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Texas paid Bitcoin miner more than $31M to cut energy usage

91 points by lxm 3y ago

logN_2 3y ago
[flagged]
- ftxbro 3y ago
  the bitcoin mines stimulated power infrastructure investment so that texas was able to withstand the heat wave without doing blackouts
  - logN_2 3y ago
    If true, I did not know that. You have a source on that?
    - anonym29 3y ago
      I'm not the person you're replying to, but I do have a source that talks about how BTC mining in Texas helps normalize and "smooth" usage. Electricity is complicated so this is a broad and major oversimplification, but: 1. It's bad™ for a grid to be producing more electricity than it's using, or vice versa 2. TX has a highly variable grid load, in part due to Very Hot Weather™ compared to much of the rest of the country 3. TX, perhaps unintuitively, is [one of the largest? maybe the largest?] (haven't checked in a while) producers of solar and wind energy, but these sources are highly variable compared to fossil fuels, hydro, nuclear, etc. 4. Importantly, peak production and peak demand in TX are VERY mismatched 5. It's hard™ to store excess energy from times of peak production to use in times of peak demand 6. BTC mining, in the right places at the right times, help smooth the imbalances resulting from point 4, which are bad™ as mentioned in point 1, avoiding the hard™ problem of storage from point 5 The net result of all of this is that the "smoothing" effect of BTC mining (in the right places, at the right times) makes it more economically viable to change the makeup of energy production to favor a larger share of renewables and a smaller share of fossil fuels. This isn't exactly the same as what the original commenter you're replying to is saying, but it's progress towards decarbonization of the grid nevertheless. Source: https://www.coindesk.com/consensus-magazine/2023/07/24/how-texas-became-a-global-mecca-for-bitcoin-mining/ https://www.coindesk.com/consensus-magazine/2023/07/24/how-t... For the people downvoting, could you please share why? If I'm doing a poor job of explaining/communicating anything, I'd appreciate being informed about what part in particular, so I can try to do better.
      - mikeryan 3y ago
        The problem with your argument and the point of the article is #6 Selling excess energy to bitcoin miners is fine. Having to pay them off when the grid is overloaded because they can’t turn their damn servers off for a week is what smells like the rest of the crypto bullshit.
        brutusborn 3y ago
        The reason they are one of the first to turn off is _because_ they can turn their servers off easily. This is why crypto mining is perfect for this application. Some industrial processes take days or weeks to fully shutdown / startup so quick shutdown isn't practical. If your business was shutdown for the greater good, would you not expect some compensation?
        deleted 3y ago
        [deleted]
        anonym29 3y ago
        > Having to pay them off when the grid is overloaded because they can’t turn their damn servers off for a week is what smells like the rest of the crypto bullshit. There seems to be a misconception here. The miners are being paid rebates to do precisely that - turning off their servers. They're being given credits to not use electricity at times when demand is high and renewable supply is low. This is part of what allows the renewable energy to make up a larger share of Texas' energy production in an economical way. Without the ability to rapidly raise ("Quick, turn the bitcoin miners on!") and lower ("Quick, turn the bitcoin miners off!") energy demand in this manner, there is a lesser need for variable production (solar and wind) and a greater need for "constant" production (oil, gas, nuclear). Note that these types of production can be turned on and off the same way bitcoin miners can, but doing so is much slower and is actually so costly that it's cheaper to decrease the share of energy produced by "constant" production sources, increase the share of energy produced by variable renewables, and simply pay the bitcoin miners to turn their racks and racks of SHA-256 ASICs on and off at precisely the right times and places. It's WAY easier, cheaper, faster, and safer to make adjustments to the "demand" side than it is to make adjustments on the "supply" side. I know it sounds really counterintuitive and complicated but this really is better for the environment - it leads to less burning of fossil fuels and lower costs for taxpayers than the alternative of not having any bitcoin miners in Texas. Please give that article I linked a read if you have the time, that goes into much more depth about all of this.
  - mikeryan 3y ago
    Maybe… Just maybe… It was people dying during the extreme heat and cold that overwhelmed the Texas energy grid that stimulated any power infrastructure development? …nah
  - corethree 3y ago
    In green energy or turbines to burn oil? Ironically this stimulus contributes to more heat waves. It's a bandaid ultimately covering up the root of the problem: Energy generation for zero utility.
  - pyinstallwoes 3y ago
    How is that even logical?
  - JKCalhoun 3y ago
    Weird if true. Weird that Texas invested in the power infrastructure for Bitcoin mining rather than for the people that relied on that for their homes.
- munchler 3y ago
  Crypto based on proof of work is wasteful by design, but there are other approaches that might benefit humanity in the end.
