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> 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 dur

> 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).
phire 3y ago
Such deals are usually structured the other way around, and have existed long before bitcoin. The energy consumer gets a cheaper electricity prices year round, on the condition that they are contractually obligated to cut power in emergencies when the energy provider demands it (though, there still can be penalty payments if the demands exceed the maximum in the contract). This allows the provider to always know how much capacity it can shed ahead of time, in exchange for slightly lower revenue. With this alternative arrangement, Texas is forced to dynamically outbid bitcoin profits and other uses of energy in the middle of an emergency. I actually have a similar deal on a consumer level for my home. In exchange for lower power prices, the power company is allowed to turn my hot water tank off remotely. Usually doesn't matter unless multiple people have very long showers on very cold days.
- toenail 3y ago
  > This allows the provider to always know how much capacity it can shed ahead of time, in exchange for slightly lower revenue. This is exactly what happened here, the difference is just how the payment is structured? Obviously an industrial operation can get a different contract than a home owner, and can provide different benefits for the providers.
  - phire 3y ago
    Superficially, it's the same. But the semantics change because it's an auction based system. ERCOT have no idea how much load shedding capacity they have ahead of time. They have to start bidding on the wholesale market and see which bids are accepted. Which makes it harder to do long-term planning and potentially slower to respond in an emergency. It also result in headlines like this :)
    - toenail 3y ago
      Superficially it's also far superior, because the amount of energy consumption that can be switched off is far bigger than that of a single home. Yes, bad journalists will always write bad headlines that are inaccurate or wrong to generate clicks.

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).

phire 3y ago

Such deals are usually structured the other way around, and have existed long before bitcoin. The energy consumer gets a cheaper electricity prices year round, on the condition that they are contractually obligated to cut power in emergencies when the energy provider demands it (though, there still can be penalty payments if the demands exceed the maximum in the contract). This allows the provider to always know how much capacity it can shed ahead of time, in exchange for slightly lower revenue. With this alternative arrangement, Texas is forced to dynamically outbid bitcoin profits and other uses of energy in the middle of an emergency. I actually have a similar deal on a consumer level for my home. In exchange for lower power prices, the power company is allowed to turn my hot water tank off remotely. Usually doesn't matter unless multiple people have very long showers on very cold days.

toenail 3y ago
> This allows the provider to always know how much capacity it can shed ahead of time, in exchange for slightly lower revenue. This is exactly what happened here, the difference is just how the payment is structured? Obviously an industrial operation can get a different contract than a home owner, and can provide different benefits for the providers.
- phire 3y ago
  Superficially, it's the same. But the semantics change because it's an auction based system. ERCOT have no idea how much load shedding capacity they have ahead of time. They have to start bidding on the wholesale market and see which bids are accepted. Which makes it harder to do long-term planning and potentially slower to respond in an emergency. It also result in headlines like this :)
  - toenail 3y ago
    Superficially it's also far superior, because the amount of energy consumption that can be switched off is far bigger than that of a single home. Yes, bad journalists will always write bad headlines that are inaccurate or wrong to generate clicks.