Energy and Electricity for Plebs — Plebucation for Bitcoiner’s #2 — Energy Demand, Pricing and Tariff’s

Daz Bea
25 min readOct 4, 2021

Energy demand, forecasting, markets and pricing are key concepts to understand when considering how bitcoin mining can integrate in the power utility, distribution and generation framework. This article gives a plebs-eye-view into this dynamic, sometimes confusing, and complex industry, it also highlights some of the ways that not only does bitcoin mining make sense, it is fiscally irresponsible of these private and publicly owned conglomerates to ignore.

Understanding Energy Generation

Energy can be difficult and expensive to store at large scale, therefore we rely heavily on real-time energy demand forecasting and real-time generational capacity. Meaning, as we use energy, the utilities have to be generating at the same time and provide enough capacity to supply that energy to the market.

As we saw in the first article of this series, a Watt is a rate at which energy is consumed and a Watt-Hour is a measure of the total energy consumed within a given time period. For a refresher, click here.

When you are at home and you have your washing machine, fridge, air-conditioner, oven, TV’s, fans and lighting on, you are relying on the energy utilities ability to have the capacity available in the network to supply that energy to you, when you need it. At that instance in time, you are drawing Watts from the system (a rate of energy consumption), so too are your neighbours, the local shopping centres, the pubs, and anyone else who wants to turn on the lights in that area. Usually, the energy demand for the connected network expands across a whole town, state or a even a whole country. In Australia for example, our entire eastern sea board is an interconnected network of electricity transmission, generation and substations connecting Queensland, New South Wales, Victoria, Tasmania, the ACT and extending to South Australia (See Figure 1). This vast network of potential energy consumption, must also be equally interconnected with energy generators.

Figure 1. The Interconnected electricity network of the East Coast of Australia. Source: (https://www.aemo.com.au/aemo/apps/visualisations/map.html)

The transmission of energy via an electrical grid can be very expensive over long distances. This can be better understood by considering the losses on a network caused by heat energy caused by current flowing through a conductor. For us to transmit energy, current will flow through our power lines to deliver that energy to the end-user. The very nature of that current flowing through the power lines causes heat, and that heat is wasted energy. How do we thus limit these heat losses? We can only achieve this by lowering the current. How do we do that?

Math Time: Recall Ohm’s Law and the Power Law from the first series of articles, Ohm’s law states that the voltage developed over a medium is proportional to the current flowing through the medium and the resistance of that material.

V=I*R

Whereby:

V= Voltage in Volts (V),

I = Current in Amps (A)

R = Resistance in Ohms (Ω)

The Power Law states that the Energy consumption in a power system is proportional to voltage and the current flowing through that system.

P = V*I

Whereby

P is Power in Watts

V is Voltage in V

and I is current in A

In order to limit the amount of current flowing through an electricity distribution system we can look at the Power Law and Ohm’s Law above.

Let us look at an example: If we wanted to deliver 5MW to a town of residential houses all wanting a 230V supply. Let’s see how much current would be flowing through the conductors if we simply wired the whole distribution network with conductors energised at 230V. (NB: For illustrative purposes we are going to assume this system has no reactance and is a purely resistive network, for a recap on this please see article 1.)

Rearranging to make “I” the subject of our Power Law:

I = P/V

I = 5x10⁶W/230V = 21,739A

Good Lord!!! That’s a lot of current!! To put it in perspective, the average house has an incoming breaker of 60A, we use breakers to stop us melting wires and causing fires. 21.739kA would definitely melt the overhead conductors to the ground. Typical overhead conductor ratings used in Australia will range from 100–400A depending on the size of the conductor, material and weather (temperature) conditions.

So how do we deliver that energy with a level of current that won’t melt our conductors to the ground? We have to increase the voltage and we split it into a 3phase system. That gives us 3phases at 230V (415V Phase to Phase).

The math becomes slightly more complicated, however the concept is the same. The equation for a purely resistive, 3phase system is thus:

P=√(3)*V*I

Let’s energise our lines at 22,000V and see what that does to our current?

Rearranging for I:

I=P/(√(3)*V)

I=5x10⁶/(√(3)*22,000)

I = 131A

Ahhh much more manageable.