  - jjtheblunt 3y ago
    What’s an example?
    - jimbob45 3y ago
      I think the parent poster is advocating for proof-of-stake as an alternative since it’s generally less power hungry (though not entirely so). Just speculating.
      - mindcandy 3y ago
        The catch is: Even with proof of stake, you need to prime the pump with proof of work. Otherwise, you have nothing to stake! Hopefully we’ve proven enough work already to serve as a foundation and from here on we can scaffold up with staking.
        anonym29 3y ago
        There's another catch as well, PoS allows and encourages control to be centralized by financially incentivizing financial hoarding behavior. Knowing what we know about wealth distribution in FIAT monetary systems, this will eventually result in people's real wealth¹ falling under the control of a single entity, which appears no different than FIAT on the surface, until you remember that said entity does not have even the limited accountability that our central banks do. ¹ even if you take for granted that whatevercoin itself isn't actually "worth" anything, the products of labor (FIAT currency) that working people exchanged for those whatevercoins absolutely are a real form of wealth, in as much as they were originally worth in FIAT form.
        oh_sigh 3y ago
        Why couldn't you just sell tokens 1 for $1 and have their price pegged to USD? No PoW priming required. If stakers required rewards, you could just redeem 1 token for 99c and use the excess for rewards.
- brutusborn 3y ago
  Why is that? In this case it seems to have both helped provide grid stability whilst providing utility as a store/transfer of value. Seems like a win/win to me. If the crypto miners hadn't existed then Texas may not have had the flexibility required to avoid blackouts. If Texas didn't have this mechanism in place then mining would be less efficient. Isn't this a great solution to excess renewable energy? What is there to curse?
  - cycrutchfield 3y ago
    This is like saying burning gasoline in a pit is a good use of gasoline.
    - blangk 3y ago
      Care to elaborate on that?
      - cycrutchfield 3y ago
        Want me to dumb it down even further?
      - plorg 3y ago
        By analogy it must be good if I just start burning gasoline in a pit because my increased demand will cause oil producers to invest in more drilling and refinery capacity. In fact, if we were just burning gasoline in pits in the 70s we wouldn't have had an energy crisis because by burning gasoline in pits we would have created the market conditions necessary for the oil companies to build more domestic wells and refinery capacity. It's perfect, because when we actually _did_ need gasoline for cars we could have just pitched the guys burning gasoline in pits some cash, they would have stopped, and we would have had enough gasoline for everyone.
        cycrutchfield 3y ago
        “Ah!”, the Crypto-Kid exclaimed, “But here’s where you’re wrong! By burning the gasoline they created SmokeCoins, which are a Store Of Value, therefore burning gasoline in a pit is not wasteful at all!” “But what happens if they don’t burn the gasoline in the first place, don’t the same SmokeCoins just get generated somewhere else then? So what net value is created by burning the gasoline?” The Crypto-Kid’s peanut brain implodes while considering this thought.
- UncleOxidant 3y ago
  Do we have to wait to look back to curse it?
quickthrower2 3y ago
Like paying your neighbour to stop playing loud music. They will use the money to buy bigger speakers. This is worse because they have made it more $ attractive for more miners to come by subsidising operations. Instead they should pass emergency laws that let them cut power to non essential enterprises like this. Then the crypto community will blacklist Texas and leave it alone. Give the money to Elon to trial some stabilization tech instead. Or connect to other grids lol!
- brutusborn 3y ago
  I don't understand this analogy. The miner is being compensated for lost production in exchange for grid stability. If mining didn't exist, the same process would occur for the next easiest consumer to shutdown. The only way your analogy works is if you consider industry bad (playing loud music). This situation is ideal for both parties.
  - raincole 3y ago
    > The only way your analogy works is if you consider industry bad (playing loud music). It's very obvious that the person you replied to consider crypto mining inherently bad. I don't necessarily agree with them, but I believe the absolute majority of HN users hold this view.
    - brutusborn 3y ago
      I know; my point is that this situation isn't unique to crypto mining: their argument applies to every industry. If crypto didn't exist, another industry would need to be shutdown.
      - quickthrower2 3y ago
        Indeed. Think of it like this. If there is a water shortage they ban hosepipes not tap water. They may ask people to limit showers. The equivalent here would be picking what industries to forcibly shut down. In that sense with such a system crypto mining might be OK (at least for this argument). But this compensation is a subsidy to ask more people to come in and use up a scarce resource.
jiqiren 3y ago
Why not just roll some blackouts to these businesses obviously not essential services?
- brutusborn 3y ago
