Bitcoin miners are looking to software to help balance the Texas grid

Although Bitcoin (BTC) mining remains a controversial topic, it is becoming more common to hear how Bitcoin mining can help balance network demand. This is demonstrated in the state of Texas, as Bitcoin miners are able to participate in demand response programs, which encourage miners to shut down operations during high demand.

A spokesperson from the Electric Reliability Council of Texas (ERCOT) — the organization that runs Texas’ electric grid — told Cointelegraph that crypto loads can impact the grid just like any large load. Still, they noted that crypto miners can help stabilize the grid by shutting down electricity demand in real time:

“Crypto mining is exceptionally responsive and can turn off in a fraction of a second and stay off for as long as needed. We work closely with the crypto mining industry and have established a large flexible load task force to ensure we move forward with grid reliability and Texas load growth in mind.”

On March 25, ERCOT established a temporary process to ensure that new large loads, such as Bitcoin miners, can be connected to the ERCOT network. While evaluations for large-load interconnections are not a new process, ERCOT explained that the timeline under which most cryptominers operate requires a new process to ensure that existing standards for new large-load interconnections are met. ERCOT’s Technical Advisory Committee approved the creation of a “Large Flexible Load Task Force” on March 30 to assist in the development of a long-term process that will replace the current interim process.

Software vendors want to help miners balance the network

While it’s notable that ERCOT is helping Bitcoin miners connect to the Texas grid faster, software vendors have also begun working with miners to ensure they have the tools needed to properly enable grid balancing.

Recent: Election numbers: Is blockchain beating the ballot box?

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:

“For cargo to qualify as a controllable cargo resource in ERCOT, customers must be able to do two things. First, they must achieve a power consumption target – either more or less – as directed by ERCOT in less than 15 seconds. Second, they should provide “primary frequency response.” This means that miners must be able to react to a loss of generation – for example the unexpected tripping of a thermal generation station – within 15 seconds.”

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

“When it comes to meeting ERCOT’s requirements, software like Lancium Smart Response is critical to meeting the time required by ERCOT. Controllable load resources provide more surgical and precise grid stabilization benefits than other demand response programs – and customers are compensated at a higher level for providing these more valuable services to the grid,” he explained.

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

Specifically, ERCOT’s spokesperson told Cointelegraph that ERCOT has a program for any load to participate in providing additional services. According to ERCOT, these programs require quantities to qualify to provide these services. “Some crypto miners have qualified to provide these services in the same manner as other loads that participate in these existing programs. These programs are often referred to as demand response programs and operations voluntarily choose to participate ‘limited,'” ERCOT said.

While McNamara was unable to comment on which miners will use Lancium Smart Response, Dan Lawrence, CEO of Foreman Mining, told Cointelegraph that Bitcoin miner CleanSpark uses the firm’s software to manage its operations.

Taylor Monnig, vice president of mining technology at CleanSpark, told Cointelegraph that Foreman allows miners to effectively limit their operations instead of flipping switches. “Loads can then be routed to where they are needed, essentially acting as a battery,” he said.

In fact, automation is important for Bitcoin miners participating in load response programs. To put this into perspective, Sam Cohen, head of business development at Foreman, told Cointelegraph that software enables a miner to be on target at scale.

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

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

Unlike Lancium, however, Foreman does not work directly with ERCOT. “We would like to work more closely with ERCOT, and I think we are set up to do that. However, there is a lot of red tape that comes with working in ERCOT,” he said.

Given this, Foreman is concerned that the growing mining industry in Texas could be controlled by a handful of players rather than a number of software vendors. “Foreman promotes decentralization of Bitcoin mining. If things continue down the route they are on, it is possible that all large-scale controllable mining load in Texas could be controlled by a handful of providers, showing a source of centralization,” he noted.

Bitcoin mining as a controllable cargo resource

Aside from centralization, 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, such as those pioneered and developed. by ERCOT.

“When we run out of power on the grid, we have two options: spin up more generators or simply reduce power consumption. As individuals, this is difficult to do. But Bitcoin miners and software companies enable ERCOT to see and control these loads to provide demand response that is much more consistent with the operation of a traditional generator (in reverse),” he said.

Powell added that Bitcoin mining could help power the Texas grid as wind and solar power become more common. For example, he noted that historically lattices have been thought of from a thermal generation point of view since thermal generation allows spinning mass to match generation and load at all times. Still, he noted that wind and solar resources are intermittent, making load balancing difficult since these renewable resources are constantly going up and down.

“Many companies have developed the technology to enable Bitcoin miners and other data centers that contain latency agnostic computing to respond to instructions from ERCOT or respond to real-time prices in the grid. When there is a scarcity of electricity, prices go up and Bitcoin miners and many others can reduce,” he explained.

Recent: House on a Hill: Top Lands to Buy Property with Crypto

Powell further argued that ERCOT is the most free-market grid in the world, with a regulatory framework necessary to encourage bottom-up and bottom-up solutions. “This is why Texas will continue to attract energy contractors needed for increasingly complex energy markets.”

While notable, it is important to point out that Bitcoin continues to see an increase in energy consumption year-on-year, which could result in stricter 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.