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You don't have to do anything dodgy to get power at an unbelievably low cost, even in north america bulk rates are a couple of cents per kilowatt hour if you kn

You don't have to do anything dodgy to get power at an unbelievably low cost, even in north america bulk rates are a couple of cents per kilowatt hour if you know where to look, and in some cases you can even be paid to use power due to politics. You can also be mining at a loss and have it be completely rational, because it is less of a loss than turning it off and writing off the equipment. The economics are very non intuitive for people who aren't exposed to the industry.

edmundsauto 4y ago
What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.
- pmorici 4y ago
  People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.
  - foepys 4y ago
    Why would is this energy go to waste now if it was so cheap?
    - latchkey 4y ago
      Because large scale electricity transmission is very very expensive and depending on how remote, sometimes impossible. If you can burn the gas in a generator (which is a lot more efficient and less environmentally damaging than flare burning it) and convert that into value directly, that seems like a better outcome.
    - skybrian 4y ago
      One reason is if it's "stranded" energy in some remote place. Building power lines or pipelines (for natural gas) can be expensive. Maybe they're at capacity, or still under construction. As a result, the power is only going to be useful if you can move whatever consumes it to that location.
      - MarkMarine 4y ago
        I worked for a startup that tried to do this, compressing at the wellsite to capture the flared gas. It’s an extraordinary amount of gas just flared off in a year
      - majewsky 4y ago
        There are other useful things to do with "stranded energy" though. In Northern Germany, they're now building hydrolysis plants to convert excess offshore wind energy into hydrogen. And if we're talking about natural gas wells, you already have a pipeline infrastructure in place, so it's not that far of a stretch to add a hydrogen pipeline to that.
- AngryData 4y ago
  I would assume it has to do with how long it takes certain power plants to spool down and then back up again. It might not make sense to spend hours spooling down when you know not long after demand will jump right back up again as AC units, factories, processing facilities, ect turn ramp back up.
  - RL_Quine 4y ago
    That's one way of getting extremely cheap rates, it's called "interruptible power" in supply terms, you might be expected by the utility to drop your entire load within a set amount of time with absolutely no warning- something a normal customer would be extremely unable to do, but miners can do in milliseconds.
- codeflo 4y ago
  I don’t know anything about particular political distortions in the US, though I wouldn’t be surprised if they exist, at least on a small scale. What I can tell you is that electric energy is traded on complicated spot markets that are designed to ensure that production and consumption are balanced at every point in time. Overproduction is as bad as underproduction, as the power grid can’t store excess energy. Fuses are tripped to prevent short-circuits, causing blackouts. This makes time-based arbitrage difficult. Since power demand isn’t entirely predictable, flexibility is rewarded in these markets. For example, if there’s a downward spike in demand that causes an imbalance, you can earn extra money by either having a power plant that can ramp down very quickly, or by being a consumer that can ramp up very quickly. I wouldn’t be surprised if mining rigs participated in these spot markets. In theory, they should be able to adjust their power consumption within seconds. BTW, it’s been theorized that overnight charging of electric cars could do the same thing and dynamically adjust the charging speed based on spot prices.
- dathinab 4y ago
  Texas isolated power grid design means they have no where to ship excess energy to (in relevant amounts, neither can they get missing energy). It's also under-provisioned but increasing supply is a problem because of excess energy. So they started making deals with miners where the miners act as a sponge for excess energy and in turn pay much less. Taking the same situation just more extreme (and likely more local) and being payed for handling excess energy doesn't seem absurd. (I intentionally didn't judge anything about the Texas gird here, it's just meant as an example.)
- praptak 4y ago
  Stopping a turbine is costly and demand has unpredictable variations. This means sometimes it makes sense to pay consumers to burn the excess power. We have no technology to quickly store and release huge amounts of energy.
IfOnlyYouKnew 4y ago
“Due to politics” is doing a lot of work in that statement.
- DonHopkins 4y ago
roenxi 4y ago
>The economics are very non intuitive for people who aren't exposed to the industry. In the short term, sure. There'll probably be fireworks for the next month or two. But thread ancestor might well be talking medium-long term where the economics are really simple - the amount of resources the miners put in to hashing will drop until they are making a profit again. The miners will be profitable again inside 12 months. Even if all that means in practice is that "miners" is some kid in a basement in Khazakstan with an old Pentium.
- bfung 4y ago
  That’s if, in 12 months, people forget about this crash and has faith that btc/crypto is worth something. Once bitten, twice shy? We’ll see.
  - kayamon 4y ago
    No coins are ever 'worth' anything really. They're just coins. It's a question of who mints them, whether bad actors get to help themselves as the coins come fresh off the presses, and whether the economy that trades them will keep allowing fair future trade or not.
praptak 4y ago
A dude I know has cheap electricity on his allotment garden where he built a wooden hut/cabin. He uses three PCs built from throwaway parts to heat the hut in the autumn and early spring (in winter there's nothing to do there). On the PCs he runs an app that basically manages the mining for you, automatically switching between cryptos to get the most microcents per watt per second. I have no idea why the allotment gardens got the cheap deal on electricity and I don't know if the mining gives him a significant "discount" on the heating.
- latchkey 4y ago
  That auto switching software is a joke. It doesn't actually get any more profit and likely costs money.
  - tarsinge 4y ago
    I had a setup like this back in 2013 and it worked very well, mining profitability changed everyday between altcoins.
    - latchkey 4y ago
      You have to assume that the cost of switching is less than the difference in profitability. Computing that is nearly impossible. It is a case of not knowing what you're losing, but feeling like you got a good deal at the same time. At least for GPUs, the cost of switching workloads on the fly, is actually quite high.
  - cypress66 4y ago
    You got downvoted by people that know nothing about mining it seems. And yes the auto switching which in this case is almost certainly nice hash is a joke. For years the only thing you would mine on a gpu has been ethereum. Nicehash takes an absurd fee and their software might as well be return "Ethereum".
    - latchkey 4y ago
ahtihn 4y ago
> You can also be mining at a loss and have it be completely rational, because it is less of a loss than turning it off and writing off the equipment. It depends what you mean by mining at a loss. It's never rational to mine when the cost of power is higher than the expected return. Turn off your equipment and go buy bitcoin directly.
- roenxi 4y ago
  > It's never rational to... Amusing fact: if we go look up dollar auctions [0] the process described sounds superficially like Proof of Work mining. [0] https://en.wikipedia.org/wiki/Dollar_auction https://en.wikipedia.org/wiki/Dollar_auction
- bialpio 4y ago
  Half-serious counterpoint: if you use electric space heaters, might as well mine bitcoin to heat up the house. In that case it's still rational to mine because you'd use that energy anyway.
  - miniwark 4y ago
    1/4 serious reply: except than you can probably heat the house the same with less energy, or put you money in thermal insolation. All in all agree than BTC will adjust is difficulty with long term economics, and so, it will not be quick, short-term actors will lose money.
    - fragmede 4y ago
      When people are renting and don't own their own home, the incentive to actually improve the property isn't there, so an extra expensive space heater that can be moved to the next place has more value than improved insulation.
    - rag-hav 4y ago
      > you can probably heat the house the same with less energy No, a 1000 watt heater is just as efficient as a 1000 watt computer in heating.