  Because arbitrarily penalizing businesses during an emergency incentivizes businesses to move to locations which don't do this. Texas tries to be friendly to business and it seems to be working.
  - mark_up 3y ago
    [dead]
- justrealist 3y ago
  Do you really want power company bureaucrats curating a clipboard of businesses deemed non-essential?
  - akira2501 3y ago
    As opposed to what? The way we do it now is we deem certain business essential, and by default, everything else isn't. All power companies have a plan to ration and route power in an emergency.
toenail 3y ago
> Riot said on Wednesday that the state's power grid operator paid the company $31.7 million in energy credits in August [...] to cut its energy consumption during a record-breaking heatwave in the state. Miners help to stabilize the Texan power grid by providing a steady demand for power and get paid in ERNERGY CREDITS during an emergency when power is needed elsewhere. This is a win-win-win no matter how uninformed people are trying to spin this.
- pixelatedindex 3y ago
  Dumb question - how does consuming energy help stabilize the grid? I thought if you used more than capacity, then the grid breaks down - kind of like the circuit breaker at home.
  - toenail 3y ago
    If there is more demand for power energy producers have an incentive to create the capacity to provide more power. Which comes in handy when you need more power, e.g. during a heat wave.
  - w-ll 3y ago
    It's hard to start and stop traditional power generators (ng/coal/nuclear), but it is easy to start and stop the bitcoin mining rigs. grid likes to be at capacity, and its easy for the miners to scale up and down to fit the gap.
  - nullc 3y ago
    To avoid brownouts the generation capacity must match or exceed the peak demand. This is particularly hard when there is a lot of renewables on the grid because their minimum output is very low compared to their average output but the renewables are inexpensive relative to their average output compared to other sources so the utility prefers to build more and more renewables if it can. To address this, utilities must build generation capacity that sits idle. This has terrible economics. Instead, utilities can take a portion of the money that they would have spent building idle capacity and pay it to users who are able to quickly shut off when demand approaches capacity (or approaches the 'cheap' capacity). This is equivalent to selling these parties spare capacity at a discounted rate. So consuming energy but being willing/able to stop on a moments notice stabilizes the grid by (1) making it economical to have worst case capacity capacity closer to the peak demand, and (2) getting out of the way when that capacity is needed. The key point is that they can immediately turn off on the utilities request. This is easier for bitcoin miners than it is for many industrial scale energy users (though there are other ones who do this too).
beau_g 3y ago
I'm consistently surprised on certain tech communities including this one's mostly negative view on crypto energy consumption. The positions are typically framed as cryptos transaction cost is wasteful compared to legacy solutions. With crypto though, that cost encompasses the infrastructure AND transaction cost. It's often compared to just the pure transaction cost of say, VISA. What is the HVAC cost to cool and heat every VISA commercial property? What is the energy cost of all their employees commuting to those offices? How efficient is VISA generally as a company, is every manager and IC being cooled and heated and driving to the office actively keeping their transaction cost at a global minimum? Given all that multiplied by every company that is needed to maintain the legacy finance global infrastructure, I'm skeptical that crypto is even worse even if it incorporates wasting energy by design, would like to see any projections/numbers around this if anyone has looked into it with infrastructure energy cost considered in this way.
- Consultant32452 3y ago
  What’s the cost of global war to maintain the petrodollar?
- brenns10 3y ago
  The issue with your argument is that transaction fees are pretty much the most obvious example of market forces at work. If it were unsustainable for Visa to operate with its low transaction fees, then it wouldn't be in business. If it were possible for a good crypto product to offer lower transaction fees, they would do it. Literally right now we're looking at the proof. The data/experiment is already here. When you hear people talking about how wasteful crypto is, it's because the data are already in and we're on to the analysis.
- JKCalhoun 3y ago
  > I'm skeptical that crypto is even worse even if it incorporates wasting energy by design The legacy transaction industry, if it does consume more energy, can move to begin to conserve energy because consuming energy is not in its design.
  - 3y ago
Gunax 3y ago
The proper solution is to raise the price of electricity.
- 22c 3y ago
  Yes, I don't understand why this is not the solution.. They don't even have to raise it for everyone (ie. if they don't want everyone else to subsidise the cost to larger consumers). If your workload is such that it causes grid instability, you should pay at least $X more for the service, where $X is the cost of grid instability. This way if it's too expensive for big customers to run a workload which exceeds the capability of the grid, they'll go elsewhere. This would incentivise the grid operator to improve stability such that they could better support the big customer's workload.
