Key Takeaways

This episode shows how Bitcoin miners in ERCOT, now representing ~3.5–4 GW of load, have become uniquely valuable grid partners by instantly curtailing during scarcity events and ramping back on when power is abundant. Unlike industrial loads or AI data centers, miners convert electrons directly into money with no downstream customers, allowing precise, machine-level control and pure responsiveness to real-time prices. Within Texas’s deregulated energy-only market, they help flatten price spikes, improve utilization of stranded wind and solar, and participate in ancillary services. Compared with batteries, excellent for short-term frequency balancing but storage-limited, Bitcoin mining provides round-the-clock demand that can be shed indefinitely, positioning it as a critical complement to renewables, natural gas, and emerging AI compute loads.

Best Quotes

• “Bitcoin mining is a completely economically rational responder to a price signal.”
• “We have no customer, no widget, just electrons directly into money. That makes us the purest load on the grid.”
• “Four gigawatts of load that can turn off on a price signal is a massive boon to the system operator.”
• “You can fine-tune Bitcoin mining, each miner is 3 kilowatts. Could a steel mill do that? No.”
• “We’re 4 gigawatts in an 84-gigawatt system. We’re making a material impact, it’s time to put on our big boy pants.”
• “Bitcoin miners are consuming 75–95% of the time, but off during stress events. That’s net positive through and through.”
• “Load growth means more investment, trillions will flow into Texas if ERCOT gets this right.”
• “Bitcoin mining paved the way for AI data centers. No one had ever requested 600 to 1,000 megawatts before miners.”
• “Batteries respond in fine nuance, but Bitcoin mines can run 24/7 and curtail indefinitely when needed.”
• “Our north star is ensuring America has access to electrons, the input to all compute.”

Conclusion

This conversation highlights how Bitcoin mining in ERCOT has matured from a misunderstood experiment to a proven cornerstone of grid reliability. Miners’ ability to instantly curtail during scarcity has turned them into valuable partners for operators, a role unmatched by AI data centers or traditional industry. As Texas braces for unprecedented load growth, the lessons learned from Bitcoin’s flexibility will shape how ERCOT accommodates AI, batteries, and future technologies. At its heart, mining demonstrates how markets, innovation, and energy intersect, positioning Texas as the global proving ground for the future of power and compute.

Timestamps

0:00 - Winter Storm Case Study & Mining Response Data
11:34 - Why Bitcoin Mining Is Uniquely Flexible
13:12 - ERCOT’s Deregulated Market Structure
20:54 - Grid Reliability & Winter Storm Uri Lessons
30:47 - Demand-Side vs Supply-Side Grid Balancing
37:40 - Public Concerns About Power Costs
45:36 - AI vs Bitcoin Mining Load Comparison
55:26 - AI Flexibility & Grid Integration Challenges
01:13:04 - Bitcoin Mining vs Batteries as Grid Resources
01:33:27 - Future Outlook & Cholla’s Strategy