Common electricity distribution voltages in Australia are 22kV and 11kV. These voltages are suitable to supply within towns (called the distribution network). We use even higher voltages to transmit energy over vast distances. Sub-transmission networks use voltages typically around 33kV and 66kV, sub-transmission is used to connect networks between minor towns in a geographical locale, while transmission voltages are typically 132kV or up to 275kV. Transmission voltages are used to transmit over large distances such as the entire east coast of Australia connecting major centres.

The higher the voltage we energise the power lines, the lower the current flowing through those lines for the same power delivery. The lower the current, the lower the losses due to heat, meaning less wasted energy.

The heat losses are directly proportional to the square of the current through a conductor. Each conductor will have a resistance proportional to its length. If the conductor resistance is known, the expected losses can be estimated once the current flowing through that conductor is known.

Losses due to heat

P=i²*r (using instantaneous quantities of current and resistance, NB resistance is mostly considered a fixed quantity but can vary depending on temperature)

For illustrative purposes let us assume we use a standard MARS conductor which is a common conductor type used in Australia for distribution networks, energised at 11kV or 22kV. For our example, let’s say we had 10km of conductor supplying a town carrying 200A, we will work out the losses due to heating. At 75deg(C) the resistance of that conductor is 0.452Ω/km (Ref¹), thus:

P=i²*r

P= 200²A*0.452Ω/km*10km

P=180,800W or 180kW.

That’s a lot of wasted hash power right there. That’s 60 x S19 Antminers we could be using to mine bitcoin, rather than have heating nothing but the surrounding air, what a waste. But does it make sense to energise those lines at even higher voltages to minimise those losses? That’s a complicated question and there are many trade-off’s that need to be considered which we will look at soon.

NB: The same P= i²*r equation can be used to understand how bitcoin miners generate heat energy, it is the very same principle and the basis behind many players in the bitcoin space looking at ways to use miners to heat homes etc. Why not put that energy to use? Conversely, this heat can be a problem for mining operators, a cool machine is an efficient machine. If you can keep your machines cool, you can push them a little harder and increase your hash rate.

We can understand why utilities transmit at high voltages to try and minimise the current flow and minimise the losses in heat energy. Some studies indicate transmission line losses can be as high as 8–15%. But, transmitting at high voltages comes at significant expense, mainly due to the associated plant required to step up and step down voltages, protection systems used for that system and the insulation requirements of working with such high voltages.

Substations

Electricity Generators do not generate electricity at voltages typically seen at transmission levels (or distributions levels for that matter). Therefore, there is a need to step up this voltage through a transformer (Figure 2). Substations are fenced off areas containing the high voltage equipment necessary to make this magic happen. The primary and secondary systems required for a safe and reliable transmission/distribution network start at the substation. They are extremely expensive to build and have ongoing maintenance requirements for the life of the plant and equipment.

Figure 2. Power Transformer. This would be typical of a 132kV/22kV transformer (source: https://www.gegridsolutions.com/hvmv_equipment/transformers.htm)

We don’t need to go into the detail of the specific plant required within a substation, it won’t add significant value to the understanding, however it is simply important to note that from an energy source you need a substation to step up the voltage to a suitable transmission level, then a substation at the other end to step down voltages to a distribution level. A typical substation arrangement can be seen in Figure 3. It is then common to have further scaled down substations (as simple as a small transformer on a wooden power-pole or as a pad-mount) to step the voltage down further to a usable consumer level (e.g 230/415V). Each Pole/Pad-mounted substation will supply a handful of customers only, so there are many of these dispersed among the distribution network (Figure 4.1 and 4.2)

Figure 3 Substation. Power Transformer at the right of image. Source: https://new.abb.com/news/detail/11614/abb-commissions-first-digital-substations-in-italy
Figure 4.1 Typical Pole Mounted 22kV to 415V Pole Mounted Transformer.
Figure 4.2 Typical Padmount Transformer

Protection Systems

Within an electricity generation, transmission and distribution system there exists the need for sophisticated protection systems to ensure a safe and reliable source of supply. The more complex the network, the more expensive protection systems can become. Protection systems can be as simple as a fuse supplying a bitcoin miner, or the circuit breaker within your power board at home, or complex digital relays at the substation clever enough to detect the approximate location of a fault on a transmission line with communications between both ends of a transmission feeder coordinating which end will trip to protect the system. Figure 5 displays a typical substation protection panel layout featuring relay control systems with main and backup protection. Each Panel would typically protect each feeder radiating out of the substation, another panel for each piece of primary plant like transformers and yet another for internal bus systems.

