How demand response from data centers can help stabilize the power grid
There has been a lot of positive buzz surrounding digital assets, bitcoin, and cryptocurrencies in the past year. Seemingly every digital coin has seen its price hit a record high. NFTs are catching like wildfire and selling for millions. Mainstream platforms and retailers are beginning to support and adopt the technology.
But with all this potential upside there is also an increasing focus on crypto’s carbon footprint.
Aiming specifically at proof-of-work cryptocurrency mining’s use of electricity. As crypto has risen in popularity and demand, it has become more difficult and energy-intensive to mine. As a result, the bitcoin mining landscape is seeing an interest and strategic shift toward a more renewable and sustainable means of operation.
Given the scale of the bitcoin network, there is an opportunity for the leading crypto mining operations to serve as a building block toward a cleaner future – rather than a deterrent. In fact, it is worth noting that many have already started this process. A 2020 study conducted by the University of Cambridge found that 76% of crypto miners use electricity from renewable sources and that almost 62% of miners are reported to use hydroelectricity.
Further, TIER 0™ data centers can act as valuable partners to energy companies and grid operators for the benefit of the local power grid – rather than simply being passive consumers of power.
Renewables and digital assets help ESG investing
When it comes to crypto mining, the increased demand for renewable energy is primarily driven by three factors: ESG initiatives, a reduced cost compared to fossil fuels, and the pressure applied by national regulations and commitments to reduce carbon emissions.
ESG stands for Environmental, Social, and Corporate Governance and has become a top priority for many investors in recent years.
ESG investing – also sometimes referred to as sustainable investing, socially responsible investing, mission-related investing, or screening – is powered by independent ratings that help investors assess a company’s behavior and policies when it comes to environmental performance, social impact, and governance issues. With so many investors prioritizing ESG investing, it has become in the best interest of growth-focused companies to prioritize their ESG standing. In the crypto space, this begins with utilizing renewable energy.
In addition to the reduced costs of renewables compared to fossil fuels, recent regulations surrounding carbon emissions and mining have also impacted demand, with China banning mining in several of its previously most mining-intensive regions.
Renewables bringing new challenges
While the shift toward renewables is a good sign, it does bring with it challenges for the energy grid, mainly in the increased difficulty of balancing generation and consumption in real-time.
The intermittency of renewable sources creates challenges primarily during times of peak demand, as sources like wind and solar only deliver energy when the wind is blowing or when the sun is shining. This goes back to the point of renewables being “virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time.” While the sources may be essentially unlimited, accessing “unlimited” power during times of peak demand is not as accessible as we have grown used to with fossil fuels.
Demand response programs
A promising solution to address the challenge of intermittent energy sources is the use of demand response programs.
Through use of demand response programs, grid operators can more efficiently balance generation and consumption, directing power toward mission-critical applications when they need it most, such as hospitals during times of a local energy crisis.
TIER 0™ data centers are ideal candidates for this type of program because the type of compute work performed in these facilities is fully interruptible around-the-clock and may be curtailed by grid operators unlike traditional data centers. This is of tremendous value because to enable intermittent supply from wind and solar, these sources must be matched with intermittent demand, to balance the grid.
Because of the unique and important relationship between TIER 0™ data centers and power providers, the process of mining has demonstrated the ability to provide added benefit to the energy ecosystem, in addition to supporting the ongoing health of a truly transformative new technology and digital asset class. Innovation will continue to bring unique solutions to meet the needs of this market and these efforts all work to support the future demand of distributed computing while retaining a focus on sustainability.