[Cryptography] Negative energy pricing and Bitcoin

[Arnold Reinhold]

Here is an interesting presentation from the California ISO, the people who manage the energy grid, on time of use pricing: 

http://www.caiso.com/Documents/CaliforniaISOProposedTime-of-UsePeriods-CPUC_2_26_2016_9am.pdf

Because of large amounts of solar power on the grid and a mismatch with demand patterns, there are times during the day, 9 am to 5 pm, when spot wholesale pricing for electricity often goes negative (see slide 14). This is especially true on weekends and holidays and in the months of March and April, what the report call “Super-off-peak." About 2700 megawatt hours of capacity is not being used each day. Some of that excess power will no doubt be diverted to storage as battery technology improves, but it won’t be economical to have storage capacity to absorb the weekend and seasonal variations

This suggests an interesting possibility for mining cryptocurrencies like Bitcoin. Ship older, less efficient mining hardware, whose capital costs have been paid for, to California or other locations with a similar situation and operate them when electricity market conditions are favorable. Maybe co-locate the mining equipment with some of  the large solar farms in the desert to eliminate transmission costs. The farms would divert their power to mining when spot prices make it economical to do so. Such a system could respond very quickly to short term demand fluctuations, which has added economic value as “dispatchable power." With some of the newer cryptocurrencies that are designed to disfavor custom silicon, one might be able to use old PCs for mining, perhaps setting them up in the shade of the solar panels.  

Arnold Reinhold