The Texas Power Summit
Focusing on the relation between Bitcoin and energy
Howdy Bitcoiners!
Last month, I moderated a panel at the Texas Power Summit, a new annual conference on the grid that was hosted at Texas A&M. It was a fabulous event that brought many people from the power industry to campus. And the goal was to educate students on how to enter this new industry.
The best session, in my view, was Grid 101, an overview of the electrical grid in Texas and how important it is for geopolitics. As you can guess, the U.S. and China are locked in combat over AI and energy. Unfortunately, China is way ahead in terms of its energy infrastructure, having added, in the last four years alone, the entire energy production of the United States. I don’t think the world has truly come to grips with how far ahead China has moved. This is a big deal in Texas because of all of the new AI data centers coming to the state.
Texas is unique because we have our own grid, separate from the other two grids in the U.S., the Eastern Interconnection and the Western Interconnection. The Texas grid also has less regulation than the others, more of a Wild West and free market that allows generators and the grid operator ERCOT to experiment. Part of that experimentation has involved Bitcoin mining. Texas doesn’t have the cheapest energy in the U.S., but it does have the cheapest at scale. Many Bitcoin miners have relocated to the state, especially after China’s ban on Bitcoin a few years ago.
I moderated a session on Bitcoin mining and highlighted its role in balancing the grid. When demand is high, energy prices rise since the Texas market is a free market. Those high prices induce Bitcoin miners shut off, since power is the chief variable cost to mining. Bitcoin mining itself is a fundamentally interruptible computation, unlike AI (neural network training and inference). Similarly, when demand for energy falls, such as in the shoulder seasons in Texas, then Bitcoin miners are incentivized to activate their machines since energy is cheap. The net effect is that this modulates the volatility of energy demand, shrinking the peaks and raising the valleys. This might seem like a small effect, but in energy, volatility really matters for the stability and resilience of the grid.
My panel also had great insights from an off-grid Bitcoin miner, a Bitcoin lawyer who represents conflicts in the mining industry, and a computer engineer who led the development of Intel’s Bitcoin chip. It was a diverse group, and the conversation was wide-ranging, but it exposed some of the sundry issues that Bitcoin mining reveals as it intersects with the energy grid. I look forward to next year’s summit and hope we can increase the Bitcoin content.