Enhancing Profitability of Wind and Solar Through Bitcoin Mining
The “duck curve” – a problem particular to the renewable power panorama – has discovered an surprising answer in Bitcoin mining. This curve displays the battle between peak demand intervals and peak renewable power manufacturing instances, a discrepancy that grows as we more and more embrace renewable power sources, complicating grid administration.
Bitcoin fixes this.
This story is a part of CoinDesk’s 2023 Mining Week, sponsored by Foundry. Adolfo Contreras is a Senior Enterprise Growth Advisor at Blockstream. He has 20 years expertise in satellite tv for pc communications, climate intelligence for power and transportation markets and Bitcoin.
Bitcoin mining income promotes worthwhile renewable infrastructure, aiding mission financing and scaling the power grid for a sustainable future. That is essential for electrifying transportation and phasing out fossil fuels. Given the huge energy storage and cargo balancing required, Bitcoin is a useful gizmo, particularly contemplating the present financial and geopolitical local weather.
Bitcoin miners, with their versatile operations, are uniquely well-equipped to navigate these power provide fluctuations. By strategically aligning their actions with intervals of excessive renewable power manufacturing and low demand, they will optimize their power utilization and probably alleviate the strain on the grid.
This text will discover how Bitcoin miners are serving to to handle the duck curve, and the methods they’re using to stability demand and optimize power consumption.
Renewable power’s uphill battle
In lots of nations, the quantity of renewable capability (although usually closely under-utilized with nearly all of energy technology capability unused or “wasted”) has elevated dramatically during the last decade, exemplified by Europe.
However that is hardly making a dent on this planet’s fossil gasoline consumption. Regardless of the various trillions of funding within the final couple of many years, fossil gasoline consumption remains to be greater than 82% of the world’s power consumption.
In 2022 alone, there was a rise in renewable capability of 266GW, which, assuming a (very low) common price of $500k per MW, represents an funding of greater than $130 billion in 2022 alone. For reference, a rustic like Spain with almost 50 million individuals has by no means peaked in electrical energy consumption above 45GW.
The crux of the argument is that this:
1. The electrification of provide is outpacing demand, with retail electrical energy demand not considerably rising as a consequence of financial stagnation and elevated machine effectivity.
2. Electrical automobile adoption is not assembly expectations and EV charging habits, usually at night time, don’t align with peak photo voltaic provide throughout sunlight hours.
3. Important displacement of fossil energy use transferring to electrical demand would require industries to adapt their manufacturing processes to electrical energy, a pricey endeavor many are unwilling to undertake as a consequence of competitiveness points.
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Due to this fact, we’d like an economically viable, electricity-intensive exercise that’s predictable, versatile, and does not require in depth transportation – and that is the place Bitcoin mining is available in.
Beneath is a glimpse of the big quantities of unused or wasted electrical energy as a consequence of inadequate demand vs technology capability in California alone:
Moreover, we will’t ignore a further bottleneck, which is the truth that wind and photo voltaic farms have considerably decrease energy density. That’s, they want far more land floor to generate the identical quantity of electrical energy.
For these causes, the distribution community for energy will want a major improve to scale and transmission expanded to attach technology plant places to inhabitants areas the place industrial and retail demand is.
Till these investments are made, we could encounter conditions the place further put in capability doesn’t translate to further renewable used technology within the electrical energy combine – unused capability, definitionally not being within the combine.
Balancing power provide and demand
The consequence of all these issues is that at explicit instances of the day (when the solar shines probably the most) the worth in electrical energy wholesale markets crashes as a consequence of what’s referred to as the duck curve:
The duck curve represents the demand remaining after subtracting variable renewable technology in the course of the day when photo voltaic technology tends to be highest.
The issue of the duck curve is that photovoltaic installations deliberate to earn cash on the wholesale electrical energy market won’t be making it on this situation. Many installations should search PPAs – energy buy agreements – that are bilateral agreements between electrical energy producers and offtakers, i.e. giant electrical energy customers.
Those that handle to signal them could save their initiatives on the expense of considerably decrease profitability whereas these that don’t, could also be going through chapter and outright abandonment of the installations.
After all electrical energy storage in batteries or PSH – Pumped Storage Hydro – pumping water backup into hydro-elecric dams might assist cut back the issue, however the price of putting in the quantity wanted could be astronomical and it’s nonetheless to be seen if these methods can work at scale.
Enter Bitcoin mining
Mining {hardware} might be immediately linked to wind and photo voltaic technology vegetation, consuming the surplus power produced throughout peak daylight hours when photo voltaic installations generate an extra of electrical energy and soak up the wasted power from the wholesale market.
By doing so, these vegetation assist to stability the availability and demand within the electrical energy market, stopping the drastic value drops that happen when there’s an oversupply of power.
That is significantly helpful for photo voltaic installations that battle to promote their power throughout these peak hours because of the low market costs.
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Let’s take into account an instance.
Suppose there is a photo voltaic farm in California that is producing a surplus of power in the course of the day.
As an alternative of promoting this power on the wholesale market at a low value, the farm might direct this extra power to a Bitcoin mining operation, which might devour this surplus power.
This may successfully take away the surplus power from the wholesale market, serving to to stabilize electrical energy costs and making the photo voltaic farm’s operation extra worthwhile.
This implies they are often positioned immediately at or close to the location of renewable power installations, lowering the necessity for in depth power transmission networks. They’ll additionally modify their power consumption based mostly on the provision of renewable power, consuming extra when there’s a surplus and fewer when there’s a scarcity.
As an example, a Bitcoin mining operation in Texas, the place wind energy is plentiful, can ramp up its power consumption in the course of the night time when wind energy technology is at its peak and the demand from different customers is low.
This helps to stability the power provide and demand, stopping potential waste of the surplus wind energy.
Conclusion
In conclusion, the “Duck Curve” phenomenon presents a singular problem within the renewable power sector, nevertheless it additionally opens up a chance for modern options. By absorbing the surplus power during times of excessive renewable technology and low demand, Bitcoin mining might help stability the power market, stabilize electrical energy costs, and improve the profitability of renewable power installations.
