Bitcoin miners turn to software to help balance Texas network

While Bitcoin (BTC) mining remains a controversial topic, it is becoming more common to hear how Bitcoin mining can help balance network demand. This has been demonstrated in the state of Texas, as Bitcoin miners are able to 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 the Texas power grid, told Cointelegraph that cryptographic loads can impact the network just like any large load. However, they did note that cryptocurrency miners can help stabilize the grid by disrupting their electricity demand in real time:

“Cryptocurrency mining is extraordinarily responsive and can go down in a fraction of a second and stay down for as long as needed. We are working closely with the cryptocurrency mining industry and have established a large flex load task force to ensure we move forward with network reliability and Texas load growth in mind.”

On March 25, ERCOT set up an interim process to ensure that new large loads, such as Bitcoin miners, can be connected to the ERCOT network. While assessments for interconnecting large loads are not a new process, ERCOT explained that the timeline in which most cryptocurrency miners operate requires a new process to ensure existing standards are met for interconnecting new large loads. On 30 March, the ERCOT Technical Advisory Board approved 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 is noteworthy 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 successfully enable 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 can serve as a controllable payload:

“For loads to qualify as a controllable load resource in ERCOT, customers need to be able to do two things. First, they must reach a target energy consumption level, more or less, as indicated by ERCOT in less than 15 seconds. Secondly, they should provide a “primary frequency response”. This means that miners must be able to react to a generation loss event, such as the unexpected trip of a thermal generating station, within 15 seconds.

In light of these requirements, McNamara shared that Lancium has licensed software to some Bitcoin miners to act as controllable payloads 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.

“To meet ERCOT requirements, software like Lancium Smart Response is essential to meet ERCOT deadlines. The controllable load resources offer more surgical and exact 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,” she explained.

For example, McNamara pointed out that miners using Lancium’s software can get certified by ERCOT to participate in its various grid stabilization programs, which could help operators earn more revenue by reducing energy costs by 50%.

Specifically, the ERCOT spokesperson told Cointelegraph that ERCOT has a program to allow any cargo to participate in the provision of ancillary services. According to ERCOT, these programs require cargoes to be qualified to provide these services. “Some cryptocurrency miners have qualified to offer these similar services to other cargoes participating in these existing programs. These programs are commonly referred to as demand response programs and operations voluntarily choose to participate in ‘reduction,’” ERCOT said.

While McNamara was unable to comment on which miners will be applying Lancium Smart Response, Foreman Mining CEO Dan Lawrence told Cointelegraph that Bitcoin miner CleanSpark is using his company’s software to manage its operations.

Taylor Monnig, vice president of mining technology at CleanSpark, told Cointelegraph that Foreman is empowering miners to effectively scale down operations instead of flipping breakers. “Loads can then be directed where needed, essentially functioning as a battery,” he said.

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

“For example, if a scale-down 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 explained.

Monnig added that Foreman allowed CleanSpark to program its machines to stop hashing when needed. “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 energy, the machines turn back on. All of this is automated.”

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

That said, Foreman is concerned that Texas’ growing mining industry could be controlled by a handful of players rather than a number of software vendors. “Foreman is promoting the decentralization of Bitcoin mining. If things continue along the path they’re following, it’s possible that all large-scale controllable mining cargoes in Texas could be controlled by a handful of suppliers, which demonstrates 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 maximum load for disaster response programs. question, such as the tried and developed ones of ERCOT.

“When we are running out of energy on the grid, we have two options: start more generators or simply reduce our energy consumption. As individuals this is hard to do. But Bitcoin miners and software companies are allowing ERCOT to visualize and control these payloads to provide an answer to the question that much more closely matches how a traditional generator works (in reverse),” she said.

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 grids have been thought of from a thermal generation perspective because thermal generation allows the rotating mass to match generation and load at all times. However, he noted that wind and solar resources are intermittent, which makes load balancing difficult as these renewable resources are constantly up and down.

“Many companies have developed the technology to allow Bitcoin miners and other data centers hosting 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 cut back,” she explained.

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Powell further said that ERCOT is the freest marketplace network in the world, with a regulatory framework needed to encourage bottom-up solutions. “This is why Texas will continue to attract energy entrepreneurs needed by increasingly complex energy markets.”

While noteworthy, it is important to point out that Bitcoin continues to experience an increase in energy consumption year-over-year, which could lead to stricter 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 within other regions.