Modeling and Analysis of Utilizing Cryptocurrency Mining for Demand Flexibility in Electric Energy Systems: A Synthetic Texas Grid Case Study

Abstract

The electricity sector is facing the dual challenge of supporting increasing level of demand electrification while substantially reducing its carbon footprint. Among electricity demands, the energy consumption of cryptocurrency mining data centers has witnessed significant growth worldwide. If well-coordinated, these data centers could be tailor-designed to aggressively absorb the increasing uncertainties of energy supply and, in turn, provide valuable grid-level services in the electricity market. In this paper, we study the impact of integrating new cryptocurrency mining loads into Texas power grid and the potential profit of utilizing demand flexibility from cryptocurrency mining facilities in the electricity market. We investigate different demand response programs available for data centers and quantify the annual profit of cryptocurrency mining units participating in these programs. We perform our simulations using a synthetic 2000 bus ERCOT grid model, along with added cryptocurrency mining loads on top of the real-world demand profiles in Texas. Our preliminary results show that depending on the size and location of these new loads, we observe different impacts on the ERCOT electricity market, where they could increase the electricity prices and incur more fluctuations in a highly non-uniform manner.

Can Bitcoin Stop Climate Change? Proof of Work, Energy Consumption and Carbon Footprint (SoK)

“…Dogan et al [14] furthermore find that bitcoin clean energy and emission allowances are (Granger) causally associated with bitcoin, in both volume and price, whereas a bitcoin miner's revenues are negatively associated with carbon emissions (see also [116]). Similarly, Menati et al [64] conclude that miner-driven additions of load could reduce energy prices. Transmission decongestion: Miners' portability (and scalability) means that they may be placed behind congested transmission nodes in the energy grid, further de-risking renewable buildout [58], [87].…”

“…The latter refers to an increase in energy demand that reduces energy prices instead of raising them, because the upward pressure thereon introduced by the upward shift in the demand curve is more than counterbalanced by an upward shift in the supply curve, which itself is the result of an increased renewable supply due to a surge in profitability. Both of these phenomena are regarded as conceivable [3], [64]. For instance, simulations by Lancium and IdeaSmiths, LLC estimate that CO2 emissions are reduced as a result of the introduction of highly flexible data centers (such as Bitcoin mining facilities) as a complement to grids with an overabundance of wind power, because it reduces the reliance on natural gas to balance out energy intermittency [78].…”

“…Transmission lines have limited capacity and experience congestion, [3], [5], [58], [64]are struggling to keep up with electrification trends [63], suffer from energy losses proportional to their length and require substantial initial investments [3], [16], especially in relation to remote locations where renewable generation is often most efficient [16], [42]. Energy that cannot be transmitted is defined as "stranded.…”

“…If control of energy supply is relinquished, move from traditional energy grids where consumption is an exogenous variable and seek to influence electricity demand patterns to match supply patterns ("load balancing" [19]). This is known as a flexible load response ( [25], [54], [58], which may be voluntary, the result of a power purchase agreement (PPA) or the result of a demand response program where the energy customer is compensated for not consuming energy during a peak event [42], [64].…”

“…This enables high responsivity to market conditions. Furthermore, it enhances the road of ancillary services provider, as (unlike most sources of demand) flexible load response services need to be located near production areas [64], [83]- [87]. Bitcoin mining furthermore is not labor-intensive, which allows placing the mining farm far from urban centers.…”