What is Curtailment?
Respect the grid.
Summer is underway and hashrate needs help(635 EH/s to 579 EH/s in the last month)
A -7% difficulty adjustment may be the glass of cold water.
Fun fact: The largest negative difficulty adjustment of all time was -27.94% in July 2021 (China mining ban).
With summer also comes load shedding, A.K.A curtailment, A.K.A demand response.
We can see curtailment peaks in the summer months (the shaded red areas):
If you mine with us at Simple Mining, you likely got an email recently about load shedding and miners going offline.
Curtailment might seem like a bad thing for miners because they need to shut down.
On the contrary.
Curtailment supports the stability of the grid and secures favorable energy contracts and power credits for miners.
What is the grid?
The power grid is a network that delivers electricity from producers to consumers.
It includes power generation plants, transmission lines, substations, and distribution lines.
This network allows for electricity generated from various sources to reach homes and businesses.
This system must be in a constant equilibrium.
If the supply side is not equal to the demand side in real-time, the grid can shut down (blackout) or damage infrastructure.
Energy must be consumed when it is produced on demand.
This balance is maintained with strategies like curtailment.
What is curtailment?
Curtailment is the practice of reducing energy consumption during peak demand periods to balance the supply and demand of power.
As mentioned, this helps stabilize the grid, prevent blackouts, and maximize energy efficiency.
How does it work?
- Energy prices and demand are monitored to predict when costs will spike or when the grid will be stressed.
- Demand responders adjust (curtail) operations accordingly. The difficulty of this depends on the operation.
What is demand response?
Demand response is a strategy where electricity consumers adjust their usage during peak periods to maintain a usage balance.
There are two types of responders:
Residential and Commercial.
Residential: Homeowners can save money by reducing consumption during peak times, often leveraging solar panels.
Commercial: Large power consumers(data centers, steel plants, etc.) participate in DR programs managed by Curtailment Service Providers (CSPs).
Demand responders must consider four variables:
- cost of reaction
- reaction time
- availability
- granularity
As this graphic shows, Bitcoin mining is a superior tool for demand response and grid load management.
Bitcoin miners are as granular as you can get.
The level of precision to curtail can be down to individual machines or reducing the hashrate per machine(underclocking).
It drastically improves the outdated power grid by providing an operating system for the network.
The mining industry is hyper-competitive, and profitability can be volatile.
Curtailment is an effective cost-saving tactic that is independent of hashprice.
Bitcoin miners acting as batteries for load management, absorbing excess power and curtailing demand, are a valuable service to the grid regardless of the market.
(And partially why mining can still be profitable as block subsidies trend to 0).
Zooming even further out, Bitcoin mining can help humanity advance towards achieving a Type 1 civilization on the Kardashev Scale, which measures a civilization's ability to harness and use energy.
Bitcoin miners are paving the way for a more advanced, energy-secure civilization.
This is just a drop in the bucket.
Proof-of-Work is changing the world.
Until next week,
✌️