These relays constantly monitor the network, checking for situations programmed outside of normal load control. If they see high currents on the network, they assume there is a fault, if this current level is above the parameters set within the relay, the relay will send a signal to a giant circuit breaker to tell it to trip (just like the ones in your home, but at a much bigger scale, Figure 6), cutting supply to the network until the source of the fault can be eliminated.

Figure 5. Substation Protection Panels.
Figure 6. Substation 3-Pole Circuit Breakers

Electrical systems are usually designed to minimise outages for customers in the event of a problem. This is done by segregating geographical areas into their own subsystems and grading protection systems in order to discriminate between certain faults and locations. As an example of this, we do not wish for the whole town to go black if someone drops a butter knife into a toaster (not recommended). Likewise a car hitting a power line should not cause an entire town outage, rather the system is designed to segregate that section of line while keeping the majority of people online until crews can investigate and repair as needed.

I have highlighted the need for protection systems within this article simply for the purpose of expressing the complexities of transmission and distribution networks.

Insulation Levels

The higher we transmit voltages, the more expensive it becomes just in terms of the equipment we need to ensure the network is safe and reliable. The higher voltages are, the more important insulation becomes. Voltage potential can jump across air-gaps if the voltage is high enough to ionise the surrounding air particles. In our homes, the double PVC insulation of our jug cord is sufficient to protect us from the 230V potential within the cable conductor. By comparison, at 132kV, we would need very thick walls of semiconductor and insulating medium to keep us sufficiently insulated from the certain lethality of the voltages held within transmission cable. Figure 7 shows the internals of a transmission cable to illustrate this point.

Figure 7 An internal cross section look at transmission cables.

When we energise conductors in the air, the same insulating properties need to be considered to insulate against the power poles and steel towers. When a conductor makes contact with earth, a short circuit occurs and causes massive current to flow. Our protection systems would kick into gear if this were to occur. Direct connection between a conductor and a wooden power pole can be enough to cause a short to earth, so we must insulate these conductors from the structures using insulators such as those that can be seen in Figure 8.1 and Figure 8.2. These images illustrate 2 types of insulator used in industry. The higher the voltage we transmit, the larger those insulators need to be to provide enough space between the conductors and earth.

Figure 8.1 Insulating Discs for a 33kV network
Figure 8.2 Insulating Standoffs for a sub-transmission network.

For transmission lines, we need a massive string of insulated discs to effectively insulate the energised conductors from the steel transmission towers. Figure 9 shows the insulating discs separating the energised conductors from the steel tower frame.

Figure 9. Insulating discs separating transmission line conductors from the conductive steel structure.

The higher the transmission/distribution voltage, the more expensive the infrastructure is to build out the network. It’s a fine balance between understanding your generator locations and the load centres (where the energy will be used), and understanding the power flow requirements to deliver that energy to the users. Running a distribution network on 22kV rather than 11kV will mean you can deliver more energy and have longer feeders, but the infrastructure will be more expensive due to the voltage ratings of the associated equipment needed. Where as distribution networks energised at 11kV will mean more distribution substation locations, including an increase in associated land costs and the extra plant and equipment needed at each location.

“This is all well and good Daz, but why do we care?” I highlight all of the above to illustrate the opportunity that bitcoin mining can present to the energy generation, transmission and distribution industries. This world is filled with untapped renewable energy sources. From stranded hydro potential, to sun-filled deserts, to trapped volcano energy. These power generation sources are often not geographically located near enough to the load centres to warrant the expenses associated with the building of the generating plant and then building of the transmission infrastructure to get the energy to the people to use. It is simply uneconomical and requires vast amounts of capital to deploy with long timeframes until a return on capital is realised. That is why histprically, it has been common for governments to fit the bill to build out this infrastructure and they quite often either still own it (as is the case in Queensland), lease it or heavily subsidise it. Often, when this infrastructure is privatised, maintenance and standards drop as has been experienced in other Australian states.

