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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 $ attractiv

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.
      - brutusborn 3y ago
        Your last sentence is where you go wrong: compensation is not a subsidy. If the government uses my land to build a highway, I am compensated because I lose something of value. Subsidies are not an exchange but are one-way. You are mischaracterizing the payments because you hate crypto.
        quickthrower2 3y ago
        It is a subsidy signal. "Build crypto mining in Texas and your expected earnings are higher than anywhere else!" I don't hate crypto, I have some nuanced opinions on it. Happy to criticize and defend it, depending on the argument. Once you get to PoS there is a lot less wrong with it environmentally. Unlimited carbon-free energy infra (and silicon production infra too, along with proper recycling!) would also make it less of a problem, but obviously we are not there yet. And I say unlimited because PoW demands that difficulty goes up and up and up to bid up PoW assets.
      - nullc 3y ago
        The program is equivalent to selling the miners spare capacity at reduced prices. There are accounting reasons that the utility prefers to structure it as payments for load shedding. Try thinking it through in terms of reduced rates for spare capacity. Any criticism that doesn't work under both frameworks is logically unsound.
        p1mrx 3y ago
        Your argument would make sense if Texas had a near-term goal to decarbonize its power grid. As long as fossil fuels are burning, there is no spare capacity.
        nullc 3y ago
        Embracing your response on its own terms, https://insideclimatenews.org/news/09032023/inside-clean-energy-texas-renewables/ https://insideclimatenews.org/news/09032023/inside-clean-ene... But that aside I don't think your response is a fair one for three reasons: (1) because solar and wind are the least expensive source of energy the excess power is significantly solar/wind. (2) But because they're the least reliable maximizing their use requires solutions like a large amount of sheddable load on the grid. (3) You're imposing your own opinions on the 'right' and 'wrong' sources of power which far from universal outside of internet filter bubbles and are not supported by the law. You may not like that some parties burn fossil fuels for energy but they currently have a right to do so. I agree that good cases can be made for restricting fossil fuel use, but so long as it isn't it's unproductive to pick and choose arbitrary targets that use energy for purposes you don't care about simply because fossil fuels for energy happens to exist. It's doubly so, considering 1/2 above because responsive loads help increase the share of renewable power.
    - raincole 3y ago
      Yes, I believe the Texas gov actually did the right thing here. If they believed crypto mining is inherently bad, it should not be allowed in the first place. If they believed crypto mining is at least neutral, it should get compensated for being forced to shut down (even temporarily), and it did.
    - enkid 3y ago
      This is such a weird take. The existence of bitcoin mining increases electric demand. There's no inherent reason that without it demand would spike above what it already is without, outside of the price of energy, which it sounds like wasn't really a factor here. (Because the market is clearly being inefficient when a supplier is paying someone not to buy their product.)
    - stouset 3y ago
      > If crypto didn't exist, another industry would need to be shutdown. This makes literally zero sense. Mining adds extra load that wouldn’t otherwise exist. If crypto didn’t exist, the Texas grid would experience reduced load. This should be obvious: if paying these miners to stop has the desired effect of reducing the load on the grid, miners not existing would surely have a similar effect. > their argument applies to every industry. Most other industries provide actual societal value, unlike crypto. And to hear off the rebuttal I already hear coming: no, just because it has a market cap doesn’t mean it’s adding value to society. As a trivial counterexample, Mexican cartels are undoubtedly worth billions but I think it’s pretty inarguable we’d all be better off without them.
      - brutusborn 3y ago
        Does your argument work at the limits? E.g. if all non-essential industry in Texas didn't exist, would you expect the same amount of investment in energy production and thus an abundance of energy for 'socially valuable' uses? No: if there was no industrial demand there would be no need for huge renewable investments. Your counter-factual doesn't make sense because you assume that additional demand has no effect on supply and vice-versa. Electricity generation isn't some constant that is unrelated to industrial needs.
