Energy Use Is Fixed by Intermittent Bitcoin Mining – Bitcoin Magazine

Energy Use Is Fixed by Intermittent Bitcoin Mining – Bitcoin Magazine

The Bitcoin mining sector suffers from a widespread lack of understanding and frequently engages in misrepresentation. However, one method that operates inside this industry stands out due to the widespread misconceptions and lack of respect that surround it: intermittent mining.

Despite the fact that the majority of miners strive to attain the maximum amount of uptime that is theoretically possible, there are still some miners who don’t. This means that their machines are either online and hashing or offline and powered down. Their uptime is significantly lower than what is typical for the industry, and they mine based on more complicated schedules that take into account factors such as the time of day, intraday profitability, and even temperature. This is in contrast to the industry norm, which calls for continuous mining.

The purpose of this article is to provide a concise but comprehensive review of the economics and general operations of intermittent miners. In addition, the article highlights some commentary that demonstrates how and why this portion of the industry is sometimes misunderstood.

What Does It Mean to Mine Bitcoin Intermittently?

This kind of mining activity is frequently related with renewable energy sources (i.e., wind and solar) due to the fact that these kinds of power are likewise generated in an intermittent fashion. The wind doesn’t blow constantly, and the sun’s rays aren’t as powerful when there’s cloud cover; this is why renewable sources of power are categorically characterized as being intermittent. In contrast to the vast majority of other energy consumers, however, bitcoin miners are able to readily adjust to the shifting schedules of the power producing facilities. The mining business Lancium is one example of a company that is constructing intermittent mining farms. Compute North is yet another illustration of this.

In point of fact, under normal operating conditions—that is, without the influence of miners wanting renewable power to act as a counterbalance—these intermittent forms of energy might cause an unneeded strain to be placed on electric systems. As will be addressed in greater depth in the following section, the demand from miners can serve to provide a floor price for renewable energy generation projects, which makes these projects more attractive as investments in infrastructure. Although it is not the sole use case for intermittent mining, improving the economics of renewable power sources is one of the most often discussed applications of this technology.

Demand-response programs, which supply miners with power sources that are not subject to interruption, can be powered by coal, natural gas, or any other common fuel that is used to generate electricity. However, to stay especially focused on renewables, let’s take bitcoin mining as an example. When bitcoin mining activities are combined with an intermittent renewable source of electricity, both sides come out on top.

Intermittent Bitcoin Mining Misunderstandings

Recent Twitter posts posted by numerous renowned proof-of-stake consensus advocates, including Ethereum co-founder Vitalik Buterin, included a spate of fairly harsh commentary about intermittent mining. These posts were written on Twitter.

In a message to his 33,000 Twitter followers, Martin Koppelmann, CEO of the “decentralized trading protocol” Gnosis, said that the concept of intermittent mining helping to build additional renewable energy sources involves “mental gymnastics.” Buterin responded to the tweet by saying, “I never understood how this concept of switching miners on and off regularly makes any sense at all.” Buterin did this by jumping into the responses section of the tweet. The conclusion of the tweet reveals that Buterin has evidently not given much thought to the matter, despite the fact that. He stated in his writing, “If you are paying for hardware but only using it half of the time, you will be operating at a loss in a competitive market.”

These tweets are not an exception to that rule. A long-time illogical mining opponent, former Dogecoin promoter, and an ex-employee of the Dutch Central Bank named Alex De Vries (aka, Digiconomist) has asserted (without any data to support his claim) that “Bitcoin mining and renewables make for the worst marriage.”

Buterin and Koppelmann have been the target of a number of clarification and correction efforts from Bitcoin supporters and actual miners on their theories regarding intermittent mining tactics. According to the Chief Technology Officer at HODL Ranch, Jesse Peltan, mining “increases the elasticity of demand for electricity.” Noah Ruderman, a researcher and developer of cryptocurrency, responded as well to Buterin’s misunderstanding of the situation. “Mining is a great way to make money off of energy that no one wants. The majority of this energy comes from renewable sources. It’s nothing more than a subsidy for the energy industry,” Ruderman explained.

In point of fact, intermittent mining receives a lot of appreciation across the majority of the Bitcoin business. For instance, Gideon Powell, CEO of Cholla Petroleum, stated in a blog post that “the intermittent character of [renewable energy’s] couples wonderfully with the flexible load that bitcoin mining requires.” In addition, Mike Colyer, the chief executive officer of Foundry, referred to bitcoin mining as one of the most significant developments that the electrical system has seen in more than a century. What exactly is the innovation? According to what Colyer wrote, “a substantial base load that is intermittent.” According to Max Gagliardi, co-founder of Ancova Energy, the “most obvious use case” for bitcoin mining is when it is linked with unreliable energy supplies. This statement was made by Gagliardi.

Intermittent or interruptible mining tactics have the potential to be more profitable than continuous mining strategies in some circumstances. This fact may come as a surprise to some detractors. In July, for instance, a mining analyst at Galaxy Digital took note of a case study regarding Riot’s mining facilities in the state of Texas. It was able to generate thirty percent more money over that span of time by selling power to the grid rather than using that power for mining operations itself. In light of this background information, the following part will go more deeply into the economics of intermittent mining.

Economic Considerations For Intermittent Bitcoin Mining

Interruptible mining businesses are looking for a competitive edge in the current market in a variety of key ways, but one of the most crucial ways is by entering into increasingly sophisticated power purchasing agreements (PPAs). In addition, while contending with unreliable power sources, miners need to design specific strategies for estimating how much electricity they are able to use, when that power will be accessible, and what kind of cryptocurrency mining and development of mining programming they will energize with that power.

The lifespans of the hardware are another factor to take into consideration, especially given that turning the hardware off and on repeatedly can reduce its usefulness in the long run. According to research conducted by Braiins, even if miners aren’t operating their equipment at max potential, hashing as little as possible in order to keep the computer from completely shutting down can be a successful technique. According to a post on the mining company’s site, “Miners who participate in load balancing systems and those who use intermittent energy sources can assist preserve their gear by keeping it running in all except the most extreme peak demand scenarios.”

In what part of the real world does this necessity for intermittent mining to provide a source of energy subsidies manifest itself? The economic argument for developing more solar supply in California is being considerably eroded as a result of falling costs and the lack of a market for extra capacity. Bitcoin miners, which are essentially purchasers of last resort for power, could easily find solutions to these issues.

The Prospects For Bitcoin Mining On An Intermittent Basis

As the number of farms with an uptime of 99% or higher or even higher begins to represent a somewhat lower part of the industry, interruptible mining tactics will undoubtedly become the norm rather than the exception. This will occur as pure-play mining corporations negotiate lucrative power purchase agreements (PPAs) with generating stations. And most crucially, intermittent mining will become the focus of the profession as power corporations themselves begin to develop mining teams in an effort to either enhance the economics of their power generation plans or to salvage them. Either way, the future of bitcoin mining is bright.

This is a post that was contributed by Zack Voell. Comments posted are exclusively those of the author(s), and do not necessarily reflect those of Bitcoin Magazine or BTC Inc.