  - cwillu 3y ago
    That's already how billing for industrial levels of power works. https://en.wikipedia.org/wiki/Power_factor https://en.wikipedia.org/wiki/Power_factor https://www.energy.gov/eere/amo/articles/reducing-power-factor-cost https://www.energy.gov/eere/amo/articles/reducing-power-fact... https://www.bchydro.com/news/conservation/2019/your-power-factor-what-it-is-and-how-to-reduce-it.html https://www.bchydro.com/news/conservation/2019/your-power-fa...
bhawks 3y ago
Having a customer that is always willing to buy energy but can zero out their consumption within seconds of a single phone call is a great asset to grid operators. Outside of Bitcoin the only customers in this class are industrial operations and they usually cannot fully turn off as well as require hours of lead time to halt operations (if they're at a stage of process where that is possible). Please balance the reflexive crypto hate with an appreciation of the logistical challenges of grid management especially when electrical supply and consumer demand don't naturally match out.
- PeterStuer 3y ago
  Also note they do not actually 'cash out' pay the companies in $. They get credits they can use for electricity consumption at a more grid convenient time.
  - bokohut 3y ago
    Yes, credits but money nonetheless that one would have had to pay if they were not able to manipulate their consumption at a point of great demand. I share these words from direct experience of being a credit receiver from my utility company for several years which has been a great WFH benefit through awareness of the program. While I am now humbled and fortunate to have a renewables battery backed system in addition to multiple EVs prior to obtaining this renewable system I certainly played this money 'saving' game as well at every turn it was offered. The day before the voluntary shutdown my utility company would use this pre day as the credit baseline for the following shutdown day. I would lower the HVAC much greater than normal and charge all EVs beyond our typical SOC at a kW rate of 11 cents per. On the day of the shutdown I would use nearly no electricity intentionally and be credited at 1.25 USD per kW not used. Participating in this shutdown a few times a month would cover a whole month's bill++. It is absolutely certain that someone will see this as "cheating" or "not fair" however everyone is equally capable of comprehending the offering as it stands and applying it to their own situation. It just takes time, which most don't want to give proactively, but those same "most" will certainly spend much more time reactively complaining. Mind your time as we all get the exact same interval of its passing however we certainly do not get the same aggregate amount. Stay Healthy!
ezzaf 3y ago
This is actually completely reasonable and a positive for the energy grid. Large industrial energy users who can switch off when needed make the grid stronger, not weaker. To illustrate, imagine a grid with 1000MW max demand and 2000MW of production. Let's say the generation is composed of equal parts solar, wind, gas, and nuclear. You've got 500MW of always on (nuclear), 500MW dispatchable (gas), and 1000MW intermittent. When the sun is shining and the wind is blowing, where do you put all your extra energy? Well if you add on another 500MW of bitcoin mining, you can send it there. And if you hit peak demand when you've got no renewables (or the gas/nuclear is offline) you can switch off your extra demand. The dispatchable industrial user is helping to pay to keep the extra capacity around you only need a few days a year.
- Salgat 3y ago
  Natural gas and coal make up over half of Texas power generation. We're better off ramping them down during low demand rather than keeping them running at max capacity for bitcoin mining of all things. What an environmental nightmare. Your example only works if most of the power comes from green energy sources.
  - bhawks 3y ago
    But ERCOT is not running at max fossil fuel generation capacity at all times. [1] Keeping industrial scale operations running is usually cheaper, safer and more efficient than turning them completely off. This is not like switching off a lightbulb. ERCOT is using these agreements so that they can smoothly ramp down and dial up generation capacity. 1: https://youtu.be/ElbdWMvI1ZE https://youtu.be/ElbdWMvI1ZE
    - Salgat 3y ago
      No, they are using these agreements because they simply don't have enough capacity regardless and are desperate to find ways to cut power usage. You don't live here do you? Otherwise you'd see the constant emergency alerts from ERCOT begging residents to lower power usage or risk outages.
PeterStuer 3y ago
Grid stability requires that you need to balance production and consumption at all times. Most production can not be turned on or off very quickly. So at times when you overproduce having a large consumer that you can modulate very fast is a nice component. You could use batteries, but those could fill. Traditional industrial demand is also not easily turned up or down. Bitcoin mining will take your power, and can be switched on and of relatively fast.
xkcd1963 3y ago
I think it's reasonable to assume that somebody in the gov knows somebody in the company and they wash their hands this way. If it wasn't for some internal goodwill I as the gov would want to just shut down their access to energy after a certain treshhold of consumption was reached.

