BlockchainCryptocurrency

Is Crypto-Mining the Solution to Energy Companies’ Curtailment Problems?

Energy companies consistently face curtailment.  Curtailment in the energy industry is the act of reducing or restricting energy delivery from a generator to the grid.  This often happens when the power grid is at capacity, as a result energy producers, frequently in the renewable sector, cannot sell as much power as they can produce.  The electricity grid in the United States operates in a state where the supply of energy going into the grid must match the demand being used. But what happens to the energy that solar panels or windmills can produce? Generally, nothing. Energy companies often just turn off their generators and don’t generate power until the grid’s demand returns. In the state of California, wind and solar producers curtailed 318,444 megawatt-hours of energy in April of 2020 alone due to an oversupply (source: http://www.caiso.com/informed/Pages/ManagingOversupply.aspx) This means valuable energy is going to waste, and the producers are missing out on revenue.

To a certain extent energy companies can predict the needs of the grid, and understand ahead of time when there will be a demand.  On a hot day when most air conditioners are running on high, at dusk when people return home from work and turn on the lights in their homes, and during primetime TV events, energy companies know there will be a demand for their supply. But there is another opportunity for energy producers to add to their revenue and utilize the energy that they otherwise must curtail, cryptocurrency mining.

There are a couple of different ways energy companies can capitalize on crypto-mining. They can form contracts with crypto-miners to sell them electricity directly at a favorable rate or they can form partnerships with crypto-miners, allowing the energy company to earn a share of the crypto-mining profits.

Mining for cryptocurrency requires a constant, predictable draw of energy. When energy companies have power purchase agreements in place with cryptominers, they can expect constant predictable revenue. Frequently, miners are also willing to help the energy company by load-shedding.  Load shedding is when a miner will scale back operations when grid prices are high to allow the energy producer to take advantage of a higher rate from the grid. Also, with this type of arrangement, energy companies will know that even when they would otherwise need to curtail their production due to grid demand, they would still be able to continue generating power knowing that their direct-sold mining customers will have a need. These agreements can be great solutions allowing both miners and energy companies to predict their cash flows.

Another, potentially more lucrative, option for energy companies is to begin mining for cryptocurrency themselves.  In doing so, they can partner with an experienced miner to get ahead of the learning curve in setting up a mining operation, but instead of just selling the power to the miner, they use their power to mine cryptocurrency themselves and directly realize the mining profits. This is often the best option for energy companies who are interested in capitalizing on their unused energy through cryptomining.

In the future, we’re likely to see more and more energy companies enter the cryptocurrency industry as they realize the opportunities that are available to them.  Sazmining Inc. works with energy companies on a regular basis. Both in establishing purchase agreements and in partnering with energy companies to help them set up their own crypto-mining operations. They find that strong relationships with energy companies have proven beneficial to both themselves and their energy partners. Sazmining sees the potential for energy companies to tap into their curtailed or stranded power and utilize this to break into crypto-mining. As the cryptocurrency industry continues to grow and mature, energy companies have a unique opportunity to diversify their business with cryptocurrency mining.  It will be exciting to see how the industry continues to evolve and grow over time.

For information on starting a crypto-mining operation, you can download Sazmining’s ebook here. You can also subscribe here for exclusive content and updates from Sazmining.

About Sazmining Inc.

Sazmining is the leading US based operation that offers a 360 approach to cryptocurrency through joint venture crypto mining projects, consulting services and treasury management to help our partners and investors navigate the financial aspects of cryptocurrency management.  Our team has built and scaled a wide range of mining operations in locations as diverse as China, Texas, and Iceland. We are well positioned to offer a range of services to new entrants to the industry, or established players looking to expand. To learn more about us, visit https://www.sazmining.com/crypto-consulting.

About author

Articles

Morris is a Technology enthusiast and a writer by night. He has been a part of TheTechly for quite some time and he contributes knowledgeable news articles from the Technology niche.
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