Bitcoin mining presents an incredible opportunity for energy generators, utilities and governments to start tapping into these otherwise wasted resources for great economic benefit. Bitcoin mining can be used as a way to start generating revenue before a single power pole is put in the ground for the transmission/distribution network. Companies/Governments can start building generation infrastructure and monetise that energy straight away. They could then consider a long term view of using this economic windfall to start building out this expensive transmission infrastructure into the future with capital they have earned from mining. Alternatively, this revenue can be simply used to enrich the treasury.

Generation is often the easy part, it is what to do with that energy once its generated that presents the most problems. These energy sources are everywhere, but are largely left untapped due to the cost-limiting nature of transmission or storage. Industry can invest in this infrastructure, gain the economic benefits of mining bitcoin straight away then seek to expand their networks using the proceeds of their bitcoin mining operations.

Understanding Energy Markets and Demand

We highlighted above the importance of generators to be located as near as possible to load centres to minimise the losses in transmission/distribution networks. We also highlighted that due to energy storage constraints we rely on real-time energy generation to meet the load requirements of the network. Often, it is the case that transmission networks can be interconnected, we will look at the Australian Energy Market to demonstrate this. Australia is made up of a number of states and Territories. The eastern to central parts of Australia consisting of the states of Queensland, New South Wales, Victoria, South Australia and Tasmania and the Australian Capital Territory are interconnected by a massive electricity transmission network (The National Electricity Market (NEM)). Each state has their own infrastructure, generators and networks that are either state owned and operated, privately owned and operated or a combination of both. There is inter-connectivity between the states and energy demand is controlled by the Australian Energy Market Operator (AEMO).

Figure 10 shows a graphic of the generator locations within the Eastern Part of Australia and a small section of the capacities of each of these plant.

Figure 10. Locations of various generation facilities through eastern Australia

The flows of energy demand and supply are managed by AEMO, with more densely populated states drawing more energy from states that have excess generational capacity (supply). The market operator monitors and forecasts demand and energy flow and controls the generators and associated demand flow from a centralised location.

Figure 11 shows the net demand flow between the interconnected grid highlighting which states are net importers of energy and which of those states are net exporters. Looking at Queensland in particular, Queensland is able to generate a lot more energy than it consumes and is therefore a net exporter of energy, whereas a state like New South Wales, relies on this supply from Queensland and other states as a net energy importer.

Figure 11. Demand Flow over the years between the interconnected state grid.

It is the job of the market operator to ensure there is sufficient generational capacity within the network to meet forecasted demand. Failure to do this effectively can mean triggering a load shedding event in which parts of the states start to trip off load centres and wide spread blackouts ensue.

Cheaper, reliable generation sources like black coal normally provide the base load generation demand while the more expensive generator plants are only called upon to operate during peak times where the demand warrants the excess costs of production. Coal is used as it is a more reliable and constant power source, too much reliance on renewables for base load requirements can cause intermittent issues and are too unreliable to depend upon for the majority of load. This is what was experienced in Texas in the Winter of 2020/21 as their wind turbines froze, caused by a severe cold snap.

The market operator will put bids out to the independent generator marketplace and the those generator operators will commit to deliver that capacity at the market rate for that energy supply. The energy market is no different than any other market in that there is a supply and demand equilibrium between generation capacity and demand-load. As the demand (load) increases, more expensive generators need to be brought online which bids up the price for the energy consumption as a whole. Conversely, if there exists excesses in generator supply, the energy bid can fall to zero (or go negative) when supply outweighs demand.

Herein lies the next golden opportunity for bitcoin mining operators…

Bitcoin Mining and Hydro — An Example

One of the best examples to illustrate this point is to look at hydro systems. As highlighted earlier, Coal is often used to provide the base load power generation within Australia. Our coal fired generators are not necessarily the cheapest energy source, but they are the most reliable and consistent form of energy generation which is essential to provide a reliable base supply to the network. The cheapest sources are obviously renewables, however generators such as Wind and Solar are not suitable to provide the stable and consistent base load power necessary for a reliable supply due their fluctuations such as cloud cover and drops in wind energy. Renewables are therefore used as supplementary generation sources for higher periods of demand.

