Enhancing Profitability of Wind and Solar Through Bitcoin Mining

The “duck curve” – a problem particular to the renewable vitality panorama – has discovered an sudden resolution in Bitcoin mining. This curve displays the battle between peak demand durations and peak renewable vitality manufacturing occasions, a discrepancy that grows as we more and more embrace renewable vitality sources, complicating grid administration.

Bitcoin fixes this.

This story is a part of CoinDesk’s 2023 Mining Week, sponsored by Foundry. Adolfo Contreras is a Senior Enterprise Growth Advisor at Blockstream. He has 20 years expertise in satellite tv for pc communications, climate intelligence for vitality and transportation markets and Bitcoin.

Bitcoin mining income promotes worthwhile renewable infrastructure, aiding challenge financing and scaling the vitality grid for a sustainable future. That is essential for electrifying transportation and phasing out fossil fuels. Given the large energy storage and cargo balancing required, Bitcoin is a useful gizmo, particularly contemplating the present financial and geopolitical local weather.

Bitcoin miners, with their versatile operations, are uniquely well-equipped to navigate these vitality provide fluctuations. By strategically aligning their actions with durations of excessive renewable vitality manufacturing and low demand, they will optimize their vitality utilization and probably alleviate the stress on the grid.

This text will discover how Bitcoin miners are serving to to handle the duck curve, and the methods they’re using to stability demand and optimize vitality consumption.

Renewable vitality’s uphill battle

In lots of international locations, the quantity of renewable capability (although sometimes closely under-utilized with the vast majority of energy technology capability unused or “wasted”) has elevated dramatically during the last decade, exemplified by Europe.

However that is hardly making a dent on the earth’s fossil gasoline consumption. Regardless of the numerous trillions of funding within the final couple of a long time, fossil gasoline consumption continues to be greater than 82% of the world’s vitality consumption.

In 2022 alone, there was a rise in renewable capability of 266GW, which, assuming a (very low) common value of $500k per MW, represents an funding of greater than $130 billion in 2022 alone. For reference, a rustic like Spain with almost 50 million folks has by no means peaked in electrical energy consumption above 45GW.

The crux of the argument is that this:

1. The electrification of provide is outpacing demand, with retail electrical energy demand not considerably rising attributable to financial stagnation and elevated machine effectivity.

2. Electrical car adoption is not assembly expectations and EV charging habits, typically at evening, don’t align with peak photo voltaic provide throughout daytime.

3. Vital displacement of fossil energy use shifting to electrical demand would require industries to adapt their manufacturing processes to electrical energy, a pricey endeavor many are unwilling to undertake attributable to competitiveness points.

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Due to this fact, we’d like an economically viable, electricity-intensive exercise that’s predictable, versatile, and does not require in depth transportation – and that is the place Bitcoin mining is available in.

Beneath is a glimpse of the large quantities of unused or wasted electrical energy attributable to inadequate demand vs technology capability in California alone:

Moreover, we are able to’t ignore a further bottleneck, which is the truth that wind and photo voltaic farms have considerably decrease energy density. That’s, they want far more land floor to generate the identical quantity of electrical energy.

For these causes, the distribution community for energy will want a big improve to scale and transmission expanded to attach technology plant areas to inhabitants areas the place industrial and retail demand is.

Till these investments are made, we might encounter conditions the place further put in capability doesn’t translate to further renewable used technology within the electrical energy combine – unused capability, definitionally not being within the combine.

Balancing vitality provide and demand

The consequence of all these issues is that at specific occasions of the day (when the solar shines probably the most) the worth in electrical energy wholesale markets crashes attributable to what’s known as the duck curve:

The duck curve represents the demand remaining after subtracting variable renewable technology in the midst of the day when photo voltaic technology tends to be highest.

The issue of the duck curve is that photovoltaic installations deliberate to generate profits on the wholesale electrical energy market won’t be making it on this situation. Many installations should search PPAs – energy buy agreements – that are bilateral agreements between electrical energy producers and offtakers, i.e. giant electrical energy shoppers.

Those that handle to signal them might save their tasks on the expense of considerably decrease profitability whereas these that don’t, could also be going through chapter and outright abandonment of the installations.

After all electrical energy storage in batteries or PSH – Pumped Storage Hydro – pumping water backup into hydro-elecric dams might assist cut back the issue, however the price of putting in the quantity wanted can be astronomical and it’s nonetheless to be seen if these programs can work at scale.

Enter Bitcoin mining

Mining {hardware} might be straight linked to wind and photo voltaic technology crops, consuming the surplus vitality produced throughout peak daylight hours when photo voltaic installations generate an extra of electrical energy and soak up the wasted vitality from the wholesale market.

By doing so, these crops assist to stability the availability and demand within the electrical energy market, stopping the drastic value drops that happen when there may be an oversupply of vitality.

That is notably useful for photo voltaic installations that battle to promote their vitality throughout these peak hours as a result of low market costs.

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Let’s take into account an instance.

Suppose there is a photo voltaic farm in California that is producing a surplus of vitality throughout the day.

As an alternative of promoting this vitality on the wholesale market at a low value, the farm might direct this extra vitality to a Bitcoin mining operation, which might eat this surplus vitality.

This may successfully take away the surplus vitality from the wholesale market, serving to to stabilize electrical energy costs and making the photo voltaic farm’s operation extra worthwhile.

This implies they are often situated straight at or close to the location of renewable vitality installations, decreasing the necessity for in depth vitality transmission networks. They’ll additionally regulate their vitality consumption primarily based on the supply of renewable vitality, consuming extra when there’s a surplus and fewer when there’s a scarcity.

For example, a Bitcoin mining operation in Texas, the place wind energy is ample, can ramp up its vitality consumption throughout the evening when wind energy technology is at its peak and the demand from different shoppers is low.

This helps to stability the vitality provide and demand, stopping potential waste of the surplus wind energy.

Conclusion

In conclusion, the “Duck Curve” phenomenon presents a novel problem within the renewable vitality sector, however it additionally opens up a chance for progressive options. By absorbing the surplus vitality during times of excessive renewable technology and low demand, Bitcoin mining may help stability the vitality market, stabilize electrical energy costs, and improve the profitability of renewable vitality installations.