Grids, Communities And The Bitcoin Network
Bitcoin mining specialists sat down together to discuss how mining companies can work with local grids to strengthen electricity production and distribution at the Bitcoin 2022 conference in a panel titled “Building New Grids.”
The panel was moderated by Zack Voell. The panelists included Paul Prager, who is the CEO of Terawulf; Sergii Gerasymovych, the founder and CEO of EZ Blockchain; Zachary K. Bradford, the CEO of CleanSpark; and Harry Sudock, vice president of strategy for GRIID.
The panelists started the discussion defining the grid and how power generation and distribution work. Sudock explained the different parts. Energy is generated when, “The turbine spins. There are many different ways to make the turbine spin, but that’s what creates power. Then it gets moved. Then it gets delivered.”
Prager expanded on this thought, “The grid is basically what connects demand to the load. Where there are imbalances is where there are great opportunities for miners.”
After the explanation of grids, the group explained how Bitcoin fits into the picture of energy distribution. Bradford used an oft-repeated analogy comparing bitcoin to a battery. “As we got exposed to the bitcoin side, we always talk about storing value, but that’s really what we’re doing, we’re storing the value of energy in bitcoin. Instead of storing that energy in a battery, we are storing it in bitcoin by mining.”
Bitcoin mining is effective for strengthening the grid because of the consistent energy use and ease of which miners can plug and unplug their operations. Bradford said, “We can consume a very flat load all the time and we can drop it off almost immediately and then bring it back on.”
Additionally, “We [miners] can interact in a way that improves grid health.”
The ways that bitcoin miners will strengthen the grid is specifically around how they purchase power from the grid. Sudock explains, “We have reinvented how power gets bought. We want to spend more money on power each month because each unit of revenue is directly correlated to each unit of power.”
Bradford elaborated on the issues with the grid when he shared, “The age of our grid is a problem and someone has to pay for it. I think bitcoin miners are well positioned to improve the grid across this whole nation.”
Bitcoin mining offers a new way for companies to make power purchase agreements with electricity providers. Sudock said, “This is fundamentally an innovative approach to consuming power for the first time in the last 90 years.”
Power companies didn’t always understand the incentive to work out agreements with bitcoin miners, but now, “The education happened and things have progressed really well, but no one knows how to price that much power and that much consistency of a load,” said Bradford.
Sudock chimed in, “There’s nothing more exciting than an economic incentive!” He went on, “The overall rate structure regime and how energy gets priced and sold; that’s the next step in the process.”
Bradford echoed the way bitcoin miners have evolved in the eyes of power companies, “In the last two years, bitcoin miners are now seen as really good anchor tenants to large scale power purchase agreements.”
Bitcoin mining being attached to grids has the potential for counterparty risk. The panelists discussed their differing concerns for potential risk next. Prager embraced the likelihood of government regulation, “I think the [mining] business will evolve to the greatest level of capital efficiency and energy efficiency.”
Similarly, Gerasymovych is also not worried about regulation.
“I think that’s what’s good about Bitcoin,” he said. “We can go anywhere. You don’t like us? We’ll go somewhere else.” He added, “It’s a resurrection of energy in general. We are resurrecting energy in places where it was dead.”
Prager shared about the benefits of bitcoin mining for communities.
“We now have union families back to mine bitcoin and repair miners.” He believes that zero carbon will be the next evolution in mining. “I think there will be a big explosion in that direction.”
Sudock concluded, “Bitcoin miners mean we can get more power at lower cost to more people which is highly correlated to human flourishing.”
Bitcoin 2022 is part of the Bitcoin Event Series hosted by BTC Inc, the parent company of Bitcoin Magazine.