How does Bitcoin mining keep the lights on? Some companies may have solutions

Imagine it’s June 30, 2021, Baltimore’s hottest day of the year at 99°F.

Imagine that every house with AC turns it to 65°. Suddenly everything goes dark and the cool air cuts off all demand on the power grid. A second later, the electricity comes back because a large power consumer (like a factory, an industrial plant, or a Bitcoin mine) somewhere shut off the power.

Also in 2021, China, which has more crypto mining activity than any country, decided to ban Bitcoin mining because it considered the industry highly polluting. This opened the door for the US to become the best place for Bitcoin mining in the world. States like New York, Texas, and Pennsylvania, as well as small towns like Coshocton, Ohio, eventually became places where industrial-sized Bitcoin mines want to set up.

Bitcoin mining essentially involves computers doing intense math to validate transactions because the decentralized nature of cryptocurrencies needs a verification process to prevent bad actors from manipulating the currency. The process is called “proof of work.” The first person to solve the mathematical equation and add their validated transactions to the ledger—that is, the blockchain—receives cryptocurrency as a reward.

“They use a lot of energy. It’s both a problem and a solution, in that they can also turn off very quickly when needed.”

The computing power needed to be first and reap the benefits is what drives Bitcoin mining energy demand to 132.48 terawatt-hours (TWh) annually worldwide, according to estimates from University of Cambridge which was reported by Business Insider. These energy needs in the United States, where 35.4% of Bitcoin mining takes place, translate to 0.85 pounds of carbon dioxide per kilowatt-hour (kWh) and 40 billion pounds of carbon dioxide.

That energy use is not lost on energy companies like Baltimore’s CPower Energy managementa company that acts as a link between Bitcoin miners and power companies.

“They use a lot of energy” David Chernistold a CPower account executive Technically. “It’s both a problem and a solution, in that they can also shut down very quickly if necessary.”

CPower provides grid reliability and demand response services. On days above 90 degrees or during intense cold, there is stress on the power grid; High-energy consumers must reduce their electricity consumption so that the rest of society continues to receive electricity evenly.

“If they were to shut down a traditional data center, think about shutting down Google. What is going to happen? You’re going to see websites go down,” the CEO said Daniel Lawrence from Baltimore-based cryptocurrency software company OBM Inc. “If you shut down a Bitcoin mine, the mine stops generating Bitcoin, but that’s about it. There’s no user impact.”

OBM Inc. created the crypto mining management platform foreman to help miners better manage the power consumption of their hundreds of devices that process transactions on the blockchain. This process aims to compensate for an environmental impact that enabled bans in countries such as China, Egypt, Iraq, Qatar, Oman, Morocco, Algeria, Tunisia and Bangladesh.

“If you shut down a Bitcoin mine, the mine stops generating Bitcoin, but that’s about it. There is no user impact.”

The software allows companies that Standard powerwhich builds and maintains enterprise-grade Bitcoin mines for clients, to automate the shutdown of Bitcoin mines in five minutes (it used to take two hours to get this done manually).

In 2018, the company bought 125 acres of what used to be a paper mill to create a bitcoin mining data center in Coshocton, a town about 78 miles northeast of Columbus. The WestRock Paper Mill had shut down in 2015, leaving hundreds unemployed. It’s an age-old story of manufacturing leaving a small town and its inhabitants out in the open. Places like Coshocton are hoping the emerging cryptocurrency infrastructure market can revitalize the city. Coshocton’s mayor Steve Mercer even boasted that renovating the facility into a cryptocurrency operation would bring 100 jobs and $100 million in tech infrastructure.

“At that level of scale, we essentially have a community development project,” said Maxim Serezhinmanaging director i Standard power.

What makes cities like Coshocton attractive to Bitcoin miners is its old industrial infrastructure, proximity to natural resources (such as the Utica and Marcellus Shale gas formations) that create excess energy capacity for the state, and proximity to fiber data centers to reduce latency. In rural Pennsylvania, Bitcoin miners have set up shop using waste coal as fuel, sparking debates on issues ranging from the carbon footprint to noise pollution from Bitcoin mining power generators that use natural gas. These debates reflect a larger conflict over what is required to actually mine Bitcoin, which has played out elsewhere as the recent crypto crash followed with calls for more oversight.

OBM, CPower and Standard Power want to change the stigma around Bitcoin mining by offering a solution to energy problems instead of a problem.

“It’s a partnership with the community where we give the community what it needs the most, at the time it needs it the most, exactly at the time the community needs the most power,” Serezhin said. “At those times, we’re able to turn off our business and say we can share the resource we own with the community and our ability to do that fundamentally changes everything.”