Summary:
- Crypto data centers are flexible in two two critical areas: location and demand. These unique properties can help crypto jumpstart the renewable energy market.
- They can create a controllable and sustainable demand for renewable resources that would otherwise go to waste or sold below cost.
- Using contractual curtailment, they can reduce their demand when power prices are surging, helping to alleviate potential pressures on the grid.
A new report from the US’s Office of Science and Technology Policy outline’s the agency’s views and recommendations for climate, energy and crypto. This is among the first public responses to President Biden’s Executive Order on digital assets. Overall, it flags the importance and value of digital assets, that clean energy should power the demand for new electricity and recommendations for further study.
Our take is that crypto data centers can be — and are already starting to be — an important bridge to a zero-carbon future. It’s important to keep in mind that crypto data centers are flexible in two critical areas: location and demand. This flexibility is part of the story that can connect the renewable energy market and crypto
Location and Demand
When it comes to location, crypto data centers are mobile. They can be set up anywhere.
They can create a controllable and sustainable demand for renewable resources that would otherwise go to waste or be sold below cost. Curtailment is a term often used in the energy space. For the grid to work properly, there needs to be a balance between supply and demand. Simplifying things, too much supply or too little demand can result in the same thing – a black out. For example, California curtailed nearly 600,000MWh of renewable power in April 2022 – enough for 55,000 homes for a year.
Source: California ISO
Data center operations can also be started and stopped. Using contractual curtailment, crypto data centers can reduce their demand when power prices are surging, helping to alleviate potential pressures on the grid. Recently, in Texas, data centers shut down in anticipation of a above average heat wave. Bloomberg’s Crypto Show has more:
Watch Bloomberg: Bitcoin miners shut as Texas Power Grid Nears Brink
Creating more consistent demand would spur growth in this crucial sector. For the renewable energy market, Crypto can be a booster and an additional revenue source for overstocked supply.
The Crypto Council is working on a report on this issue. It examines case studies of operational data centers powered by renewable or alternative sources to showcase one pathway forward. As the digital asset industry grows around the world, we think it’s important to show some additional pathways forward for how data centers can engage with renewable energy. This is especially important since research has shown that blanket bans can lead to fossil fuel dependence. For example, China’s ban on bitcoin forced data centers powered by renewable energy to migrate to other countries and switch to coal or other fossil fuels.
New Tech Needed to Supercharge Overall Market Demand
Zooming out – it is important to look at some of the conditions that put climate and renewables front and center. Renewable energy and the technology behind emission reductions has been in sharp focus in the run up to the COP26 climate summit in Glasgow. The International Energy Association reported that the majority of our emission reduction goals rely on tech either under development or in prototype phases. Demand for renewable technology is needed to jumpstart and maintain a new market. Investment has been picking up into climate start-ups and initiatives like the First Movers Coalition are putting additional resources and awareness behind clean green tech solutions.