edmundsauto 4y ago

What is the situation where people are being paid to sustainably consume power? Genuinely curious - seems like a ripe arb situation so I’m curious why it isn’t being taken advantage of.

pmorici 4y ago
People using flair gas from oil wells for example to power a generator. The alternative is just burning the gas.
- foepys 4y ago
  Why would is this energy go to waste now if it was so cheap?
  - latchkey 4y ago
    Because large scale electricity transmission is very very expensive and depending on how remote, sometimes impossible. If you can burn the gas in a generator (which is a lot more efficient and less environmentally damaging than flare burning it) and convert that into value directly, that seems like a better outcome.
  - skybrian 4y ago
    One reason is if it's "stranded" energy in some remote place. Building power lines or pipelines (for natural gas) can be expensive. Maybe they're at capacity, or still under construction. As a result, the power is only going to be useful if you can move whatever consumes it to that location.
    - MarkMarine 4y ago
      I worked for a startup that tried to do this, compressing at the wellsite to capture the flared gas. It’s an extraordinary amount of gas just flared off in a year
    - majewsky 4y ago
      There are other useful things to do with "stranded energy" though. In Northern Germany, they're now building hydrolysis plants to convert excess offshore wind energy into hydrogen. And if we're talking about natural gas wells, you already have a pipeline infrastructure in place, so it's not that far of a stretch to add a hydrogen pipeline to that.
AngryData 4y ago
I would assume it has to do with how long it takes certain power plants to spool down and then back up again. It might not make sense to spend hours spooling down when you know not long after demand will jump right back up again as AC units, factories, processing facilities, ect turn ramp back up.
- RL_Quine 4y ago
  That's one way of getting extremely cheap rates, it's called "interruptible power" in supply terms, you might be expected by the utility to drop your entire load within a set amount of time with absolutely no warning- something a normal customer would be extremely unable to do, but miners can do in milliseconds.
codeflo 4y ago
I don’t know anything about particular political distortions in the US, though I wouldn’t be surprised if they exist, at least on a small scale. What I can tell you is that electric energy is traded on complicated spot markets that are designed to ensure that production and consumption are balanced at every point in time. Overproduction is as bad as underproduction, as the power grid can’t store excess energy. Fuses are tripped to prevent short-circuits, causing blackouts. This makes time-based arbitrage difficult. Since power demand isn’t entirely predictable, flexibility is rewarded in these markets. For example, if there’s a downward spike in demand that causes an imbalance, you can earn extra money by either having a power plant that can ramp down very quickly, or by being a consumer that can ramp up very quickly. I wouldn’t be surprised if mining rigs participated in these spot markets. In theory, they should be able to adjust their power consumption within seconds. BTW, it’s been theorized that overnight charging of electric cars could do the same thing and dynamically adjust the charging speed based on spot prices.
dathinab 4y ago
Texas isolated power grid design means they have no where to ship excess energy to (in relevant amounts, neither can they get missing energy). It's also under-provisioned but increasing supply is a problem because of excess energy. So they started making deals with miners where the miners act as a sponge for excess energy and in turn pay much less. Taking the same situation just more extreme (and likely more local) and being payed for handling excess energy doesn't seem absurd. (I intentionally didn't judge anything about the Texas gird here, it's just meant as an example.)
praptak 4y ago
Stopping a turbine is costly and demand has unpredictable variations. This means sometimes it makes sense to pay consumers to burn the excess power. We have no technology to quickly store and release huge amounts of energy.

