Crypto Research

Bitcoin mining as control energy

Jun 7, 2022

This article is about control energy. What is that, actually? And to what extent does Bitcoin play an important role in this?

In the case of energy control, it is ultimately a question of establishing a balance between generation and consumption. The standard frequency in the power grid in Europe is 50 Hertz. In North America and parts of Japan, on the other hand, a standard frequency of 60 hertz is used.

The reason we use 50 or 60 hertz and no more is because they are optimal frequencies for induction motors as motor speed is proportional to frequency, which keeps transmission losses within tolerable limits. The higher the frequency, the greater the losses, and lower frequencies would result in increased size, weight, and therefore cost.

In order for the frequency to always remain stable, there must always be a balance between the generation and consumption of electrical energy. Balancing a suddenly increased demand with an insufficient supply is referred to as "positive control energy" - more electricity must be fed into the grid quickly or less electricity must be consumed. The balancing of increased supply and suddenly weak demand, on the other hand, is referred to as "negative control energy" - electricity production must be reduced quickly or electricity consumption increased quickly.

There are three types of balancing power:

• Primary control energy: The primary purpose of primary frequency control is to respond to any frequency deviation within a few seconds, restoring the balance between generated and consumed energy. The control takes place locally and independently by a proportional control in each power unit involved.
• Secondary control energy: Secondary frequency control, also known as load frequency control, is the second stage to compensate for active power mismatch. It starts after a few seconds and returns to nominal within 15 minutes. If this is not the case, the tertiary control takes over the secondary control. In contrast to the primary control, the secondary control only reacts to a disturbance in its own control zone of the load frequency control in order not to change the load flows on cross lines to other zones. It can be performed either manually or automatically.
• Tertiary control energy: If required, the tertiary control energy is activated manually by the grid operator within 15 minutes. It is activated primarily to free up secondary reserves in a balanced situation, but also to assist secondary control after a large event to bring the frequency back to nominal and avoid the need for primary control. Tertiary control energy must run until generation is adjusted to the new system situation.

Why are we explaining all this to our crypto readers? The answer is: Bitcoin mining. Bitcoin mining is the ideal secondary control energy supplier. The reason for this is, on the one hand, that miners can constantly act as consumers of electricity and, on the other hand, that miners can switch off their devices at any time without being disturbed in their "value chain". Bitcoin mining is independent of time and place and the players in this area are constantly looking for cheap electricity.

The interesting thing is that for energy companies, Bitcoin mining is now an alternative to battery storage and hydrogen. However, both technologies - battery storage as well as hydrogen - always require infrastructure to transport or consume the energy. What is special about Bitcoin mining is also that the investment costs are significantly lower than for battery and hydrogen technology. In addition, with Bitcoin mining, even the most inflexible energy generators (e.g. wind and solar systems) can be flexibly controlled by miners defining how much energy goes into mining and how much energy flows into the grid.