How is it extortion when I'm sure all the variables are in the contract?
In Texas idling rigs make more than mining crypto
- Thread starter Pekelo
- Start date
Deeply profound. I will need time to come up with a rebuttal to your thorough and well argued position
I'm not informed on power grid and all this stuff, but I saw a video one time that made sense to me on this grid stabilization
Before and After the Bitcoin miners in Texas
Before the Bitcoin miners
Let's put some examples and of course these are made up numbers, but just going after concepts
Let's say Texas had .071 Jiga-watts total capacity = 0.5 Jiga-watt from Oil, 0.11 Jiga-watt from Wind Turbines and 0.10 Jiga-watt from Solar Panels
The demand for power fluctuates. During the day on a hot summer, more people turn on AC's, are working from home and are active on Zoom and Peloton, vs at night or early morning, most people are asleep
The demand is also high during blizzards, everyone stuck at home, needs power for heaters and jacuzzis and stuff vs in the Spring
So, let's say on average, 0.25 - 0.31 Jigawatts usage demand, lots of excess capacity, no need to expand
Then came the Texas blizzards, Wind Turbines are frozen, Solar panels are snowed in, and the demand is high for people to get heaters to their homes, heat the water for showers and stuff
The power company tries to activate all their capacity, but many of their skilled workers are at home (snow in the driveways), so less skilled workers, messed things up, blew up some transformers so now, people are being frozen, and the 0.5 Jiga-watt total capacity is not being delivered to meed the demand
The Bitcoin miners came to Texas (After the Bitcoin miners)
The miners came and said we will take all your excess capacity you can give to us 24/7, but only your excess capacity. We can turn off our mining machines very quickly, boom, turn off 100 bitcoin mining hardware our of 300 mining hardware with a software command, done
Also, you got these flare gases you're burning up and releasing toxic stuff, we'll bring some sheds to your fields and hook up and use up all those, no toxic emissions
Power company says, we want to double our capacity from 0.5 Jiga-watt to 1.0 Jigawatt so we can have total capacity 1.21 Jiga-watt from all power sources to go (back) to the future
But as a power company, we cannot do capex planning if we don't have a guaranteed demand
Bitcoin miners say, go for it, expand your operations, we will take your excess capacity 24/7, early morning, or in the Spring, don't worry bros, we got you
But, you gotta compensate us when you want us to not do this Bitcoin mining thingy so we have revenues for our shareholders
And that's the way I understood it, but of course could be wrong about all of these
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To state that Riot balances the grid is absurd. ERCOT cannot force Riot off the grid and ERCOT benefits from Riot's use of the grid when is massive excess capacity during the shoulder months. Well no sht. There are no limits to their stranglehold on ERCOT.
Riot has an arbitrage gain on the demand months of something approaching 4x their mining revs.
The idea that ERCOT made their bed isn't open to debate. The absurdity that they can balance the grid is analogous to stating they (Riot) will shoot you in the leg instead of a head shot.
Riot has an arbitrage gain on the demand months of something approaching 4x their mining revs.
The idea that ERCOT made their bed isn't open to debate. The absurdity that they can balance the grid is analogous to stating they (Riot) will shoot you in the leg instead of a head shot.
Why would a utility pay money to customers who DON'T use power? It makes zero sense. In a very direct way it is charging all other consumers more money (than they would ordinarily charge) to finance kickbacks to some crypto fly-by to collect money for doing nothing. Incredible if you see nothing wrong with that.
Your example of the airline industry is fitting. It is equally preposterous how an airline can sell more seats than it actually does on a flight. It's completely irrelevant how many actually fly. What matters is that those customers paid for the seat. No single seat should be sold twice. Unbelievable this practice is still not declared illegal and outlawed. If an airline wants to provide special tickets with refund capability at twice the price then the airline can of course do that, but it still does not change the fact that selling a seat twice is highly unethical and immoral.
Your example of the airline industry is fitting. It is equally preposterous how an airline can sell more seats than it actually does on a flight. It's completely irrelevant how many actually fly. What matters is that those customers paid for the seat. No single seat should be sold twice. Unbelievable this practice is still not declared illegal and outlawed. If an airline wants to provide special tickets with refund capability at twice the price then the airline can of course do that, but it still does not change the fact that selling a seat twice is highly unethical and immoral.
Think of it like this. On a really hot day, everyone turns on their AC. The power grid is buckling under all that demand. When too much demand is put on the system, lots of bad things can happen from fires to blackouts for entire neighborhoods. They can ask all the customers nicely to reduce their usage, but who the heck does this when its hot? Who wants to be the one to suffer?
But as the day progresses, the utility can clearly see that when the hottest part of the day hits, and when people get home from work, the demand on the grid will 100% cause problems. Now, they can pro-actively do rotating blackouts, but how popular is this? This is third world electricity management, not a major US city.
So its obvious that on this day, if the grid is to survive without disruption, there has to be a dramatic reduction in usage. Maybe sometimes the cost of electricity spikes up during these times, but even at the higher price, it isn't enough to convince people to turn off their AC as they they mind paying more to feel comfortable. But what if the power company made a deal with a customer who would turn their usage off whenever requested? There are people willing to pay more to use power during a price surge, and likewise, there are people willing to cut their power usage if compensated.
If the power company sees that the usage will be 105% of capacity, they need to cut 5% in order to prevent blackouts. And maybe as the day enters the 5pm rush where usage is highest, people are willing to spend extra to cool their house or whatever else they need. So if they can spend an extra $5 for that evening, and maybe if the crypto miner is willing to turn off some machines and receive that $5 as compensation, then the power company manages to properly balance the load. This is free-market capitalism as its finest.
If you don't offer compensation, even the crypto miner wouldn't want to shut off, and if nobody shuts off, the power will 100% go out. So in this situation, paying someone to reduce their usage is actually the most logical thing to do.
That is exactly right! I'm not expert either, but from the information I have seen, a bitcoin miner is the best type of customer for a power company.