In an electricity network, most of the energy is used just in the effort to stabilise the voltage. If you want to save power, you don’t start with reducing demand or increasing supply; you start with making the grid more stable.
The biggest instabilities are caused by fluctuating demand during the day and night, and fluctuating supply due to unreliable wind and solar power.
There are three well-known solutions;
- regulate demand with variable-rate tariffs to encourage users to consume less during peak hours
- create an energy-supply market where the price changes second-by-second to match the fluctuations. This compels suppliers to continuously match the demand.
- Whenever there is excess energy, either store it or burn it. Water is pumped up dams or water-towers, and batteries or flywheels are charged.
But there are two more options: Creating hydrogen using hydrolysis, and mining bitcoin.
Hydrolysis is very inefficient. The whole hydrogen economy is much more wasteful than any alternative, for several fundamental reasons. But if the electricity it is using is free, then it could make sense to produce hydrogen. The hydrogen can either be burned again at peak times, or bottled for use in engines.
Bitcoin is always overlooked, because it is considered a failed project. It didn’t fulfill the dreams people had for it in the beginning, so now it is considered useless. The trick is do find the right use for it. Bitcoin can solve electricity’s problems, and electricity can solve bitcoin’s problems. But can together become much more useful and stable.
At peak times, computers can be turned on to mine bitcoin. They must be left on for at least 15 minutes because of how mining works. Occasionally the power company will win a bitcoin, which wan be stored or exchanged for Euros (or Rubles) or used for trade.
This is an efficient use of surplus power - reducing wasted energy, stabilising the grid, and earning money. It is more efficient because does not require building more power stations, or water towers or other wasteful structures. It can be done anywhere using cheap hardware.
Bitcoin’s biggest problem is the same as the power grid’s biggest problem - the energy that is wasted to stabilise the currency. Every 15 minutes, a new block is mined. This means that a new coin (new money) is created and all the global transactions from that 15 minutes are processed.
This works similarly to the energy market. The suppliers who are willing to spend the most electricity on Bitcoin mining will win most of the new coins. The most successful miners consume vast electricity in this effort.
This is controlled by the “difficulty” parameter - how much electricity must be consumed (on average) to create one new coin. When the difficulty goes up, it requires more electricity to win a new coin, so it becomes more expensive and less profitable.
Imagine a new miner enters the market, who has access to free electricity at certain times of day. He turns on many mining machines and starts earning coins, and pushes up the cost of mining (the difficulty) for everybody. Now it is not profitable for the other miners anymore. They are forced to stop mining.
All the existing mining businesses will stop. The world will stop using its electricity for mining, except for the excess grid energy.
This also pushes down the price of mining equipment, making is easier for the power company to buy more.
Bitcoin has another crippling problem. It is controlled by its miners. A majority of miners can control everything about Bitcoin. They can change any rule. Bitcoin is the global digital currency. Usually they choose to do nothing. Historically, efforts to solve bitcoins problems have failed just because the miners did nothing.
Bitcoin is a new technology with diverse unexplored power. It would be a very useful thing for a few governments to gain control over Bitcoin. They could solve all its existing problems (like the block-cap and the mining algorithm) and have a hand in its future development.
Bitcoin is a very useful tool. It is irreplaceable as a economic tool. Finding a large-scale use for Bitcoin is very important for the future of the world. But that’s out of the scope of this article.
In summary, power companies starting to mine bitcoin at peak times has these outcomes:
- Crash the Bitcoin mining economy. Solve the global scourge of bitcoin miners wasting energy.
- Stabilise the power grid without the need to expensive infrastructure.
- Generate money for the power company. This money can be used to buy Russian gas for example.
- Create a legitimate use for Bitcoin.
- Gain control over Bitcoin and its development.
This is a very valuable project. We need to start it now.