        wolfendin 3y ago
        yes. If there isn’t enough supply to satisfy things like residential demand then you loose demand (and therefore re revinue
        stouset 3y ago
        > if all non-essential industry in Texas didn't exist, would you expect the same amount of investment in energy production and thus an abundance of energy for 'socially valuable' uses? If those industries are using that power that Texas has invested in producing, then how is it "abundantly available" for socially valuable uses? Yes, without things like crypto, we probably would have somewhat less investment in green energy sources. We'd also be burning less coal. Given possible futures with "more fossil fuels and more renewables" versus "fossil fuels coal and fewer renewables", I'll pick the latter every time. The goal isn't more renewables, it's replacing fossil fuel with renewables. Worse, those renewables being used up by cryptocurrencies are going to be the optimally-located renewables with the lowest installation and maintenance costs for the highest energy output (think: most reliable wind at high speeds, least cloud cover and highest sun angle). As we do continue to transition further away from fossil fuels, every additional installation is going to be in locations marginally less competitive than the ones that came before. This means that transitioning the non-crypto loads will take longer and be less cost-effective than if crypto magically disappeared overnight.
- jerrysievert 3y ago
  the miner is making more money not mining than mining with this process, it's rather like being paid to not grow crops.
  - quickthrower2 3y ago
    It is worse. Maybe it is getting paid to not grow crops because you are upstream and the people can’t take a shower and need to buy evian by the gallons. And the crop is just canola oil but someone else is paying you to burn it in a fire.
  - computerfriend 3y ago
    Paying someone to change their behaviour is very normal.
- quickthrower2 3y ago
  One thing, if they didn’t exist that would be less strain on the grid period. Granted an industrial use of that same land might use as much power. Now it is a case of well: they are doing something more useful for society. In addition imagine a spreadsheet for miner profit based on world location. That spreadsheet now might add this new upside in being paid to not run the miners and make more money. This attracts more miners! If the goal is to protect society and especially local people, having miners AND shitty power supply is not good (choose one or the other)
  - brutusborn 3y ago
    That's not how markets work. Removing demand tends to reduce investment in supply. Or the opposite: maybe they moved to Texas because there is often excess cheap energy due to renewables. They are causing the same amount of 'strain' (demand) as any other industry. Their demand will attract investment in supply the same as any other industry. The advantage is that their demand can be shed quickly, which is useful for the grid operators, and helps 'protect society.'
    - etrautmann 3y ago
      Yes, and the marginal benefit to society of those kilowatts is the concern here in emergency situations. The grid is also not a normal free market operating under normal free market principles. Regulated monopolies are a different beast with different constraints. Given the challenge of supplying during peak loads, attempting to prioritize use cases strikes me as a reasonable endeavor in principle.
      - infecto 3y ago
        But is Texas unlike most other US states? There is a governing body Ercot with two different transmission maintainers but the generation is indeed a relatively free market with free market pricing.
  - nullc 3y ago
    > One thing, if they didn’t exist that would be less strain on the grid period. No, there would be a corresponding reduction in generation capacity and the strain on the grid would be identical. > This attracts more miners! Good. The miner's usage pays to build more generation capacity (acres of solar, etc), but then when there is an imbalance (production down and/or demand up) the miners turn off so the extra capacity they paid to be built is available for others.
- enkid 3y ago
  What's the value added to society of bitcoin mining?
- bdcravens 3y ago
  They are asking us residents to conserve. Perhaps they could offer us $20/day to do so?
  - brutusborn 3y ago
    Yes, in a situation where this was easy to track (eg smart meters), it would definitely make sense to compensate people to disconnect from the grid temporarily for stability sake. This would incentivize people to build more solar panels and personal battery storage. The difference is that this is very complex and would have a minor effect (compared to shutting down a single large industrial consumer).
    - icehawk 3y ago
      It is easy for ERCOT to to track. They know I used 4.2 kWh in the last hour. They send me energy usage in 15min increments once per day. Its uncomplex and effective enough that I even have emails where this was done elsewhere and BGE was telling me: "Congratulations, you earned $4.13 for saving 3.3 kWh."
      - brutusborn 3y ago
        I’m reading that as the frequency of smart meter measurements is 15 mins. Those are rookie numbers for stabilizing the grid. If they could contact you and you could cut the connection in <3 minutes then it might be useful, but only if many consumers were in the same boat. Compare that with the crypto miners: ERCOT knows how long they take to shutdown and their load, as well as already having commercial arrangements for the shutdown. And with one switch they reduce many multiples of an average homes load.