Figure 12 shows a snapshot over the years of the breakdown in energy production sources and the associated pricing for each type. The table highlights the full year of 2020 and the associated pricing. It is clear that black coal accounted for the majority of our generation at ~100GWh at an average cost of $58.31/MWh. We can also see that Hydro was more expensive on an annualised basis at $75/MWh, more expensive than coal, bio, most of the gas generation, wind and solar generation. This isn’t always the case depending on the available resources, network configurations and myriad other reasons, however for 2020 it was the case.

Figure 12. Breakdown of yearly generation capacity and pricing by generation type. Source: https://opennem.org.au/energy/nem/?range=1y&interval=1M

Areas such as Tropical North Queensland experience monsoonal wet seasons, typically from December to April where rainfall is abundant. There are a couple of hydro-generation facilities within the region namely Kareeya and Barron Gorge Power Stations we can look at for an example. Kareeya has 88MW generational capacity while Barron Gorge has 66MW. The reservoir for Kareeya is Koombaloomba dam which can hold from 180,000–205,000 megalitres of water. Barron Gorge has a weir reservoir fed by the Barron River with the ability to draw water from Tinaroo Dam.

Throughout the year, with the abundance of rainfall in the region, there exists the situation whereby the reservoirs are full, the rain is pouring, yet the bid for generation is zero (or below their minimum threshold of profitable operation). What ends up happening in these times of zero-bid is that these generators are not running, and excess water pours over the spillway making its way to the ocean. I have personally spoken to management of some of these facilities and when they see vast amounts of water pouring over their spillways their exact words were “it is like watching bags of money floating down the river system and into the ocean”. Containerised, on site bitcoin mining facilities can fill this void and provide a constant revenue source for these generation operators. Bitcoin mining facilites can be the drag net laid across the watercourse scooping up those bags of otherwise wasted cash. When water is pouring over the spillway, they could bring the generators online and operate in a state known as “islanding” (where they are not connected to the grid). With the generators online, the bitcoin mining rigs could be brought online and soak up the otherwise wasted energy and allow the generators to capture all that wasted revenue by channeling that water through their generators rather than letting it run into the sea.

This otherwise wasted revenue could be used by these facilities as cash reserves for maintenance, used for capital expansion or captured by the state governments to build out other infrastructure like roads or creating more jobs. There is massive opportunity in this space. Having bitcoin mining rigs in containers, they can be shipped and move around the state to meet seasonality demand. They can be mining off of the hydro in North Queensland through the summer wet season, then moved to a wind farm in central QLD through the winter.

On the day of writing this section of the article it was a beautiful sunny Queensland day in October (Spring), looking at the AEMO daily snapshot of current and forecasted demand we can see that the bid fell negative as at 6:45AM (Figure 13). It can be assumed by comparing the times and weather that this was mainly due to the large amount of solar generation available as can be seen in Figure 14. By 7:30am, the hydro generation bid price fell toward zero as the combination of the coal generation (remember it’s needed to maintain the steady base load) and the increase in solar had enough capacity to well and truly cover the demand. With zero-bid for generation the hydro facilities would ramp down to a stand still. An on-site bitcoin mining facility could continue taking profitable load for the hydro generators during that entire down time until demand picked back up which was estimated to be around 16:00 that day.

Figure 13 — Daily Energy Bid, Demand and Forecast for Queensland 02/10/2021 (source: https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/data-nem/data-dashboard-nem)
Figure 14 — Daily generation data for Queensland 24 hour leading to 02/10/2021

Bitcoin mining facilities could also be used to absorb any excess power generation when these generators are actually up and running. To illustrate with a scenario: If the market operator only offered to purchase 35MW to Barron Gorge for example, the power station would then decide if they would accept all 35MW out of their possible 66MW, or only bid for the the operation of 1 out of the 2 generators @ 30MW. Alternatively they could run both generators near their safe limit capacity and use bitcoin mining to soak up the remaining capacity.

The above are just a few examples of the benefits that bitcoin generation could have for generating revenue to generation operators and the market as a whole. Bitcoin mining provides fully programmable load requirements with the optionality to geographically disperse load centres where needed. Containerised bitcoin mining facilities provide the ability to relocate these load centres to adjust to seasonality. These mining centres provide fast response time to react to load demand and load shedding as needed to help utilities and the market operators react swiftly to consumer demand all the while utilising spared, trapped or otherwise wasted generational capacity. All this can be achieved while providing profitability and enhanced economic incentives to operators and stakeholders.