IfOnlyYouKnew 4y ago

“Due to politics” is doing a lot of work in that statement.

DonHopkins 4y ago

roenxi 4y ago

>The economics are very non intuitive for people who aren't exposed to the industry. In the short term, sure. There'll probably be fireworks for the next month or two. But thread ancestor might well be talking medium-long term where the economics are really simple - the amount of resources the miners put in to hashing will drop until they are making a profit again. The miners will be profitable again inside 12 months. Even if all that means in practice is that "miners" is some kid in a basement in Khazakstan with an old Pentium.

bfung 4y ago
That’s if, in 12 months, people forget about this crash and has faith that btc/crypto is worth something. Once bitten, twice shy? We’ll see.
- kayamon 4y ago
  No coins are ever 'worth' anything really. They're just coins. It's a question of who mints them, whether bad actors get to help themselves as the coins come fresh off the presses, and whether the economy that trades them will keep allowing fair future trade or not.

praptak 4y ago

A dude I know has cheap electricity on his allotment garden where he built a wooden hut/cabin. He uses three PCs built from throwaway parts to heat the hut in the autumn and early spring (in winter there's nothing to do there). On the PCs he runs an app that basically manages the mining for you, automatically switching between cryptos to get the most microcents per watt per second. I have no idea why the allotment gardens got the cheap deal on electricity and I don't know if the mining gives him a significant "discount" on the heating.

latchkey 4y ago
That auto switching software is a joke. It doesn't actually get any more profit and likely costs money.
- tarsinge 4y ago
  I had a setup like this back in 2013 and it worked very well, mining profitability changed everyday between altcoins.
  - latchkey 4y ago
    You have to assume that the cost of switching is less than the difference in profitability. Computing that is nearly impossible. It is a case of not knowing what you're losing, but feeling like you got a good deal at the same time. At least for GPUs, the cost of switching workloads on the fly, is actually quite high.
- cypress66 4y ago
  You got downvoted by people that know nothing about mining it seems. And yes the auto switching which in this case is almost certainly nice hash is a joke. For years the only thing you would mine on a gpu has been ethereum. Nicehash takes an absurd fee and their software might as well be return "Ethereum".
  - latchkey 4y ago

ahtihn 4y ago

> You can also be mining at a loss and have it be completely rational, because it is less of a loss than turning it off and writing off the equipment. It depends what you mean by mining at a loss. It's never rational to mine when the cost of power is higher than the expected return. Turn off your equipment and go buy bitcoin directly.

roenxi 4y ago
> It's never rational to... Amusing fact: if we go look up dollar auctions [0] the process described sounds superficially like Proof of Work mining. [0] https://en.wikipedia.org/wiki/Dollar_auction https://en.wikipedia.org/wiki/Dollar_auction
bialpio 4y ago
Half-serious counterpoint: if you use electric space heaters, might as well mine bitcoin to heat up the house. In that case it's still rational to mine because you'd use that energy anyway.
- miniwark 4y ago
  1/4 serious reply: except than you can probably heat the house the same with less energy, or put you money in thermal insolation. All in all agree than BTC will adjust is difficulty with long term economics, and so, it will not be quick, short-term actors will lose money.
  - fragmede 4y ago
    When people are renting and don't own their own home, the incentive to actually improve the property isn't there, so an extra expensive space heater that can be moved to the next place has more value than improved insulation.
  - rag-hav 4y ago
    > you can probably heat the house the same with less energy No, a 1000 watt heater is just as efficient as a 1000 watt computer in heating.