- akira2501 3y ago
  > I don't understand this analogy. Well.. Texas doesn't just pay this miner, they pay any enterprise which "strains the grid." It's a market for perverse incentives the way the Cobra Effect is. > The miner is being compensated for lost production in exchange for grid stability. The miner is arbitraging the tax payer against their ability to construct new plants, which is how this money could presumably be better spent. > The only way your analogy works is if you consider industry bad (playing loud music). His analogy is flawed. There's an absolute limit to sound pressure in this universe. There's probably not an absolute limit to human greed in this universe. So, yes, unconstrained processes without any natural (e.g. non-external) feedback are probably bad.
  - SamReidHughes 3y ago
    An enterprise that "strains the grid" still has to pay for that electricity, so it's not some perverse incentive at all.
    - deleted 3y ago
      [deleted]
    - akira2501 3y ago
      There is no "strain based pricing" in effect here, though, there is "strain based rationing through buyouts." Since those who can receive the buyouts can also create the strain, it does very well seem to be that this is exactly a perverse incentive. If, however, the number of "strain incidents per unit of time" were factored into pricing accordingly, I'm sure these enterprises would change their strategy.
manmal 3y ago
The miner has a likely very expensive contract with the grid operator in order to be able to pull this kind of energy. Also likely, they have to announce the amount of energy they will be drawing up front. If the operator can’t/won’t honor the contract, they have to compensate, or they are in breach.
sMarsIntruder 3y ago
We’re talking about Bitcoin which is not “crypto” as you probably already know. This is a contract where Bitcoin miner uses energy that would be wasted otherwise. [1] I see a lot of bad faith here on understanding why Ercot did that. But if you prefer state laws that “makes you safe”, go ahead. [1] https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fixing-texas-electric-grid-ted-cruz-agrees.html https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fi...
- wolfendin 3y ago
  Who knows this? pretty sure everyone associates bitcoin and crypto.
- Nursie 3y ago
  > We’re talking about Bitcoin which is not “crypto” as you probably already know. This is nothing but cope from bitcoin maxis in the face of the terrible reputation that cryptocurrency now has. Bitcoin was the first cryptocurrency, it practically defines the term cryptocurrency, it has all the same features as other cryptocurrencies, many of which start life as either code or chain forks of Bitcoin anyway. It has first mover advantage and name recognition, but it absolutely is a cryptocurrency.

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.
    - brutusborn 3y ago
      Your last sentence is where you go wrong: compensation is not a subsidy. If the government uses my land to build a highway, I am compensated because I lose something of value. Subsidies are not an exchange but are one-way. You are mischaracterizing the payments because you hate crypto.
      - quickthrower2 3y ago
        It is a subsidy signal. "Build crypto mining in Texas and your expected earnings are higher than anywhere else!" I don't hate crypto, I have some nuanced opinions on it. Happy to criticize and defend it, depending on the argument. Once you get to PoS there is a lot less wrong with it environmentally. Unlimited carbon-free energy infra (and silicon production infra too, along with proper recycling!) would also make it less of a problem, but obviously we are not there yet. And I say unlimited because PoW demands that difficulty goes up and up and up to bid up PoW assets.
    - nullc 3y ago
      The program is equivalent to selling the miners spare capacity at reduced prices. There are accounting reasons that the utility prefers to structure it as payments for load shedding. Try thinking it through in terms of reduced rates for spare capacity. Any criticism that doesn't work under both frameworks is logically unsound.
      - p1mrx 3y ago
        Your argument would make sense if Texas had a near-term goal to decarbonize its power grid. As long as fossil fuels are burning, there is no spare capacity.
        nullc 3y ago
        Embracing your response on its own terms, https://insideclimatenews.org/news/09032023/inside-clean-energy-texas-renewables/ https://insideclimatenews.org/news/09032023/inside-clean-ene... But that aside I don't think your response is a fair one for three reasons: (1) because solar and wind are the least expensive source of energy the excess power is significantly solar/wind. (2) But because they're the least reliable maximizing their use requires solutions like a large amount of sheddable load on the grid. (3) You're imposing your own opinions on the 'right' and 'wrong' sources of power which far from universal outside of internet filter bubbles and are not supported by the law. You may not like that some parties burn fossil fuels for energy but they currently have a right to do so. I agree that good cases can be made for restricting fossil fuel use, but so long as it isn't it's unproductive to pick and choose arbitrary targets that use energy for purposes you don't care about simply because fossil fuels for energy happens to exist. It's doubly so, considering 1/2 above because responsive loads help increase the share of renewable power.