91 points by lxm 3y ago

logN_2 3y ago

[flagged]

ftxbro 3y ago
the bitcoin mines stimulated power infrastructure investment so that texas was able to withstand the heat wave without doing blackouts
- logN_2 3y ago
  If true, I did not know that. You have a source on that?
  - anonym29 3y ago
    I'm not the person you're replying to, but I do have a source that talks about how BTC mining in Texas helps normalize and "smooth" usage. Electricity is complicated so this is a broad and major oversimplification, but: 1. It's bad™ for a grid to be producing more electricity than it's using, or vice versa 2. TX has a highly variable grid load, in part due to Very Hot Weather™ compared to much of the rest of the country 3. TX, perhaps unintuitively, is [one of the largest? maybe the largest?] (haven't checked in a while) producers of solar and wind energy, but these sources are highly variable compared to fossil fuels, hydro, nuclear, etc. 4. Importantly, peak production and peak demand in TX are VERY mismatched 5. It's hard™ to store excess energy from times of peak production to use in times of peak demand 6. BTC mining, in the right places at the right times, help smooth the imbalances resulting from point 4, which are bad™ as mentioned in point 1, avoiding the hard™ problem of storage from point 5 The net result of all of this is that the "smoothing" effect of BTC mining (in the right places, at the right times) makes it more economically viable to change the makeup of energy production to favor a larger share of renewables and a smaller share of fossil fuels. This isn't exactly the same as what the original commenter you're replying to is saying, but it's progress towards decarbonization of the grid nevertheless. Source: https://www.coindesk.com/consensus-magazine/2023/07/24/how-texas-became-a-global-mecca-for-bitcoin-mining/ https://www.coindesk.com/consensus-magazine/2023/07/24/how-t... For the people downvoting, could you please share why? If I'm doing a poor job of explaining/communicating anything, I'd appreciate being informed about what part in particular, so I can try to do better.
    - mikeryan 3y ago
      The problem with your argument and the point of the article is #6 Selling excess energy to bitcoin miners is fine. Having to pay them off when the grid is overloaded because they can’t turn their damn servers off for a week is what smells like the rest of the crypto bullshit.
      - brutusborn 3y ago
        The reason they are one of the first to turn off is _because_ they can turn their servers off easily. This is why crypto mining is perfect for this application. Some industrial processes take days or weeks to fully shutdown / startup so quick shutdown isn't practical. If your business was shutdown for the greater good, would you not expect some compensation?
      - deleted 3y ago
        [deleted]
      - anonym29 3y ago
        > Having to pay them off when the grid is overloaded because they can’t turn their damn servers off for a week is what smells like the rest of the crypto bullshit. There seems to be a misconception here. The miners are being paid rebates to do precisely that - turning off their servers. They're being given credits to not use electricity at times when demand is high and renewable supply is low. This is part of what allows the renewable energy to make up a larger share of Texas' energy production in an economical way. Without the ability to rapidly raise ("Quick, turn the bitcoin miners on!") and lower ("Quick, turn the bitcoin miners off!") energy demand in this manner, there is a lesser need for variable production (solar and wind) and a greater need for "constant" production (oil, gas, nuclear). Note that these types of production can be turned on and off the same way bitcoin miners can, but doing so is much slower and is actually so costly that it's cheaper to decrease the share of energy produced by "constant" production sources, increase the share of energy produced by variable renewables, and simply pay the bitcoin miners to turn their racks and racks of SHA-256 ASICs on and off at precisely the right times and places. It's WAY easier, cheaper, faster, and safer to make adjustments to the "demand" side than it is to make adjustments on the "supply" side. I know it sounds really counterintuitive and complicated but this really is better for the environment - it leads to less burning of fossil fuels and lower costs for taxpayers than the alternative of not having any bitcoin miners in Texas. Please give that article I linked a read if you have the time, that goes into much more depth about all of this.
- mikeryan 3y ago
  Maybe… Just maybe… It was people dying during the extreme heat and cold that overwhelmed the Texas energy grid that stimulated any power infrastructure development? …nah
- corethree 3y ago
  In green energy or turbines to burn oil? Ironically this stimulus contributes to more heat waves. It's a bandaid ultimately covering up the root of the problem: Energy generation for zero utility.
- pyinstallwoes 3y ago
  How is that even logical?
- JKCalhoun 3y ago
  Weird if true. Weird that Texas invested in the power infrastructure for Bitcoin mining rather than for the people that relied on that for their homes.
munchler 3y ago
Crypto based on proof of work is wasteful by design, but there are other approaches that might benefit humanity in the end.
- jjtheblunt 3y ago
  What’s an example?
  - jimbob45 3y ago
    I think the parent poster is advocating for proof-of-stake as an alternative since it’s generally less power hungry (though not entirely so). Just speculating.
    - mindcandy 3y ago
      The catch is: Even with proof of stake, you need to prime the pump with proof of work. Otherwise, you have nothing to stake! Hopefully we’ve proven enough work already to serve as a foundation and from here on we can scaffold up with staking.
      - anonym29 3y ago
        There's another catch as well, PoS allows and encourages control to be centralized by financially incentivizing financial hoarding behavior. Knowing what we know about wealth distribution in FIAT monetary systems, this will eventually result in people's real wealth¹ falling under the control of a single entity, which appears no different than FIAT on the surface, until you remember that said entity does not have even the limited accountability that our central banks do. ¹ even if you take for granted that whatevercoin itself isn't actually "worth" anything, the products of labor (FIAT currency) that working people exchanged for those whatevercoins absolutely are a real form of wealth, in as much as they were originally worth in FIAT form.
      - oh_sigh 3y ago
        Why couldn't you just sell tokens 1 for $1 and have their price pegged to USD? No PoW priming required. If stakers required rewards, you could just redeem 1 token for 99c and use the excess for rewards.
brutusborn 3y ago
Why is that? In this case it seems to have both helped provide grid stability whilst providing utility as a store/transfer of value. Seems like a win/win to me. If the crypto miners hadn't existed then Texas may not have had the flexibility required to avoid blackouts. If Texas didn't have this mechanism in place then mining would be less efficient. Isn't this a great solution to excess renewable energy? What is there to curse?
- cycrutchfield 3y ago
  This is like saying burning gasoline in a pit is a good use of gasoline.
  - blangk 3y ago
    Care to elaborate on that?
    - cycrutchfield 3y ago
      Want me to dumb it down even further?
    - plorg 3y ago
      By analogy it must be good if I just start burning gasoline in a pit because my increased demand will cause oil producers to invest in more drilling and refinery capacity. In fact, if we were just burning gasoline in pits in the 70s we wouldn't have had an energy crisis because by burning gasoline in pits we would have created the market conditions necessary for the oil companies to build more domestic wells and refinery capacity. It's perfect, because when we actually _did_ need gasoline for cars we could have just pitched the guys burning gasoline in pits some cash, they would have stopped, and we would have had enough gasoline for everyone.
      - cycrutchfield 3y ago
        “Ah!”, the Crypto-Kid exclaimed, “But here’s where you’re wrong! By burning the gasoline they created SmokeCoins, which are a Store Of Value, therefore burning gasoline in a pit is not wasteful at all!” “But what happens if they don’t burn the gasoline in the first place, don’t the same SmokeCoins just get generated somewhere else then? So what net value is created by burning the gasoline?” The Crypto-Kid’s peanut brain implodes while considering this thought.
UncleOxidant 3y ago
Do we have to wait to look back to curse it?