The Economic Benefits of Bitcoin Mining for a Nation

As a thought experiment, I have taken the 7-Day outlook data from the AEMO website to see the forecasted demand and spare capacity and create a model for bitcoin mining profitability.

To be 100% transparent, I have drawn a LOT of conclusions and made just as many assumptions about the following data, and I will elaborate on those further. But this exercise is illustrative of the economic potential a bitcoin mining policy could provide for Australia that is fully scalable and extremely profitable.

Figure 15 shows the 7 day outlook across the states for demand and reserve capacity. I have highlighted the reserve demand and taken the average for the 7-day period highlighted in yellow.

Figure 15 — AEMO Peak 7-day Demand/Reserve Capacity Forecast (source: https://aemo.com.au/en/energy-systems/electricity/national-electricity-market-nem/data-nem/data-dashboard-nem)

I also make another big assumption that all this spare capacity is available at the same time, which in reality it is not, due to the differing peak demand times outlined and the net inflows from other states, however I account for this by only utilising a small % of the generational capacity as you will see soon.

Adding up the average reserve capacity for each state, we get a total spare capacity of 12.5GW (or 12,553 MW, or 12,553,857 kW). If we simply assume that we can capture just 5% of this spare capacity for use for mining operations, we might be able to conclude that at just 5% we could always tap into economical sources of this energy at any given time provided we have that much headroom above the peak demand limit. But again, this is an assumption I have made for the purpose of this exercise. At 5% of this available capacity, we see that 627,692kW is available to allocate to our model.

The next assumption I am making is that we are able to source as many Antminer s19 miners as we like, which is far from the truth in today’s market. But if we were able to get as many as we like, we could go and order

627,692kW/3.25kW/miner = 193,136 Antminer s19 miners.

I will also assume that an order size this large won’t effect the market demand price for s19’s, and I am able to buy them at AUD$16k per miner for a total cost $3.09Billion (I’ll just get that out of my wallet).

I also assume to add a 25% increase for frictional costs, this is a pure guesstimate, I have no idea what costs are associated with shipping, building out containers fit for purpose, racking, wiring, cooling and power delivery. But it will be fine for the model to assume an extra $800Million needed for this (I might have to use my overdraft account).

Now we have all the finer detail worked out, I used the nicehash.com calculator to do the sums on 193,136 s19 miners at a variety of energy price levels to gauge the profitability. The final assumption that is made (which I am not sure the nicehash.com calculation accounts for, is the increase in hash power that the addition of 193k miners would have on the current network hash rate in the calculation, I imagine it would make significant impact on these results). But again, this is for entertainment purposes.

The Results:

Figure 16: Profitability in AUD for various kWh energy price levels.

As can be seen from the above scenarios, bitcoin mining can be extremely profitable. Even with energy prices as high as 15c/kWh, its around 2years to payback the initial capital (assuming no interest) with an expected lifespan of 3–4years per miner, it’s all profit from there until the miner dies (excluding ongoing operational and maintenance costs). At 3c per kWh, where do I sign?

Energy market operators, generation facility owners and politicians, my DM’s are open, let’s print some money. This solution is a scaleable, flexible and profitible way to harness otherwise wasted demand…. what are you waiting for?

Tariffs

We will wrap this article up by bringing it back to the plebs, what does it mean for them? As mentioned in the previous section, the energy prices within the energy markets are a function of the supply/demand of that market. This of course flows through to the average plebs electricity bill.

When you plug in a miner at home to try and get your hands on those sats, do you know what you are paying for that electricity or are you aware of your options? Perhaps you have solar on the roof feeding back to the grid at 7c/kWh, and paying upwards of 20c+ at night.

As we saw, prices fluctuate due to demand. There exists daily peak times of demand as well as troughs. As we saw above in Figure 13, this peak demand spiked around 7pm. This is because people are home, they have their ovens on, its heating up so we might have air-cons on, TV’s are full-noise, the lights and fans are on and the kids are charging their ipads, and so is every other household in Australia. This peak demand time is fairly consistent throughout the year for Australia, your utility provider is well aware of it and they try to help manage peak demand times by using tariffs to help manage consumer behaviour.

