Crypto mining is gaining dominance in the U.S., where more than a third of miners worldwide are centralized. For Bitcoin, network power demand is in the range of 10-15 gigawatts per day, which translates to roughly 0.4-0.9% of annual global use. Miners are looking to situate operations in areas where they can source low-cost electricity to maximize profit. The U.S. is an attractive market because renewable energy generation offers cryptocurrency operations access to low-cost electricity options. Crypto also offers renewables reliable load at times where network demand may not be pervasive.
Scrutinizing average generation output and daily LMP alone does not factor in the intricacies of working alongside intermittent energy sources. Additional factors such as curtailment, the reduction in generation output, causes of congestion such as overload of power, physical distribution of projects, and areas with an abundance of negative hours are essential factors when narrowing down site options. Understanding drivers of electricity pricing is key when identifying potential areas and negotiating a power purchase agreement for offtake.
We recently hosted the webinar, “Crypto Mining and its Growing Role in Power Markets,” where we discussed the following:
- Crypto basics: hash rate, network power demand and electricity consumption.
- The relationship between cryptocurrency profitability and electricity price .
- How to identify areas and projects with the highest negative hours.
- Identifying constraint causes and drivers for prices.