  - raincole 3y ago
    Yes, I believe the Texas gov actually did the right thing here. If they believed crypto mining is inherently bad, it should not be allowed in the first place. If they believed crypto mining is at least neutral, it should get compensated for being forced to shut down (even temporarily), and it did.
  - enkid 3y ago
    This is such a weird take. The existence of bitcoin mining increases electric demand. There's no inherent reason that without it demand would spike above what it already is without, outside of the price of energy, which it sounds like wasn't really a factor here. (Because the market is clearly being inefficient when a supplier is paying someone not to buy their product.)
  - stouset 3y ago
    > If crypto didn't exist, another industry would need to be shutdown. This makes literally zero sense. Mining adds extra load that wouldn’t otherwise exist. If crypto didn’t exist, the Texas grid would experience reduced load. This should be obvious: if paying these miners to stop has the desired effect of reducing the load on the grid, miners not existing would surely have a similar effect. > their argument applies to every industry. Most other industries provide actual societal value, unlike crypto. And to hear off the rebuttal I already hear coming: no, just because it has a market cap doesn’t mean it’s adding value to society. As a trivial counterexample, Mexican cartels are undoubtedly worth billions but I think it’s pretty inarguable we’d all be better off without them.
    - brutusborn 3y ago
      Does your argument work at the limits? E.g. if all non-essential industry in Texas didn't exist, would you expect the same amount of investment in energy production and thus an abundance of energy for 'socially valuable' uses? No: if there was no industrial demand there would be no need for huge renewable investments. Your counter-factual doesn't make sense because you assume that additional demand has no effect on supply and vice-versa. Electricity generation isn't some constant that is unrelated to industrial needs.
      - wolfendin 3y ago
        yes. If there isn’t enough supply to satisfy things like residential demand then you loose demand (and therefore re revinue
      - stouset 3y ago
        > if all non-essential industry in Texas didn't exist, would you expect the same amount of investment in energy production and thus an abundance of energy for 'socially valuable' uses? If those industries are using that power that Texas has invested in producing, then how is it "abundantly available" for socially valuable uses? Yes, without things like crypto, we probably would have somewhat less investment in green energy sources. We'd also be burning less coal. Given possible futures with "more fossil fuels and more renewables" versus "fossil fuels coal and fewer renewables", I'll pick the latter every time. The goal isn't more renewables, it's replacing fossil fuel with renewables. Worse, those renewables being used up by cryptocurrencies are going to be the optimally-located renewables with the lowest installation and maintenance costs for the highest energy output (think: most reliable wind at high speeds, least cloud cover and highest sun angle). As we do continue to transition further away from fossil fuels, every additional installation is going to be in locations marginally less competitive than the ones that came before. This means that transitioning the non-crypto loads will take longer and be less cost-effective than if crypto magically disappeared overnight.
jerrysievert 3y ago
the miner is making more money not mining than mining with this process, it's rather like being paid to not grow crops.
- quickthrower2 3y ago
  It is worse. Maybe it is getting paid to not grow crops because you are upstream and the people can’t take a shower and need to buy evian by the gallons. And the crop is just canola oil but someone else is paying you to burn it in a fire.
- computerfriend 3y ago
  Paying someone to change their behaviour is very normal.
quickthrower2 3y ago
One thing, if they didn’t exist that would be less strain on the grid period. Granted an industrial use of that same land might use as much power. Now it is a case of well: they are doing something more useful for society. In addition imagine a spreadsheet for miner profit based on world location. That spreadsheet now might add this new upside in being paid to not run the miners and make more money. This attracts more miners! If the goal is to protect society and especially local people, having miners AND shitty power supply is not good (choose one or the other)
- brutusborn 3y ago
  That's not how markets work. Removing demand tends to reduce investment in supply. Or the opposite: maybe they moved to Texas because there is often excess cheap energy due to renewables. They are causing the same amount of 'strain' (demand) as any other industry. Their demand will attract investment in supply the same as any other industry. The advantage is that their demand can be shed quickly, which is useful for the grid operators, and helps 'protect society.'
  - etrautmann 3y ago
    Yes, and the marginal benefit to society of those kilowatts is the concern here in emergency situations. The grid is also not a normal free market operating under normal free market principles. Regulated monopolies are a different beast with different constraints. Given the challenge of supplying during peak loads, attempting to prioritize use cases strikes me as a reasonable endeavor in principle.