Most people are probably on a standard pricing tariff for home. This is a standard set rate per kWh regardless of the time of use or how much is used. But your hot water system might be on an economy tariff. These tariffs are controlled by a relay in your switchboard triggered by a signal superimposed onto your incoming powerline by the utility company, controlling when to turn the power on and off to these devices. These tariffs will usually give you a heavily discounted rate, the downside though? Whatever is connected to that circuit will only work for a certain number of hours per day, largely dictated by the utility company and it doesn’t necessarily have to be consistent, but rather a guaranteed minimum total time of operation. Example: the utility company might guarantee 8 hours of operation a day but it might be for any combination of time and any duration throughout that 24hour period. Figure 17.1 shows examples of the local QLD utility company’s economy tariffs, while figure 17.2 shows the standard and time of use tariffs.

Figure 17.1: QLD utility company economy tariffs (source: https://www.ergon.com.au/retail/residential/tariffs-and-prices/compare-residential-tariffs)
Figure 17.2?: QLD utility company standard and time-of-use tariffs (source: https://www.ergon.com.au/retail/residential/tariffs-and-prices/compare-residential-tariffs)

The recent introduction of digital meters have given utility companies a bit more flexibility to control pricing by offering different rates to that of a standard feed-in tariff. Rather than turning power on and off like on the economy tariffs, the time-of-use tariffs will charge much higher rates for power consumption during peak demand periods and discounted rates during lower periods of demand, trying to incentivise customers to alter their consumer habits. Use your dryer, pool pump and dishwasher through the day and operate the bare minimum at night for cheaper power bills.

Scaling this up further to industrial and commercial customers there are a number of combinations of the above arrangements as well as peak demand service agreements. An example of this is that a heavy-industry customer might pay a certain amount per day up to a certain capacity, regardless of what they might actually use.

Example: Using total arbitrary figures they might pay $100 per day but can use up to 30kW of power at any one time but not pay anymore than the $100 fixed rate. If they exceed that peak demand of 30kW they pay a premium.

Other tariff arrangements include limits on the VAR’s (reactive power) they are allowed within their system.

Back to the plebs and tariffs. For your home-miners, there exists different firmware versions and 3rd party solutions to allow you programmable control of your miners to help you manage your power costs. Economy Tariffs may not be suitable because it is usually a condition of eligibility that any equipment that uses that rate is hard wired into the circuit. That means you can’t move the miner between the socket connected to that economy rate then move it back when the economy rate is switched off (unfortunately). Usually you want your miners on for as long as possible, so economy tariffs might not work for what you want to achieve.

Using a time-of-use tariff it is possible to configure your miner to ramp up hash rate during those low-cost hours and scale it back during the high cost peak demand times.

The possibilities are endless and there will exist a combination that works for your setup and what you want to achieve out of your miners. Have a look at your local utility providers web sites to see what tariff’s are available.

Conclusion

This concludes this deep dive into energy markets, demand and energy pricing for plebs. I hope it gave some more insight into how energy markets work and the infrastructure behind getting energy to you at home as well as highlighting the limitation as to why perhaps we don’t harness all the renewable generation capacity that exists in the world today. It is evident that by using a bitcoin mining strategy, there exists vast opportunity to start building out some of this infrastructure and bitcoin mining can play a critical role in helping the world to reach their renewable energy targets by providing a constant, programmable and flexible revenue source to start monetising their projects quickly. The option then exists for those revenues to be channeled into further projects for communities, municipalities, governments, corporations and shareholders.

We then looked at how bitcoin mining can help the energy market operators and generation facilities to optimise demand, help minimum demand load management, capture spare capacity and harness otherwise wasted energy sources. Again, another powerful illustration of the potential of adopting bitcoin mining into the everyday operations of the energy market.

Finally we revisited pricing for the plebs to illustrate some of the ways that utility companies use tariffs to help control and price power consumption by their customer and how plebs can use this knowledge to help optimise their profitability within their home mining operations.

Thanks for reading and happy stacking

Daz Bea

Twitter: @dazbea1

Medium:

Daz Bea

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References

  1. Source: https://www.prysmiancable.com.au/wp-content/uploads/2018/05/PGAU_BOHC2018-05_20pg_lowres.pdf

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