quickthrower2 3y ago

Like paying your neighbour to stop playing loud music. They will use the money to buy bigger speakers. This is worse because they have made it more $ attractive for more miners to come by subsidising operations. Instead they should pass emergency laws that let them cut power to non essential enterprises like this. Then the crypto community will blacklist Texas and leave it alone. Give the money to Elon to trial some stabilization tech instead. Or connect to other grids lol!

brutusborn 3y ago
I don't understand this analogy. The miner is being compensated for lost production in exchange for grid stability. If mining didn't exist, the same process would occur for the next easiest consumer to shutdown. The only way your analogy works is if you consider industry bad (playing loud music). This situation is ideal for both parties.
- raincole 3y ago
  > The only way your analogy works is if you consider industry bad (playing loud music). It's very obvious that the person you replied to consider crypto mining inherently bad. I don't necessarily agree with them, but I believe the absolute majority of HN users hold this view.
  - brutusborn 3y ago
    I know; my point is that this situation isn't unique to crypto mining: their argument applies to every industry. If crypto didn't exist, another industry would need to be shutdown.
    - quickthrower2 3y ago
      Indeed. Think of it like this. If there is a water shortage they ban hosepipes not tap water. They may ask people to limit showers. The equivalent here would be picking what industries to forcibly shut down. In that sense with such a system crypto mining might be OK (at least for this argument). But this compensation is a subsidy to ask more people to come in and use up a scarce resource.

