Bitcoin miners are looking at software to balance the Texas grid

Bitcoin miners are looking at software to balance the Texas grid

While Bitcoin (BTC) mining remains a controversial topic, it is becoming increasingly common to hear how Bitcoin mining can help balance demand on the power grid. This is being 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 manages Texas’s electrical grid — told Cointelegraph that crypto charges can impact the grid just like any other major load. Still, they noted that cryptominers can help stabilize the network by shutting down their electricity demand in real time:

“Crypto mining is extremely responsive and can be turned off in a fraction of a second and stay turned off for as long as needed. We are working 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 set up an interim process to ensure that new large cargoes, such as Bitcoin miners, can be connected to the ERCOT grid. While evaluations for large load connections are not a new process, ERCOT explained that the timeline under which most cryptominers operate requires a new process to ensure existing standards for connecting new large loads are met. ERCOT’s Technical Advisory Committee approved on March 30 the creation of a “Large Flexible Load Task Force” to help develop a long-term process that will replace the current interim process.

Software vendors want to help miners balance the network

While it’s notable that ERCOT helps Bitcoin miners connect to the Texas grid faster, software vendors have also started working with miners to ensure they have the tools necessary to make balancing the grid possible. to make.

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Michael McNamara, co-founder and CEO of Lancium – a Texas-based energy and infrastructure company – told Cointelegraph at the Texas Blockchain Summit that in 2020 Lancium demonstrated how a Bitcoin mine could act as an auditable tax:

“In order for loads to qualify as a controllable load resource in ERCOT, customers must be able to do two things. First, they must reach an ERCOT-specified target power consumption level in less than 15 seconds – more or less. Second, they must provide ‘primary frequency response’. This means that miners must be able to react within 15 seconds to an event where production is lost, for example the unexpected trip of a combined heat and power plant.”

Given these requirements, McNamara shared that Lancium has licensed software to certain Bitcoin miners to act as controllable 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 within seconds.

“In terms of meeting ERCOT’s requirements, software such as Lancium Smart Response is essential to meet ERCOT’s time requirements. Controllable load resources provide more surgical and exact 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 be certified by ERCOT to participate in its various grid stabilization programs, helping operators generate more revenue while reducing energy costs by 50%.

In particular, ERCOT’s spokesperson told Cointelegraph that ERCOT has a program for each cargo to participate in providing support services. According to ERCOT, these programs require payloads to be eligible to provide these services. “Some cryptominers are qualified to offer these services, similar to other payloads participating in these existing programs. Those programs are commonly referred to as ‘demand response programs’ and operations voluntarily choose to participate in ‘curtailment’,” said ERCOT.

While McNamara was unable to comment on which miners will adopt Lancium Smart Response, Foreman Mining CEO Dan Lawrence 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 effectively curtail their operations rather than turning over crushers. “Loads can then be directed where needed, essentially acting like a battery,” he said.

Indeed, automation is important for Bitcoin miners participating in tax response programs. To put this in perspective, Sam Cohen, head of business development at Foreman, told Cointelegraph that software enables a miner to work on schedule at scale.

“For example, if a Curtailment Service Provider asks a miner to reduce its consumption by 10 MW, Foreman can reduce its load in less than a minute without operator intervention,” he explains.

Monnig added that Foreman has given CleanSpark permission to program its machines to stop hashing when necessary. “For example, an S19 mining machine goes from 3,000 watts to 90 watts in ‘sleep mode’. When the grid doesn’t need power, the machines turn back on. This is all automated.”

However, unlike Lancium, Foreman does not currently work directly with ERCOT. “We would like to work more closely with ERCOT and I think we are ready to do so. However, there is a lot of red tape involved in working at ERCOT,” he said.

That’s why Foreman worries that the booming Texas mining industry will end up in the hands of a handful of players rather than a few software vendors. “Foreman promotes decentralization of Bitcoin mining. If things continue on their current path, it’s possible that all large-scale manageable mining loads in Texas could be controlled by a handful of providers, demonstrating a source of centralization,” he noted.

Bitcoin mining as a manageable load source

Aside from centralization, Gideon Powell, CEO and chairman of Cholla Petroleum Inc. — a Texas-based exploration company focused on the energy sector — told Cointelegraph that it believes Bitcoin mining is the top load for demand response programs, such as those pioneered and developed by ERCOT.

“When we run out of power on the grid, we have two options: run more generators or simply reduce our power consumption. As individuals, this is difficult to do. But Bitcoin miners and software companies enable ERCOT to watch and monitor these loads to provide demand response that much more closely matches the operation of a traditional generator (in reverse),” he said.

Powell added that Bitcoin mining could help power the grid in Texas as wind and solar power become more common. For example, he noted that grids have historically been thought about from a thermal generation point of view, as thermal generation ensures that the spinning mass matches the generation and load at all times. Still, he noted that wind and solar sources are intermittent, making load balancing difficult since these renewable sources are constantly going up and down.

“Many companies have developed the technology to enable Bitcoin miners and other data centers that host latency-agnostic computing to respond to ERCOT instructions or respond to real-time prices in the grid. When power is scarce, prices go up and Bitcoin miners and many others can limit their money,” he explained.

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Powell further claimed that ERCOT is the most free-market network in the world, with a regulatory framework necessary to encourage bottom-up solutions. “This is why Texas will continue to attract 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 usage year after year, which could result in more stringent regulation. However, McNamara remains optimistic, noting that Bitcoin mining continues to be a friendly resource for the Texas grid, also demonstrating the potential this technology could have in other regions.