Solar-Bitcoin Convergence

Feb 22, 2021 08:46 AM ET
  • Solar energy and cryptocurrency, on first glance these two fields look vastly different. But on closer inspection, we can spot a lot that is common and analyze how both domains converge in various aspects.
Solar-Bitcoin Convergence

Cryptocurrency and Solar Energy Production are decentralized, both are going through exponential public adoption over the course of time and both are examples of disrupting pre-existing systems.

The electricity involved in the mining processing of cryptocurrency is often immense. But with the growing trends in solar energy prices, and the affordability of adopting and operating solar panels, mining can become a process of directly converting solar energy to bitcoin valuation.

Solar Power and its Utilization

Often, when it comes to solar production, there are problems associated with it e.g. power fluctuation due to daily weather patterns, all of these can be addressed by the creation of Peaker Plants or other technological responses. Demand responses is another strategy; shutting down of assets during peak periods. The easiest option could be storage with batteries, as they are cheaper than peaker plants and have higher utilization.

A potential fourth option could be through the introduction of bitcoin mining, posing as virtual batteries. These real-time bitcoin batteries can be shut down or run to provide supply and demand response. Whenever demand spikes, bitcoin miners can be paid by the grid to shut down operations (the ideology of the Solar Energy Duck Curve). As long as the money earnt through this per Kilowatt hour is more than the expected value per bitcoin mined for the same kilowatt used, then it is very sensible for shutting down operations during these periods. In-fact, the best part of the advanced solar powered bitcoin grids is that they can shut down operations granularly and continue operating but in a lower quantity. This demand response and virtual battery strategy can effectively turn the mining operation into the equivalent of a virtual power plant. Along with serving as a demand response alternative, these bitcoin mining operations can also serve as supply response. Supply Response is basically when more solar and renewable energy production enters a national grid, then electricity prices will start dropping and negative prices will become the norm. Bitcoin miners can offer a price floor for electricity, increasing market efficiency and making grid running easier nationally.

Virtual Bitcoin Batteries

If one were to compare the Lithium Batteries involved in regular solar production with that of the bitcoin mining, as per the limits of moores law, the less total cost of bitcoin mining and the fact that lithium batteries wear out within five years or so will increase the value proposition in favor of investing in bitcoin storage. Co-optimization between regular storage and bitcoin virtual battery service is however necessary.

Bitcoin Mining and Backup Options

Another possible route of action would be that regular grid stations sell their excess energy to the bitcoin miners, as the more energy they receive the more mining activities they can undergo. This will reduce investment in Peaker plants and would prioritize overbuilding of solar or wind capacity. That is because they’ll know that Bitcoin miners shall always stay as flexible last resort buyers. This is going to accelerate the feedback loop between solar and bitcoin technology, as the volume for both bitcoin computing systems will increase alongside the increase in solar panels and inverter technology, bringing the prices and cost curves of both domains down. 

The questions for this overall analysis that remain are, what sort of financial strategies and forms of financing can benefit this bitcoin and solar convergence development. Will it be bespoke project financing, or will other ventures decide to invest in making this process grow?  Another question that can be raised is that, will the cost of storage through batteries and new technology become cheaper as well. If that happens, will it again shift the market in favor of these batteries as compared to the bitcoin virtual batteries, how much of the market will be available for the bitcoin battery processes. 

Mining Prosumer

Although these questions exist, in time, with development and the broadening of the scope bitcoin and solar power have, they will be eventually answered. It seems likely that as this energy production and cost decreases start to affect the global energy dynamics, then we’ll easily shift more to the edge of the grid. Instead of being consumers, everyone can potentially be a ‘prosumer’ instead. An Individual that consumers and produces at the same time. This can open other avenues of development, be it better software for grid participants to decide on how to handle the excess energy – use, sell, store or maybe spend it for its original purpose of mining.