jiqiren 3y ago

Why not just roll some blackouts to these businesses obviously not essential services?

brutusborn 3y ago
Because arbitrarily penalizing businesses during an emergency incentivizes businesses to move to locations which don't do this. Texas tries to be friendly to business and it seems to be working.
- mark_up 3y ago
  [dead]
justrealist 3y ago
Do you really want power company bureaucrats curating a clipboard of businesses deemed non-essential?
- akira2501 3y ago
  As opposed to what? The way we do it now is we deem certain business essential, and by default, everything else isn't. All power companies have a plan to ration and route power in an emergency.

toenail 3y ago

> Riot said on Wednesday that the state's power grid operator paid the company $31.7 million in energy credits in August [...] to cut its energy consumption during a record-breaking heatwave in the state. Miners help to stabilize the Texan power grid by providing a steady demand for power and get paid in ERNERGY CREDITS during an emergency when power is needed elsewhere. This is a win-win-win no matter how uninformed people are trying to spin this.

pixelatedindex 3y ago
Dumb question - how does consuming energy help stabilize the grid? I thought if you used more than capacity, then the grid breaks down - kind of like the circuit breaker at home.
- toenail 3y ago
  If there is more demand for power energy producers have an incentive to create the capacity to provide more power. Which comes in handy when you need more power, e.g. during a heat wave.
- w-ll 3y ago
  It's hard to start and stop traditional power generators (ng/coal/nuclear), but it is easy to start and stop the bitcoin mining rigs. grid likes to be at capacity, and its easy for the miners to scale up and down to fit the gap.
- nullc 3y ago
  To avoid brownouts the generation capacity must match or exceed the peak demand. This is particularly hard when there is a lot of renewables on the grid because their minimum output is very low compared to their average output but the renewables are inexpensive relative to their average output compared to other sources so the utility prefers to build more and more renewables if it can. To address this, utilities must build generation capacity that sits idle. This has terrible economics. Instead, utilities can take a portion of the money that they would have spent building idle capacity and pay it to users who are able to quickly shut off when demand approaches capacity (or approaches the 'cheap' capacity). This is equivalent to selling these parties spare capacity at a discounted rate. So consuming energy but being willing/able to stop on a moments notice stabilizes the grid by (1) making it economical to have worst case capacity capacity closer to the peak demand, and (2) getting out of the way when that capacity is needed. The key point is that they can immediately turn off on the utilities request. This is easier for bitcoin miners than it is for many industrial scale energy users (though there are other ones who do this too).

beau_g 3y ago

I'm consistently surprised on certain tech communities including this one's mostly negative view on crypto energy consumption. The positions are typically framed as cryptos transaction cost is wasteful compared to legacy solutions. With crypto though, that cost encompasses the infrastructure AND transaction cost. It's often compared to just the pure transaction cost of say, VISA. What is the HVAC cost to cool and heat every VISA commercial property? What is the energy cost of all their employees commuting to those offices? How efficient is VISA generally as a company, is every manager and IC being cooled and heated and driving to the office actively keeping their transaction cost at a global minimum? Given all that multiplied by every company that is needed to maintain the legacy finance global infrastructure, I'm skeptical that crypto is even worse even if it incorporates wasting energy by design, would like to see any projections/numbers around this if anyone has looked into it with infrastructure energy cost considered in this way.

Consultant32452 3y ago
What’s the cost of global war to maintain the petrodollar?
brenns10 3y ago
The issue with your argument is that transaction fees are pretty much the most obvious example of market forces at work. If it were unsustainable for Visa to operate with its low transaction fees, then it wouldn't be in business. If it were possible for a good crypto product to offer lower transaction fees, they would do it. Literally right now we're looking at the proof. The data/experiment is already here. When you hear people talking about how wasteful crypto is, it's because the data are already in and we're on to the analysis.
JKCalhoun 3y ago
> I'm skeptical that crypto is even worse even if it incorporates wasting energy by design The legacy transaction industry, if it does consume more energy, can move to begin to conserve energy because consuming energy is not in its design.
- 3y ago

Gunax 3y ago

The proper solution is to raise the price of electricity.

