This is worse because they have made it more $ attractive for more miners to come by subsidising operations.
Instead they should pass emergency laws that let them cut power to non essential enterprises like this. Then the crypto community will blacklist Texas and leave it alone.
Give the money to Elon to trial some stabilization tech instead.
Or connect to other grids lol!
This situation is ideal for both parties.
Well.. Texas doesn't just pay this miner, they pay any enterprise which "strains the grid." It's a market for perverse incentives the way the Cobra Effect is.
> The miner is being compensated for lost production in exchange for grid stability.
The miner is arbitraging the tax payer against their ability to construct new plants, which is how this money could presumably be better spent.
> The only way your analogy works is if you consider industry bad (playing loud music).
His analogy is flawed. There's an absolute limit to sound pressure in this universe. There's probably not an absolute limit to human greed in this universe. So, yes, unconstrained processes without any natural (e.g. non-external) feedback are probably bad.
If, however, the number of "strain incidents per unit of time" were factored into pricing accordingly, I'm sure these enterprises would change their strategy.
Granted an industrial use of that same land might use as much power. Now it is a case of well: they are doing something more useful for society.
In addition imagine a spreadsheet for miner profit based on world location. That spreadsheet now might add this new upside in being paid to not run the miners and make more money. This attracts more miners!
If the goal is to protect society and especially local people, having miners AND shitty power supply is not good (choose one or the other)
They are causing the same amount of 'strain' (demand) as any other industry. Their demand will attract investment in supply the same as any other industry. The advantage is that their demand can be shed quickly, which is useful for the grid operators, and helps 'protect society.'
The grid is also not a normal free market operating under normal free market principles. Regulated monopolies are a different beast with different constraints. Given the challenge of supplying during peak loads, attempting to prioritize use cases strikes me as a reasonable endeavor in principle.
The miner load has other unique and favorable attributes, but those are the ones that are relevant in this situation.
Is the energy for sale or not?
Pumped water storage, aluminum production, gravel or other crushed rock product manufacturing, municipal base load, etc. all come to mind.
Paying consumers to reduce their load does not incentivize supply investment. In real terms, it essentially does the exact opposite: it takes dollars that would go into plants and infrastructure and turns them into paychecks for people who are stressing the grid. In other words: it effectively rewards those who can consistently torture the grid with the money that would be used to improve it.
On the other hand we have proposals to increase the upfront costs, consume more valuable land (real estate prices too low for anyone's taste?), and utilize it in environmentally unfriendly ways (who wants to live next to a rock crusher operation or an aluminum factory). Relying on Bitcoin miners as a flexible consumer is extremely compelling.
Of course not. The thing that incentivizes supply is the load. Preferably a nice flat load. Oh, like miners.
Also, "aluminum production"? Really? You can just turn off an aluminum factory? What about the workers? What about all of the hot things that will cool down?
No, there would be a corresponding reduction in generation capacity and the strain on the grid would be identical.
> This attracts more miners!
Good. The miner's usage pays to build more generation capacity (acres of solar, etc), but then when there is an imbalance (production down and/or demand up) the miners turn off so the extra capacity they paid to be built is available for others.
Less strain on the grid would be less economic reasons to develop the grid and expand energy production capacity.
The only reason any business ever develops is unsatisfied customer needs.
And the crop is just canola oil but someone else is paying you to burn it in a fire.
It's very obvious that the person you replied to consider crypto mining inherently bad.
I don't necessarily agree with them, but I believe the absolute majority of HN users hold this view.
This makes literally zero sense. Mining adds extra load that wouldn’t otherwise exist. If crypto didn’t exist, the Texas grid would experience reduced load. This should be obvious: if paying these miners to stop has the desired effect of reducing the load on the grid, miners not existing would surely have a similar effect.
> their argument applies to every industry.
Most other industries provide actual societal value, unlike crypto. And to hear off the rebuttal I already hear coming: no, just because it has a market cap doesn’t mean it’s adding value to society. As a trivial counterexample, Mexican cartels are undoubtedly worth billions but I think it’s pretty inarguable we’d all be better off without them.