    - infecto 3y ago
      But is Texas unlike most other US states? There is a governing body Ercot with two different transmission maintainers but the generation is indeed a relatively free market with free market pricing.
- nullc 3y ago
  > One thing, if they didn’t exist that would be less strain on the grid period. No, there would be a corresponding reduction in generation capacity and the strain on the grid would be identical. > This attracts more miners! Good. The miner's usage pays to build more generation capacity (acres of solar, etc), but then when there is an imbalance (production down and/or demand up) the miners turn off so the extra capacity they paid to be built is available for others.
enkid 3y ago
What's the value added to society of bitcoin mining?
bdcravens 3y ago
They are asking us residents to conserve. Perhaps they could offer us $20/day to do so?
- brutusborn 3y ago
  Yes, in a situation where this was easy to track (eg smart meters), it would definitely make sense to compensate people to disconnect from the grid temporarily for stability sake. This would incentivize people to build more solar panels and personal battery storage. The difference is that this is very complex and would have a minor effect (compared to shutting down a single large industrial consumer).
  - icehawk 3y ago
    It is easy for ERCOT to to track. They know I used 4.2 kWh in the last hour. They send me energy usage in 15min increments once per day. Its uncomplex and effective enough that I even have emails where this was done elsewhere and BGE was telling me: "Congratulations, you earned $4.13 for saving 3.3 kWh."
    - brutusborn 3y ago
      I’m reading that as the frequency of smart meter measurements is 15 mins. Those are rookie numbers for stabilizing the grid. If they could contact you and you could cut the connection in <3 minutes then it might be useful, but only if many consumers were in the same boat. Compare that with the crypto miners: ERCOT knows how long they take to shutdown and their load, as well as already having commercial arrangements for the shutdown. And with one switch they reduce many multiples of an average homes load.
akira2501 3y ago
> I don't understand this analogy. Well.. Texas doesn't just pay this miner, they pay any enterprise which "strains the grid." It's a market for perverse incentives the way the Cobra Effect is. > The miner is being compensated for lost production in exchange for grid stability. The miner is arbitraging the tax payer against their ability to construct new plants, which is how this money could presumably be better spent. > The only way your analogy works is if you consider industry bad (playing loud music). His analogy is flawed. There's an absolute limit to sound pressure in this universe. There's probably not an absolute limit to human greed in this universe. So, yes, unconstrained processes without any natural (e.g. non-external) feedback are probably bad.
- SamReidHughes 3y ago
  An enterprise that "strains the grid" still has to pay for that electricity, so it's not some perverse incentive at all.
  - deleted 3y ago
    [deleted]
  - akira2501 3y ago
    There is no "strain based pricing" in effect here, though, there is "strain based rationing through buyouts." Since those who can receive the buyouts can also create the strain, it does very well seem to be that this is exactly a perverse incentive. If, however, the number of "strain incidents per unit of time" were factored into pricing accordingly, I'm sure these enterprises would change their strategy.

manmal 3y ago

The miner has a likely very expensive contract with the grid operator in order to be able to pull this kind of energy. Also likely, they have to announce the amount of energy they will be drawing up front. If the operator can’t/won’t honor the contract, they have to compensate, or they are in breach.

sMarsIntruder 3y ago

We’re talking about Bitcoin which is not “crypto” as you probably already know. This is a contract where Bitcoin miner uses energy that would be wasted otherwise. [1] I see a lot of bad faith here on understanding why Ercot did that. But if you prefer state laws that “makes you safe”, go ahead. [1] https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fixing-texas-electric-grid-ted-cruz-agrees.html https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fi...

wolfendin 3y ago
Who knows this? pretty sure everyone associates bitcoin and crypto.
Nursie 3y ago
> We’re talking about Bitcoin which is not “crypto” as you probably already know. This is nothing but cope from bitcoin maxis in the face of the terrible reputation that cryptocurrency now has. Bitcoin was the first cryptocurrency, it practically defines the term cryptocurrency, it has all the same features as other cryptocurrencies, many of which start life as either code or chain forks of Bitcoin anyway. It has first mover advantage and name recognition, but it absolutely is a cryptocurrency.