Bitcoin can fix global power grids, here’s how
Bitcoin mining has been subject to much criticism regarding energy consumption and environmental impact. However, the reality is very different. Bitcoin can actually help us fix a recurrent problem that affects power grids relying on renewable energy.
How power grids work: The importance of balance
Before we jump into the positive repercussions of Bitcoin mining, it is essential to understand how power grids work — especially those that use renewable energy.
One of the biggest challenges of power grids is that they need to stay balanced constantly. Energy production always has to match the load. If the load goes up, production has to go up. Otherwise, you’re going to have shortages. The same happens when energy production outweighs the load. Power is constantly flowing through the grid, and you can’t have standing electricity on a wire. If people don’t use it, the grid can overload and cause blackouts.
Now, that shouldn’t be complicated, right? Just keep generating more electricity as the consumption grows. But consumption varies with the weather, as changes in temperature and humidity affect the demand for space heating and cooling.
The particular case of renewable energy
Balance is a requirement all power grids need, but with renewables, it becomes even more complicated. Primarily because generation is inconsistent, and you depend entirely on the weather. It can lead to shortages when there’s not enough wind or sunshine to harvest power. However, it’s actually the opposite situation that causes more problems: generating too much electricity.
You can’t stop the wind from blowing, the sun from shining, or the rivers from flowing. So if you’re generating electricity through these natural resources, it will be cumbersome to adjust production to load. Yes, there are different mechanisms to cover solar panels to create shade or stop wind and hydroelectric turbines from generating power and overloading the grid. The problem is this isn’t cost-efficient at scale.
So if shutting facilities down isn’t an option, how are we solving these problems today? In 2016, for example, California — which generates ~31% of its energy through solar panels — had to pay Arizona to take electricity off its power grid. The Golden State produced so much power that it couldn’t consume it nor ramp it down. Yes, you read it right. They actually paid another state to use their energy.
Nevertheless, with mining and proof-of-work, we’ve got a much more efficient solution.
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Cryptocurrency mining and rebalancing power grids
As we’ve mentioned before, mining is an energy-intensive process, but that’s not necessarily a bad thing. Technological advancement and proof-of-work architecture provide us with a perfect tool to rebalance power grids and make a profit out of them. What used to cost thousands of dollars now generates the same amount in revenue.
How? The model Titan proposes is to build renewable energy at scale, so power grids rely 100% on renewable energy. These sources are not only cleaner than fossil fuels, but they are also the cheapest. So the benefits would be both environmental and financial. With today’s landscape and the inconsistency between production and load, a power grid like that would be critically unbalanced and suffer from blackouts and shortages repeatedly.
However, if we add cryptocurrency mining to the equation, everything changes. Firstly, proof-of-work mining is a location-agnostic activity. It can be performed anywhere with an internet connection. Secondly, it’s an industry that can be shut down immediately just by flipping a switch.
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What does that have to do with power grids? Let’s say we build a mining facility to counterbalance that renewables grid. During high consumption seasons, when there is more demand for energy, we could simply turn off miners and redirect all the power they use to residential and commercial sectors. On the other hand, when low consumption seasons arrive, we can turn on miners. Mining hardware would consume excess electricity homes and businesses would no longer use, generating revenue in Bitcoin or any other proof-of-work cryptocurrency we choose to mine.
Cryptocurrency mining is the perfect solution for rebalancing power grids as it’s a versatile industry that enables immediate adjustments to match energy production and load. Additionally, it opens a window to build a 100% renewable energy, scalable grid that also generates revenue.
Optimizing and decentralizing mining
As efficient and profitable as this solution is, it comes not without its respective limitations.
Firstly, managing mining hardware can be cumbersome, especially for those who have little experience. Furthermore, we’re talking about large-scale mining operations here, and they would require dedicated and specialized attention.
Most importantly, there’s the risk of centralization. Extremely favorable situations like this can lead to the concentration of mining. Following up on our previous example, if California decided to start mining Bitcoin and encourage its industry and residents to do the same to rebalance its grid, a significant amount of the hashrate could accumulate there. As such, a great portion of the network’s miners would depend on that specific location’s infrastructure, conditions, and government regulations.
These risks are why Titan is developing innovative solutions to maximize hashrate optimization and decentralization.
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On the one hand, there’s the Lumerin Protocol. A network powered by smart contracts and blockchain technology designed to tokenize, trade, and redirect hashrate via the internet. Through it, miners can sell their computing power to the highest bidder. In turn, buyers could take complete control of that hashrate, redirecting to the mining pool of their preference or simply using it to mine individually. This dynamic decouples hashrate control from the geographical location where it’s produced, so an investor in Australia, for example, could control and mine crypto using hashpower produced by a miner in California.
On the other hand, Titan is also building practical, user-friendly software to make managing enterprise-level mining hardware and operations a lot easier, faster, and straightforward with just a few clicks.
Combining the protocol and the software, energy producers that use excess electricity to mine Bitcoin could enjoy the benefits of both a massively better cryptocurrency mining experience and a fully balanced, 100% renewable energy grid.
If you’re interested in the Lumerin Protocol and Titan, make sure to visit our website to learn more!
Titan is actively working to optimize mining and make proof-of-work cryptocurrencies more accessible and democratic. If you liked this story, make sure to subscribe to our blog and sign up for our weekly newsletter. You can also visit our social media through the links below. We’ll be glad to have you!