Your counter-factual doesn't make sense because you assume that additional demand has no effect on supply and vice-versa. Electricity generation isn't some constant that is unrelated to industrial needs.
If those industries are using that power that Texas has invested in producing, then how is it "abundantly available" for socially valuable uses?
Yes, without things like crypto, we probably would have somewhat less investment in green energy sources. We'd also be burning less coal. Given possible futures with "more fossil fuels and more renewables" versus "fossil fuels coal and fewer renewables", I'll pick the latter every time. The goal isn't more renewables, it's replacing fossil fuel with renewables.
Worse, those renewables being used up by cryptocurrencies are going to be the optimally-located renewables with the lowest installation and maintenance costs for the highest energy output (think: most reliable wind at high speeds, least cloud cover and highest sun angle). As we do continue to transition further away from fossil fuels, every additional installation is going to be in locations marginally less competitive than the ones that came before. This means that transitioning the non-crypto loads will take longer and be less cost-effective than if crypto magically disappeared overnight.
If there isn’t enough supply to satisfy things like residential demand then you loose demand (and therefore re revinue
In a privatized system, a large, predictable, static load would attract additional infrastructure. Assuming how that's how Texas' system works, if these miners did not exist, the peak capacity would be lower.
If they believed crypto mining is inherently bad, it should not be allowed in the first place.
If they believed crypto mining is at least neutral, it should get compensated for being forced to shut down (even temporarily), and it did.
The equivalent here would be picking what industries to forcibly shut down. In that sense with such a system crypto mining might be OK (at least for this argument).
But this compensation is a subsidy to ask more people to come in and use up a scarce resource.
Try thinking it through in terms of reduced rates for spare capacity. Any criticism that doesn't work under both frameworks is logically unsound.
But that aside I don't think your response is a fair one for three reasons:
(1) because solar and wind are the least expensive source of energy the excess power is significantly solar/wind.
(2) But because they're the least reliable maximizing their use requires solutions like a large amount of sheddable load on the grid.
(3) You're imposing your own opinions on the 'right' and 'wrong' sources of power which far from universal outside of internet filter bubbles and are not supported by the law. You may not like that some parties burn fossil fuels for energy but they currently have a right to do so. I agree that good cases can be made for restricting fossil fuel use, but so long as it isn't it's unproductive to pick and choose arbitrary targets that use energy for purposes you don't care about simply because fossil fuels for energy happens to exist. It's doubly so, considering 1/2 above because responsive loads help increase the share of renewable power.
I think lawmakers have an ethical duty to fix the "burning carbon is too cheap" problem, but the odds of that happening in Texas are low. If we had something like a carbon fee and dividend, miners could become a net good for society just by following price signals.
You are mischaracterizing the payments because you hate crypto.
I don't hate crypto, I have some nuanced opinions on it. Happy to criticize and defend it, depending on the argument. Once you get to PoS there is a lot less wrong with it environmentally. Unlimited carbon-free energy infra (and silicon production infra too, along with proper recycling!) would also make it less of a problem, but obviously we are not there yet. And I say unlimited because PoW demands that difficulty goes up and up and up to bid up PoW assets.
The difference is that this is very complex and would have a minor effect (compared to shutting down a single large industrial consumer).
"Congratulations, you earned $4.13 for saving 3.3 kWh."
Compare that with the crypto miners: ERCOT knows how long they take to shutdown and their load, as well as already having commercial arrangements for the shutdown. And with one switch they reduce many multiples of an average homes load.
This is a contract where Bitcoin miner uses energy that would be wasted otherwise. [1]
I see a lot of bad faith here on understanding why Ercot did that. But if you prefer state laws that “makes you safe”, go ahead.
[1] https://www.cnbc.com/2021/12/04/bitcoin-miners-say-theyre-fi...
This is nothing but cope from bitcoin maxis in the face of the terrible reputation that cryptocurrency now has.
Bitcoin was the first cryptocurrency, it practically defines the term cryptocurrency, it has all the same features as other cryptocurrencies, many of which start life as either code or chain forks of Bitcoin anyway. It has first mover advantage and name recognition, but it absolutely is a cryptocurrency.