In Texas idling rigs make more than mining crypto

[M.W.]

Let me present to you an alternative: a strong regulator requires said utilities to cover absolute peak demand without any blackouts whatsoever. If the utility does not manage that then pull their license and tell them to get the fuck out and put up the license for tender with the obligation to cover the required demand. Do that not just state wide but work with federal regulators so that such shitty regulator won't be able to operate in ANY other state. Guess how fast those utilities are gonna upgrade their capacity.

The problem today are shit ass weak regulators who are either blatantly stupid or overtly corrupt and collude with the same corporations they are expected to regulate.

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.

 

[NoahA]

Let me present to you an alternative: a strong regulator requires said utilities to cover absolute peak demand without any blackouts whatsoever. If the utility does not manage that then pull their license and tell them to get the fuck out and put up the license for tender with the obligation to cover the required demand. Do that not just state wide but work with federal regulators so that such shitty regulator won't be able to operate in ANY other state. Guess how fast those utilities are gonna upgrade their capacity.

The problem today are shit ass weak regulators who are either blatantly stupid or overtly corrupt and collude with the same corporations they are expected to regulate.

Let's be real. Texas apparently uses lots of renewable energy. If the wind isn't blowing or the sun isn't shining, where does this energy come from? There is no way a regulator could require a utility to be able to cover absolute peak demand.

Its just like a bank. Do you expect them to have 5 millions dollars in 20 dollar bills on hand just in case a rich customer decides to go crazy and come in for a cash withdrawl? Or ever go to a grocery store and see they ran out of something that happens to be on sale? Do you propose the store should have their business license revoked just because some items aren't in stock?

To put it another way, if a utility was required to have all the extra capacity on hand, power would be shit loads more expensive. And because it takes hours to get a plant up and running, they would literally have to be running all the time just in case too many people flipped a light switch. It just isn't feasible.

 

[johnarb]

A more detailed article in Feburary 2023

I like the comparison to Amazon data centers... there is no other industry that can be paid off to curtail power usage

https://www.cnbc.com/2022/02/03/win...bitcoin-miners-shut-off-to-protect-ercot.html

 

[newwurldmn]

you are rational in your response. But think about how fucked up ERCOT is to have to pay 1 customer so many millions of dollars. What a disaster in capacity planning! RIOT is clearly taking advantage of it. The issue isn’t RIOT, it’s the Texas power grid. And the retail customers pay for it.

I run multiple manufacturing plants. We have the same agreements in place with our local power companies. Like bitcoin mining we have large power consuming machines. In 13 years, we’ve been asked only once in one plant to shut down for two hours. The amount of money we got was negligible but enough to cover the shut down costs of the plant (lost material, wages)

Let's be real. Texas apparently uses lots of renewable energy. If the wind isn't blowing or the sun isn't shining, where does this energy come from? There is no way a regulator could require a utility to be able to cover absolute peak demand.

Its just like a bank. Do you expect them to have 5 millions dollars in 20 dollar bills on hand just in case a rich customer decides to go crazy and come in for a cash withdrawl? Or ever go to a grocery store and see they ran out of something that happens to be on sale? Do you propose the store should have their business license revoked just because some items aren't in stock?

To put it another way, if a utility was required to have all the extra capacity on hand, power would be shit loads more expensive. And because it takes hours to get a plant up and running, they would literally have to be running all the time just in case too many people flipped a light switch. It just isn't feasible.

 

[M.W.]

Absolutely can a regulator require that, why not? We require other regulated industries to provide us with what they promised. The problem here seems more your pro corporation, winner take all capitalist mentality. Many other highly successful countries and societies operate on a social market capitalist model where consumers come first, not corporations.

Let's be real. Texas apparently uses lots of renewable energy. If the wind isn't blowing or the sun isn't shining, where does this energy come from? There is no way a regulator could require a utility to be able to cover absolute peak demand.

Its just like a bank. Do you expect them to have 5 millions dollars in 20 dollar bills on hand just in case a rich customer decides to go crazy and come in for a cash withdrawl? Or ever go to a grocery store and see they ran out of something that happens to be on sale? Do you propose the store should have their business license revoked just because some items aren't in stock?

To put it another way, if a utility was required to have all the extra capacity on hand, power would be shit loads more expensive. And because it takes hours to get a plant up and running, they would literally have to be running all the time just in case too many people flipped a light switch. It just isn't feasible.

 

[SunTrader]

I have to agree ERCOT overall management of Texas' energy needs is chit compared to FL, AZ, CA, NM and other southern hot weather states and a big part of it is its laissez faire thinking - let the market do what markets do. IMO life sustaining Utils should not be run that way.

But bitcoin miners are taking advantage of it just like other industries.

 

[Frederick Foresight]

I run multiple manufacturing plants.

Just curious. What do you produce?

 

[Frederick Foresight]

But think about how fucked up ERCOT is to have to pay 1 customer so many millions of dollars.

Hmm. Makes you wonder if it's ineptitude on the part of key ERCOT personnel, or perhaps something a bit more nefarious.

 

[deaddog]

But bitcoin miners are taking advantage of it just like other industries.

Keep in mind the reason that RIOT makes money when they are down is because they lose money whe they are operating.
As a customer I would want guaranteed service. If the power company suddenly shut the power off without warning or compensation I can see lots of lawsuits. Better to have a method of managing the consumption.
Also at less than peak you have a customer, that's also wworth paying for.

 

[NoahA]

you are rational in your response.

Thank-you.

The issue isn’t RIOT, it’s the Texas power grid. And the retail customers pay for it.

I haven't studied this enough, nor do I know the details of the contract. I'm sure both sides have done a cost/benefit analysis. At some point on a curve, I'm sure a shutdown is advantageous to both sides.

I look at this as no different than a trading strategy. At some point, you might suffer a 20% drawdown, but if in between these periods you made 50%, and that drawdown isn't expected to happen for a long enough time frame you don't expect back to back drawdowns, its likely a good strategy.

The idea as MW is suggesting, to require the utility to have max power available at all times is simply crazy. Its like requiring the US military to have an aircraft carrier group parked outside of every hostile country just in case something happens. Of course the military would love this, but imagine the bill.

Perhaps the numbers are outrageous right now for what the miners are getting, but I believe much of this is because of reliance on wind and solar, which is proving to be more intermittent than initially thought perhaps. So perhaps the payments are higher than expected, but the fact that the grid hasn't gone down is evidence of a policy that is somewhat working.