT to visualize and control these loads to provide demand response that much more closely matches the operation of a traditional generator (in reverse),” he said. he declares.

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, arrays have been thought of from the perspective of thermal generation since thermal generation allows the rotating mass to match generation and load at all times. Still, he noted that wind and solar resources are intermittent, which makes load balancing difficult since these renewable resources are constantly on the rise and fall.

“Many companies have developed the technology to allow bitcoin miners and other data centers that host latency-agnostic computing to respond to ERCOT instructions or respond to real-time pricing in the grid. When electricity is scarce, prices rise and Bitcoin miners and many others can reduce their expenses,” he explained.

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Powell further asserted that ERCOT is the most free market network in the world, with a necessary regulatory framework to encourage bottom-up solutions. “That’s why Texas will continue to attract the energy entrepreneurs needed for increasingly complex energy markets.”

While notable, it is important to point out that Bitcoin continues to see an increase in energy consumption year over year, which may lead to tighter regulations. McNamara remains optimistic, however, noting that Bitcoin mining continues to be a friendly resource for the Texas network, which also demonstrates the potential this technology could have in other regions.