Harry Sudock on Bitcoin Mining Energy

I just listened to the podcast “The Truth about Bitcoin’s Energy” with Harry Sudock on the “What Bitcoin Did” podcast hosted by Peter McCormack. Sudock is working as a VP of Strategy for the “Griid Infrastructure” mining project.

I learned that in the American market power lines don’t extend more than 500 miles. I learned that power cost for miners are between 80 and90 percent of their budget. I learned that by co-locating the miner close to the generator he saves about 30 percent of those costs. I learned that miners will go for cheap electricity prices, but his project would not look at coal generation, since there are so many attractive alternatives.

For the generator party having a mining project up close means they can increase their capacity factors. As Sudock explained, there is a lot more capacity built in the system than is needed at normal times. That in turn means that there are lots of time slots where you could generate electricity but can’t sell it. A mining facility close by will give you demand in those time slots, increasing the percentage of time the generator actually delivers (capacity factor). Generators are willing to accept lower prices in return for that.

Sudock likes nuclear energy.

Unfortunately for him, the Bitcoin Central Authority (BCA) just decided that nuclear energy may not be used for bitcoin mining purposes.

On the other hand, such an authority does not exist, just like the Central Internet Authority (CIA) does not exist.

That in turn means that whatever economic advantage for generators comes from the larger capacity factors goes to all methods of generating power equally. Bitcoin gives support on a level playing field.

There may still be a difference. Sudock mentioned that a nuclear power plant delivers 99.9 percent of the time, which leaves them with more times slots lacking demand than a wind site with a capacity factor of 41.9 percent.

I don’t know how that will play out. As someone interested in supporting renewable, I just note that any advantage for renewable projects will favor geothermal, solar, wind, biomass, and hydro in equal ways. There will not be different tariffs.

Published by kflenz

Professor at Aoyama Gakuin University, Tokyo. Author of Lenz Blog (since 2003, lenzblog.com).

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