Cryptocurrency miners are becoming increasingly valuable to the energy sector. Miners have a unique opportunity to help power companies use excess energy and assist in balancing the power load in times of high consumption.
When energy companies have extra power at their power plants, either sitting on the grid or on transmission lines, many companies will burn off the extra energy, known as flaring, since they can’t store it. These flares contain methane gas emissions that are harmful to the environment, and emissions from the energy sector continue to rise, according to the International Energy Agency. The Canadian energy sector had a 55% share of all methane emissions in the country in 2021, and in the United States, the energy sector was responsible for 54% of all methane emissions.
Some companies are finding ways to find a use for that excess power instead of flaring it off. They’re partnering with cryptocurrency miners to use that energy for their operations. For example, Exxon has rerouted 18 million cubic feet per month of what would’ve been wasted gas to Bitcoin miners. The energy is still being created, but it has an end use instead of becoming more methane emissions. With this strategy, crypto miners set up very close to or directly on site of the power plants. Since cryptocurrency operations are much more geographically flexible and portable than many other industries, this is much easier to do. Setting up near a power plant reduces energy transmission losses and provides a more efficient energy transfer between the power plant and the crypto-mining operation. Electricity companies can continue to benefit from this proximity as they’re able to secure a stable and long-term market for that excess energy.
Greenidge Generation takes this approach, using what they call “behind-the-meter” energy at a power plant in New York state. The company mines Bitcoin with leftover power that would otherwise be wasted, producing 1,866 BTC in 2021.
Mining is an energy-intensive process. It’s estimated that a single Bitcoin transaction uses the same amount of power as approximately 50 days of electricity for the typical US household. As a result, crypto miners are looking for greener, more affordable, and more reliable sources of energy. This collaboration with electricity companies is a great option, and as the cryptocurrency industry continues to grow, power companies will be looking to miners more and more to stabilize their power grids.
Can Crypto Mining Be a Value To The Grid?
Load curtailment is the voluntary reduction of electricity consumption during times of high demand, usually in exchange for rebates or incentives from the power company. Peak periods of power consumption are usually during the day. For example, in Alberta, the period when energy demand is the highest is between 4:00 p.m. and 7:00 p.m. During curtailment, consumers are encouraged to shift their energy usage to times when the energy demand is lower. Load curtailment is a popular way to maintain the stability of the power grid and avoid overloading, which leads to the need for load shedding.
Controlled blackouts and brownouts happen during load shedding. These are intentional and are done as a last resort in specific areas to prevent widespread power outages due to extreme electricity consumption. Power companies want to avoid load shedding. While it may seem like a quick solution, it can cause customer dissatisfaction, can increase the maintenance cost of power plant equipment and can be incredibly bad for the power plant’s carbon footprint. Load shedding results in a waste of electricity that has already been generated. So, power companies would rather take other approaches than implement load shedding. This is where crypto comes in.
Cryptocurrency miners have flexibility and responsiveness that most other industries don’t have and, as a result, are important players in the energy sector, especially when it comes to load curtailment. Most miners have instant control over their power consumption, which can be accessed remotely in many cases. Some manufacturing industries take many hours (or even days) to curtail their power usage, but a Bitcoin miner can do it in less than a minute. Mining operations also don’t impact individuals, whereas blackouts and brownouts impact communities and the management of utilities for citizens.
This sudden action to a grid scarcity is called demand response, or DR. In times of energy crisis, where load shedding, blackouts, and brownouts are a possibility, cryptocurrency miners who can DR are an asset to power companies, balancing the supply. The energy sector can look to miners’ responsiveness as a tool for increasing power reserves. The International Energy Agency estimates that an additional 500 gigawatts of DR needs to be achieved by 2030 in order to accomplish the global Net Zero Scenario milestone in 2050. There is a massive opportunity for the power sector to partner with miners.
Does This Minimize The Carbon Footprint of Mining Companies?
Miners are valuable to the power industry, but a demand response plan is a great benefit to crypto operations as well.
Cryptocurrency mining has been criticized for high energy consumption and an impact on the environment, as the electricity generation for mining operations is typically from fossil fuels. By practicing load curtailment and reducing consumption during periods with high electricity demand, Bitcoin mining companies can help to reduce their impact on the environment and make cryptocurrency mining a cleaner practice. To reduce power consumption even further, crypto miners can implement efficient cooling systems for their computing hardware. Liquid immersion cooling solutions improve a miner’s carbon footprint while maintaining high hashrates. Using the Intelliflex system can drop Power Usage Effectiveness (PUE) to 1.02 and boost efficiency up to 95%.
The carbon footprint of Bitcoin miners has steadily improved over the years, according to the Bitcoin Mining Council, but by reducing electricity consumption during periods of high demand, miners can help to reduce the need for the generation of electricity from fossil fuels and, as a result, further reduce their carbon footprint.
Cryptocurrency miners can also be greener by extending the life of their mining equipment. When practicing demand response, equipment is powered down during periods of high energy demand. When hardware isn’t running 24/7, it will last longer.
Miners don’t need to worry about a loss of profits while becoming more environmentally friendly. Incentives for curtailing, in the form of power credits, can make a major difference to the bottom line. Riot, a large crypto mining company in Texas, brought in $9.5 million in power credits in July 2022 as a result of curtailment efforts. The company says this offset the reduction of crypto coins mined that month.
As both the energy sector and the cryptocurrency industry continue to advance, the potential for collaboration is thrilling. Power companies willing to introduce curtailment programs for miners may find it easier to stabilize the grid and eliminate disruptions in service, and considering rerouting potential flares into crypto production reduces methane emissions. If miners take advantage of curtailment incentives, their costs are reduced or offset, and operations are more environmentally friendly.
If these industries continue to find ways to work together, the future is exciting!
FAQs on Load Shedding and Load Curtailment
➔ Why do energy companies load shed?
Loading shedding is an extreme measure used to prevent widespread power outages. Power companies load shed when there is an overwhelming demand for power but not enough supply to fulfill that demand. When this imbalance happens, the power grid is at risk of collapsing. During load shedding, electricity consumption is decreased with scheduled blackouts and brownouts. This is usually a last-resort effort. Power companies typically try to avoid load shedding, as it can damage the reputation and customer trust, and may look to implement load curtailment or demand response programs instead.
➔ How can load curtailing help?
Load curtailing can play an important role in avoiding load shedding. Curtailing is a voluntary reduction of power consumption by customers. Curtailment (also called demand response) is typically incentivized with rebates and discounts. When individuals and businesses cut back on their power usage, it helps the power grid stabilize and eliminates the potential for overloading since there is adequate supply for the demand. Load curtailing is typically done during the periods of highest energy demand. These periods vary by region and the time of year.
➔ Can energy companies and mining companies work together on curtailing?
Collaboration between the energy sector and the crypto-mining industry can reduce pressure on the power grid. One approach is for power plants to reroute energy that would be wasted in flares, producing methane gas, to miners set up nearby or on-site of the power plant. Another collaborative approach is to encourage miners to practice demand response (DR) during times of high energy demand. Crypto miners have the flexibility for demand response, and incentives from the power companies to reduce consumption can balance the grid and avoid load shedding.