Rethinking energy storage with Bitcoin mining

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Energy production is a huge thing for humanity. Famous astrophysicist Nikolai Kardashev went so far as to consider energy production as the sole factor in assessing how advanced a civilization is. So when we hear that the AI ​​industry is predicted to consume around 120 GW by 2030, or that Bitcoin (BTC) mining is currently predicted to consume around 17.6 GW globally, we can actually see these as signs of progress and progress.

Over the past decade, there has been a strong push for renewable energy production, with entrepreneurs like Elon Musk leading the world towards electrification. However, since there is no magic solution in the energy sector, it is necessary to diversify the solutions instead of putting all the eggs in the same basket.

I have been arguing for years that Bitcoin mining is synergistic for the development of green energy production and can be considered as a form of energy storage that can help facilitate the energy transition we are in, creating a more energy abundant world.

The importance of energy storage

Batteries are often the elephant in the room when it comes to electrification. It’s no secret that the energy storage required to keep up with the increase in electric vehicles and renewable energy installations is a major concern for many in the industry.

Although various methods are available, such as hydroelectric or geothermal storage, these generally depend on specific conditions; That’s why batteries are becoming an increasingly common energy storage solution.

To understand the problem, it is important to understand the problem that energy storage solves. When electricity is produced using renewable energy instead of fossil fuels, a mismatch between consumer and industrial demand and electricity supply often arises because energy sources such as wind and solar are not stable. Specifically, wind energy generally peaks at night, solar energy is naturally strongest during the day, and both inevitably depend on weather conditions. This problem is called intermittency, and currently the best way to solve it is through energy storage solutions such as batteries.

Imagine a home with solar panels that produces a greater amount of electricity in the middle of the day when everyone is at work or school, and produces next to nothing in the evening when the television, air conditioner, oven, and other appliances are on. For this reason, in homes with solar panels, excess electricity is usually stored using a battery (typically a lithium-ion battery).

Understanding batteries: What should we know?

When we look at total battery storage capacity in the United States, it becomes clear that the growth in production and usage is exponential; A capacity of 30 GW is expected to be reached by the end of this year and a staggering 970 GW is expected to be reached. This level is predicted to be reached by 2030, according to the US Energy Information Administration.

Today’s batteries typically only provide power for a short period of time before needing to be recharged. Some companies are working on advanced battery solutions that can store energy for more than 12 hours. Another way to extend storage time is to add more batteries to facilities, but this approach may face economic difficulties.

States like California and Texas are accumulating large quantities of batteries to keep up with the rise in renewable energy. Electricity is stored when demand is low and distributed through the power grid during peak hours.

However, due to the current limitations of battery technology, additional long-term grid balancing solutions are still required, and Bitcoin mining can help meet this challenge.

A profitable and flexible energy load or balancing system

Bitcoin miners are location agnostic, meaning they can conduct their operations anywhere in the world, whether near an urban area or at a remote facility, as long as operational costs can be met. All a local miner really needs is electricity and an internet connection.

Second, Bitcoin miners have great flexibility; This allows them to turn their machines off and on again without incurring any costs other than marginal loss of profit during that period. This means machines can be turned off in times of need, such as peak hours or winter storms that damage the power grid, and turned on during moments of low demand, when the electricity produced would be wasted or stored. batteries.

This flexible load helps stabilize the grid and ultimately increase the share of green energy sources in the grid. Texas is a great example of how the Electric Reliability Council of Texas, a regional operator, is working with Bitcoin miners to stabilize the power grid. Bitcoin miners adjust their energy consumption in real time, allowing ERCOT to more effectively balance supply and demand to manage peak periods.

With Bitcoin mining, electricity service providers can monetize their unused electricity from renewable energy sources without having to rely solely on batteries, ultimately resulting in greater efficiency. This is a paradigm shift because unused energy becomes a source of additional income rather than a cost or missed profit. This could lead to greater investment in renewable energy sources, which will ultimately benefit the consumer.

Implementing policies correctly

In this context, local public authorities may soon experiment with new policies that treat Bitcoin mining as a public good and an alternative form of energy production to be encouraged. This could create a very interesting synergy between batteries and Bitcoin mining; especially given the fact that the latter creates large numbers of local jobs, supports regional economies by working with local suppliers and contractors, and often reuses abandoned infrastructure for its own operations.

While recent developments put Bitcoin mining and the industry in general in a good position from a policy perspective, there is still much work to be done in educating decision-makers. Once the features that balance this grid and support green energy production become clearer to both national and local regulators, there will be a huge opportunity to improve the energy sector.

Bitcoin mining provides unprecedented flexibility and monetization opportunities for energy producers, offering a new and efficient way to approach energy production, grid stabilization and battery storage at a time when the use of batteries is increasing at an unprecedented rate.

By leveraging the unique aspects of Bitcoin mining such as location uncertainty and operational flexibility, we can advance the integration of additional renewable energy generation more effectively than ever before.

Policymakers should recognize the potential of Bitcoin mining as part of their energy strategies. Only by experimenting and diversifying can we build a more resilient and sustainable energy future.

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Andrey Kim is the co-founder and CEO of GDA. Andrey has over 10 years of expertise in executive roles in the technology, data centers and digital asset industries. He has extensive experience in setting up and managing HPC operations: blockchain infrastructure, hosting and processing of AI applications.