22c 3y ago
Yes, I don't understand why this is not the solution.. They don't even have to raise it for everyone (ie. if they don't want everyone else to subsidise the cost to larger consumers). If your workload is such that it causes grid instability, you should pay at least $X more for the service, where $X is the cost of grid instability. This way if it's too expensive for big customers to run a workload which exceeds the capability of the grid, they'll go elsewhere. This would incentivise the grid operator to improve stability such that they could better support the big customer's workload.
- cwillu 3y ago
  That's already how billing for industrial levels of power works. https://en.wikipedia.org/wiki/Power_factor https://en.wikipedia.org/wiki/Power_factor https://www.energy.gov/eere/amo/articles/reducing-power-factor-cost https://www.energy.gov/eere/amo/articles/reducing-power-fact... https://www.bchydro.com/news/conservation/2019/your-power-factor-what-it-is-and-how-to-reduce-it.html https://www.bchydro.com/news/conservation/2019/your-power-fa...

bhawks 3y ago

Having a customer that is always willing to buy energy but can zero out their consumption within seconds of a single phone call is a great asset to grid operators. Outside of Bitcoin the only customers in this class are industrial operations and they usually cannot fully turn off as well as require hours of lead time to halt operations (if they're at a stage of process where that is possible). Please balance the reflexive crypto hate with an appreciation of the logistical challenges of grid management especially when electrical supply and consumer demand don't naturally match out.

PeterStuer 3y ago
Also note they do not actually 'cash out' pay the companies in $. They get credits they can use for electricity consumption at a more grid convenient time.
- bokohut 3y ago
  Yes, credits but money nonetheless that one would have had to pay if they were not able to manipulate their consumption at a point of great demand. I share these words from direct experience of being a credit receiver from my utility company for several years which has been a great WFH benefit through awareness of the program. While I am now humbled and fortunate to have a renewables battery backed system in addition to multiple EVs prior to obtaining this renewable system I certainly played this money 'saving' game as well at every turn it was offered. The day before the voluntary shutdown my utility company would use this pre day as the credit baseline for the following shutdown day. I would lower the HVAC much greater than normal and charge all EVs beyond our typical SOC at a kW rate of 11 cents per. On the day of the shutdown I would use nearly no electricity intentionally and be credited at 1.25 USD per kW not used. Participating in this shutdown a few times a month would cover a whole month's bill++. It is absolutely certain that someone will see this as "cheating" or "not fair" however everyone is equally capable of comprehending the offering as it stands and applying it to their own situation. It just takes time, which most don't want to give proactively, but those same "most" will certainly spend much more time reactively complaining. Mind your time as we all get the exact same interval of its passing however we certainly do not get the same aggregate amount. Stay Healthy!

ezzaf 3y ago

This is actually completely reasonable and a positive for the energy grid. Large industrial energy users who can switch off when needed make the grid stronger, not weaker. To illustrate, imagine a grid with 1000MW max demand and 2000MW of production. Let's say the generation is composed of equal parts solar, wind, gas, and nuclear. You've got 500MW of always on (nuclear), 500MW dispatchable (gas), and 1000MW intermittent. When the sun is shining and the wind is blowing, where do you put all your extra energy? Well if you add on another 500MW of bitcoin mining, you can send it there. And if you hit peak demand when you've got no renewables (or the gas/nuclear is offline) you can switch off your extra demand. The dispatchable industrial user is helping to pay to keep the extra capacity around you only need a few days a year.

Salgat 3y ago
Natural gas and coal make up over half of Texas power generation. We're better off ramping them down during low demand rather than keeping them running at max capacity for bitcoin mining of all things. What an environmental nightmare. Your example only works if most of the power comes from green energy sources.
- bhawks 3y ago
  But ERCOT is not running at max fossil fuel generation capacity at all times. [1] Keeping industrial scale operations running is usually cheaper, safer and more efficient than turning them completely off. This is not like switching off a lightbulb. ERCOT is using these agreements so that they can smoothly ramp down and dial up generation capacity. 1: https://youtu.be/ElbdWMvI1ZE https://youtu.be/ElbdWMvI1ZE
  - Salgat 3y ago
    No, they are using these agreements because they simply don't have enough capacity regardless and are desperate to find ways to cut power usage. You don't live here do you? Otherwise you'd see the constant emergency alerts from ERCOT begging residents to lower power usage or risk outages.

PeterStuer 3y ago

Grid stability requires that you need to balance production and consumption at all times. Most production can not be turned on or off very quickly. So at times when you overproduce having a large consumer that you can modulate very fast is a nice component. You could use batteries, but those could fill. Traditional industrial demand is also not easily turned up or down. Bitcoin mining will take your power, and can be switched on and of relatively fast.

xkcd1963 3y ago

I think it's reasonable to assume that somebody in the gov knows somebody in the company and they wash their hands this way. If it wasn't for some internal goodwill I as the gov would want to just shut down their access to energy after a certain treshhold of consumption was reached.