Bitcoin miners are looking for software to balance the Texas grid

Although bitcoin (BTC) mining remains a controversial topic, more and more people are hearing about how bitcoin mining can help balance network demand. This is being demonstrated in the state of Texas as Bitcoin miners can participate in demand response programs that encourage miners to suspend operations during peak demand.

A spokesman for the Electric Reliability Council of Texas (ERCOT) — the organization that runs Texas’ electric grid — told Cointelegraph that like any large load, crypto loads can impact the power grid. However, they found that crypto miners can help stabilize the power grid by throttling their power demand in real time:

“Crypto mining is extraordinarily responsive and can be turned off in a split second and left off for as long as needed. We are working closely with the crypto mining industry and have established a large flexible load task force to ensure we move forward on grid reliability and load growth in Texas.”

On March 25, ERCOT set up a preliminary process to ensure that new large loads, such as B. Bitcoin miner, can be connected to the ERCOT network. While ratings for large load connections are not a new process, ERCOT explained that the timeframe under which most crypto miners operate requires a new process to ensure existing standards for connecting new large loads are met. ERCOT’s Technical Advisory Committee approved the creation of a Large Flexible Load Task Force on March 30 to help develop a long-term process that will replace the current preliminary process.

Software providers want to help miners balance the grid

While it is notable that ERCOT is helping bitcoin miners connect to the Texas grid faster, software vendors have also started working with miners to ensure they have the tools needed to properly balance the grid.

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Michael McNamara, co-founder and CEO of Lancium — a Texas-based energy and infrastructure company — told Cointelegraph during the Texas Blockchain Summit that in 2020 Lancium demonstrated how a Bitcoin mine could act as a controllable load:

“In order for loads to qualify as controllable load resources in ERCOT, customers must be able to do two things. First, they must reach a target power consumption level – either more or less – set by ERCOT in less than 15 seconds. Second, they should provide a “primary frequency response.” This means miners need to be able to respond to a power outage within 15 seconds – for example, the unexpected tripping of a thermal power plant.”

Given these requirements, McNamara shared that Lancium has licensed software to certain bitcoin miners to act as controllable loads within ERCOT and provide grid stability services. Known as Lancium Smart Response, McNamara explained that this software works by automatically responding to power grid conditions and signals within seconds.

“To meet ERCOT’s requirements, software like Lancium Smart Response is essential to meet ERCOT’s required time. Controllable load resources provide more surgical and granular grid stabilization benefits than other demand-response programs – and customers are compensated at a higher level for providing these more valuable grid services,” he explained.

For example, McNamara pointed out that miners using Lancium’s software can be certified by ERCOT to participate in its various grid stabilization programs, which could help operators generate higher revenues while reducing electricity costs by 50%.

More specifically, ERCOT’s spokesperson told Cointelegraph that ERCOT has a program for each load to get involved in providing ancillary services. According to ERCOT, these programs must qualify to provide these services. “Some crypto miners have qualified to offer these services, similar to other loads participating in these existing programs. These programs are commonly referred to as demand-response programs, and farms voluntarily choose to participate in “restrictions,” ERCOT explained.

While McNamara could not comment on which miners will adopt Lancium Smart Response, Foreman Mining CEO Dan Lawrence told Cointelegraph that bitcoin miner CleanSpark uses his company’s software to manage its operations.

Taylor Monnig, vice president of mining technology at CleanSpark, told Cointelegraph that Foreman is allowing miners to effectively limit operations rather than flipping circuit breakers. “Loads can then be routed to where they’re needed, essentially functioning like a battery,” he said.

Indeed, automation is important for bitcoin miners participating in load-response programs. To put this in perspective, Sam Cohen, head of business development at Foreman, told Cointelegraph that software allows a miner to be highly targeted.

“For example, if a power capping service provider asks a miner to reduce its consumption by 10 MW, Foreman can reduce its load in less than a minute without operator intervention,” he explained.

Monnig added that Foreman has allowed CleanSpark to program its machines to stop hashing when needed. “For example, an S19 mining machine in ‘sleep mode’ will go from 3,000 watts down to 90 watts. Then, when the grid doesn’t need power, the machines turn back on. It’s all automated.”

However, unlike Lancium, Foreman does not currently work directly with ERCOT. “We would like to work more closely with ERCOT and I think we are ready for that. However, working at ERCOT involves a lot of bureaucracy,” he said.

Given this, Foreman worries that the growing Texas mining industry could be controlled by a handful of players rather than a suite of software vendors. “Foreman promotes decentralization of bitcoin mining. If things continue as they have taken, it is possible that all of the large controllable mining loads in Texas could be controlled by a handful of vendors, providing a source of centralization,” he noted.

Bitcoin mining as a controllable loading resource

Centralization aside, Gideon Powell, CEO and chairman of Cholla Petroleum Inc. — a Texas-based exploration company focused on the energy sector — told Cointelegraph that he believes bitcoin mining is the peak load for demand-response programs is like those designed and developed by ERCOT.

“If we run out of electricity on the grid, we have two options: run up more generators or simply reduce our electricity consumption. As a private person it is difficult. But bitcoin miners and software companies are enabling ERCOT to view and control these loads to provide demand control much closer to running a traditional generator (in reverse),” he said.

Powell added that Bitcoin mining can help power the Texas power grid as wind and solar power become more common. For example, he noted that grids have historically been viewed from a thermal generation standpoint, since thermal generation allows mass to rotate to match generation and load at all times. However, he noted that wind and solar resources are intermittent, making load balancing difficult as these renewable resources ebb and flow.

“Many companies have developed the technology to allow bitcoin miners and other data centers hosting zero-latency computing to respond to instructions from ERCOT or to respond to real-time prices on the grid. When power is scarce, prices go up and bitcoin miners and many others can cut back,” he explained.

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Powell went on to claim that ERCOT is the most pro-market network in the world, with a regulatory framework needed to encourage bottom-up solutions. “Therefore, Texas will continue to attract energy entrepreneurs needed for increasingly complex energy markets.”

While notable, it’s important to note that Bitcoin’s energy consumption continues to rise year-over-year, which may lead to tighter regulations. However, McNamara remains optimistic, noting that Bitcoin mining continues to be a friendly resource for the Texas grid, which also shows the potential this technology could have in other regions.