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Long-term, Bitcoin is reducing everyone’s electric bill by smoothing out the bathtub curve and making it economical to overprovision energy sources. Bitcoin mi

by wyager 5y ago

Long-term, Bitcoin is reducing everyone’s electric bill by smoothing out the bathtub curve and making it economical to overprovision energy sources. Bitcoin mining can easily turn on and off as the price of energy fluctuates, so all of a sudden we have the ability to use energy sources like solar which need to be overprovisioned to ensure that e.g. bad weather doesn’t reduce grid capacity too much. Bitcoin mining just turns off if it’s cloudy. We also all of a sudden have the ability to economically use energy sources which can’t be spun up and down rapidly, like geothermal. You just leave the turbines running all the time and if you have a surplus you fire up the Bitcoin miners.

reginold 5y ago
Got sources? Curious to read about it. Is this a future effect or already happening?
- wyager 5y ago
  This is my own analysis. I used to do some work in power markets (FTRs) so I’m reasonably familiar with the domain. I have heard other people say similar things so I’m sure there’s some content out there. I expect this to take place over quite a long time - on the scale of decades. Power is super capital intensive and super regulated so it takes forever for things like this to work. If you ever see a nuclear power plant being built with a Bitcoin mine being constructed alongside it, you can be confident that the effect is in full force.
StefanWestfal 5y ago
Would it make it cheaper? I understood that the initial investment is the main cost factor for renewable energy sources. The full load hours for on-shore wind in Germany are about 40% of the total hours per year. You would then need 2.5x the amount of windmills to reach 100% This does not count for the fact that thier production is somewhat related (i.e. low wind speeds on all Europ) so you would need an even higher factor. And of course the investment to get to 100% renewables in the energy mix. To compensate for that the electricity would need to rise I think?
- wyager 5y ago
  Medium term, I’m assuming that environmentalists are more or less correct that fossil fuels, coal, etc. have large uninternalized externalities. Increased electricity demand from any source will almost certainly increase the dollar price of electricity, at least until R&D allocation effects kick in. However, if environmentalists are correct, even if electricity is a little bit more expensive from increased demand, the type of power generation incentivized by Bitcoin will be less costly for society when externalities are included. Long term, increased reliable electrical demand will hopefully lead to R&D that drives the dollar cost of power down as well.

by wyager 5y ago

reginold 5y ago

Got sources? Curious to read about it. Is this a future effect or already happening?

wyager 5y ago
This is my own analysis. I used to do some work in power markets (FTRs) so I’m reasonably familiar with the domain. I have heard other people say similar things so I’m sure there’s some content out there. I expect this to take place over quite a long time - on the scale of decades. Power is super capital intensive and super regulated so it takes forever for things like this to work. If you ever see a nuclear power plant being built with a Bitcoin mine being constructed alongside it, you can be confident that the effect is in full force.

StefanWestfal 5y ago

Would it make it cheaper? I understood that the initial investment is the main cost factor for renewable energy sources. The full load hours for on-shore wind in Germany are about 40% of the total hours per year. You would then need 2.5x the amount of windmills to reach 100% This does not count for the fact that thier production is somewhat related (i.e. low wind speeds on all Europ) so you would need an even higher factor. And of course the investment to get to 100% renewables in the energy mix. To compensate for that the electricity would need to rise I think?

wyager 5y ago
Medium term, I’m assuming that environmentalists are more or less correct that fossil fuels, coal, etc. have large uninternalized externalities. Increased electricity demand from any source will almost certainly increase the dollar price of electricity, at least until R&D allocation effects kick in. However, if environmentalists are correct, even if electricity is a little bit more expensive from increased demand, the type of power generation incentivized by Bitcoin will be less costly for society when externalities are included. Long term, increased reliable electrical demand will hopefully lead to R&D that drives the dollar cost of power down as well.