Many aspects of the Bitcoin mining industry are misunderstood and often distorted. But one practice in this sector stands out due to the misunderstandings and misunderstandings that surround it: intermittent mining.
While most miners aim to achieve as much availablity as technically feasible – meaning their machines are online and hashing instead of offline or turned off – some miners don’t. Instead of operating continuously, their availability is well below industry standards and operates on more complex schedules built around variables such as electricity supply and demand, time of day, intraday profitability and even temperature.
This article aims to provide a brief but detailed overview of the economy and general operations of intermittent miners, and it highlights some discourses that show how and why this part of the sector is often misunderstood.
What is intermittent bitcoin mining?
This type of mining activity is often associated with renewable energy sources (ie wind and solar) since these types of energy are also produced intermittently. The wind doesn’t blow all the time and the sun won’t provide as much power on cloudy days – renewable energy is definitely intermittent. But bitcoin miners can easily adapt to fluctuations in these power generation schedules, unlike most other energy consumers. Lancium is an example of a mining company building intermittent mining farms. calculate north is another example.
In fact, under normal operating conditions (i.e. without the balancing effect of miners requiring renewable energy), these intermittent energy sources can create stress on electrical networks. Miner demand, as discussed in more detail later, can serve to create a price floor for renewable energy generation projects, making them more attractive as infrastructure investments. Improving the economics of renewable energy sources is not the only use case for intermittent mining, but it is one of the most discussed.
Demand response programs that provide interruptible power sources to miners can be powered by coal, natural gas, or any other common fuel used to generate electricity. But to stay specifically focused on renewable energy, for example, when bitcoin mining operations are combined with an intermittent renewable energy source, both teams win.
Intermittent Misunderstandings About Bitcoin Mining
A recent flurry of somewhat negative commentary on intermittent mining came from Twitter posts written by several prominent proponents of the proof-of-stake consensus, including Ethereum co-founder Vitalik Buterin.
Martin Köppelmann, CEO of the “decentralized trading protocol” Gnosis, Told its 33,000 Twitter followers that the idea of intermittent mining helping to develop more renewable energy sources requires “mental gymnastics.” Buterin jumped into the tweet replies to say, “I never understood how much this concept of frequent activation and deactivation of miners made sense.” The end of the tweet betrays that apparently Buterin did not examine the matter closely. He wrote: “If you pay for hardware but only use it half the time, in a competitive market you will be at a loss.
And these tweets are no exception. Alex DeVries (aka, Digiconomist), a longtime irrational mining critic, former Dogecoin promoter And one former employee of the Dutch Central Bankargued (without much supporting evidence) that “Bitcoin Mining and Renewables Make the Worst Match.”
Several bitcoin advocates and real miners have attempted to clarify and correct the ideas behind intermittent mining strategies for Buterin and Köppelmann. Mining ‘increases the elasticity of demand for electricity’ Explain Jesse Peltan, Technical Director of HODL Ranch. Cryptocurrency researcher and developer Noah Ruderman also countered Buterin’s misunderstanding. “Mining monetizes energy that nobody wants. Much of this energy is renewable. It’s just an energy subsidy,” Ruderman wrote.
Intermittent mining is actually widely enjoyed across most of the Bitcoin industry. For example, Gideon Powell, CEO of Cholla Petroleum, wrote this “[renewable energy’s] the intermittent nature pairs beautifully with the flexible charging of #bitcoin mining. And Mike Colyer, CEO of Foundry, describe bitcoin mining as one of the most important innovations for the power grid in over 100 years. What innovation exactly? “A large intermittent base load”, Colyer wrote. The “most obvious use case” for bitcoin mining, according to Max Gagliardi, co-founder of Ancova Energy, is coupled with intermittent energy resources.
To the potential surprise of some reviewers, intermittent or interruptible mining strategies can sometimes be more profitable than continuous mining. A mining analyst at Galaxy Digital, for example, remark the case study of Riot’s mining facilities in Texas in July. By reselling electricity to the network instead of exploiting it with itself, it generated 30% additional revenue over this period. And with that in mind, the next section takes a deeper look at the intermittent mining economy.
Economic Considerations for Intermittent Bitcoin Mining
One of the primary ways that interruptible mining operations seek competitive advantage in today’s market is through the use of increasingly sophisticated power purchase agreements (PPAs). And when dealing with inconsistent energy sources, miners must develop custom strategies to determine how much energy they can use, when that power is available, and what type and generation of mining equipment and firmware they will energize with this power.
The lifetime of the hardware is also a consideration, as repeatedly stopping and turning on the hardware can limit its long-term usefulness. According to Braiins’ analysis, even if miners are not using the machines at full capacity, minimal hashing to prevent a complete shutdown can be a winning strategy. “Miners who participate in load-balancing programs and those who use intermittent power sources can help preserve their hardware by keeping it running under all the most extreme peak demand scenarios,” said one. blog post of the mining company suggests.
Where is this need for intermittent mining as a real-world energy subsidy? California is seeing the economic case for building more solar supply is significantly undermined when prices fall and excess supply has no buyer. Bitcoin miners – power buyers of last resort – could easily mitigate these problems.
The future of bitcoin intermittent mining
Interruptible mining strategies will certainly become more dominant as the number of farms with 99% or higher availability begin to represent a slightly smaller portion of the industry. This will happen as pure-play mining companies negotiate lucrative PPAs with generation companies. And, more importantly, intermittent mining will come to the forefront of the industry as power companies themselves form mining teams to improve or save the economy of their power generation plans. Either way, the future of bitcoin mining is bright.
This is a guest post by Zack Voell. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.