Transcript

(00:05) Brad, welcome back to Austin. Parker, good to be here, man. Um, last episode with Pierre, we went real deep on the difficulty target and the difficulty adjustment. Um, today we’re going to talk about mining in Urkott. Urkot generally, grid mining, but also talking about the broader market and how Bitcoin mining fits into that.
(00:30) So, we’ll inevitably get deep, but appreciate you being here and recording. Got Brad Cuddy from Choya, Inc., what does the hat say? Never stop exploring. Never stopped exploring. Yep. We’ve got to figure out uh if that was a Gideon Pal original or if it was passed down, but love of the hat. I shot him a text. No answer yet. So, not yet. DBD.
(00:50) All right, we’re going to dive right in um to an actual example of how Bitcoin mining is interacting with the UrkOT grid in terms of winter storm and around scarcity events. And then we’ll kind of come back up for air to talk about how different levers why things are happening.
(01:23) But there was a chart that Urkott had put out during winter storm Heather in January of 2024 that the the storm spanned two or three days and the the price of power effectively increased from, you know, $15 a megawatt hour to on a log scale looks like $750 to $1,000 a megawatt hour and approximately 1.1 gawatt of power a specifically large flexible load came offline the power price came back down basically peaked came back down another scarcity event this time almost 1.
(02:16) 6 6 GW of large flexible load came offline and then there was a a third peak and similarly. So talk about the actual incentives that are driving that and what might be happening to create a scarcity event in Urkot during the winter and then how helps manage that and how Bitcoin miners play into it. Yeah, I think this is the this is really hitting on the the beauty of Bitcoin mining in Urk.
(02:43) It’s a completely economically rational uh responder to a price signal. Uh you can see there that they have a line drawn at what is it 120 megawatt hours is like a assumed average of break even price, right? 122 megawatt hours, which is what Urkott had calculated as what they viewed Bitcoin mining’s break even being based on a S19 J Pro, which is just interesting that someone at Urkott is doing this math, presenting this to Urkott.
(03:15) Yeah, when Evan Neil was at Urkott, he was he was in the weeds. He’s a Bitcoiner, so we uh we had one of us in there. He since left, but I digress. Um, so what you can see is that the pink highlights on the graph, those are Urkott issued conservation appeals.
(03:38) Those are alerts that are coming out via your retailer or your quezy or even like to a residential uh user on your app being like, hey, looks tight. We don’t know if we have enough generation to serve the projected load. So if you could, you know, you know, not use as much load, that would be appreciated. So, and this is when in a in the winter, everyone’s running their heaters. Yes.
(04:01) Freezing temperatures, maxing it out, right? And temperatures are going down. So, it’s it’s likely at some point early in the like overnight, early in the morning, right? It it’s it’s likely, yeah, overnight early in the morning. Uh, we have that in the in the winter time, it’ll peak in the morning time.
(04:18) Sometimes you’ll get an evening peak, too. But the load curves look completely different on uh on uh winter versus summer. But here what you will what you’ll see is um the blue which is the total large flexible load start to step down as that price line the black line starts to go up. So the miners are doing this um purely off of like an economically rational decision.
(04:44) Like if if you’re making 120 bucks a megawatt hour and power costs $200 a megawatt hour, you’re losing money. It’s a quick way to go out of business. Like you do not want to be doing this. There’s a potential to have some layered on hedges or like be committed to an ancillary service. So you have to keep your load on.
(05:05) Like don’t want to get too too too nuanced here, but the Bitcoin miners are responding to the price. The price is a signal of generation scarcity. As generation um becomes more and more scarce, it goes up and up the generation offer curve and it settles at the uh lowest price generator that clears the market. And so in this situation, there was less and less generation.
(05:32) They’re um likely hitting the ODC operating reserve demand curve. That’s just that’s a long string of erdcain that sorry ord. Yeah, operating reserve demand curve. And so that basically when UrkOT gets to I think it’s 2 or 3,000 megawatts worth of reserve capacity left, meaning latent gen that can turn on like when it’s when load and gen is within $2,000.
(05:56) They start increasing the prices to send the right price signals to have every generator turn on. Whether it’s like this old steam generator, whether it’s a marginally economic coal unit, like they’re sending the price skyhigh and then hoping that the market responds and you know acts rationally in an economic basis and Bitcoin money does here. And so on the other side on the other side. Exactly. Yeah.
(06:19) Because the price is going up and nobody wants to eat a,000 or $2,000 a megawatt hour. It’s a it’s a very quick way to to lose money. So if someone is looking at the chart when this winter storm starts there’s about 2.2 gawatt of large flexible load which in your mind is that ver virtually all Bitcoin mining. Yes. Yeah.
(06:49) Yeah, practically speaking, yeah, there is, and we’ll talk about why that’s the case, but just wanted to to touch on this now that as the as the market price started moving up before the first conservation notice, about 500 megawatts had already come offline. And then as the price ramped further another 1 gawatt of power came offline and a bitcoin a bitcoiner would look at that and say like that’s that’s Bitcoin mining helping the grid but this interesting note from from which is basically saying not all large flex not all not 100% came offline but making making that point right Um, but then
(07:42) basically the market price comes down, the large flexible load comes back up to like 1.9 gawatt and then the next time there’s a conservation notice 1.6 comes offline. Yeah. Um, but just talk about the um the relationship there. Like it’s not a it’s a request 100% of the market, right? Even like grandma and grandpa at their house. This is a this isn’t a notice that’s going out just to Bitcoin miners. Correct. Yeah.
(08:15) This is is uh this is an you knowwide notice conservation appeal. And you can even see on