You may have already heard about the large amounts of energy that Bitcoin miners utilize in the process of working on the blockchain and spitting out another coin, or “mining” it.
Recently, I was introduced to an ingenious way of using this for stabilizing the energy supply of green sources. In a nutshell, how it works is that renewable energy sources, are hooked up to Bitcoin miners when there is excess capacity. So when the sun is shining, and the wind is blowing, there is too much electricity produced, and it is diverted to mine bitcoins. The value is stored, and when the wind stops, or the sun sets, and the electricity demand surpasses the supply, the utility company can buy energy with the bitcoins it mined, from somewhere else, and therefore balancing the supply with the demand.
Of course, the energy purchased has to come from somewhere else, but that’s outside of the scope of this short blog.
Most domains have some analog in another domain. Translating between one and the other can help understand an unfamiliar one. I know that’s probably clear as mud, but I just wanted to put it out there and I will try to explain in the next paragraph.
Many moons ago, I used to work in engineering for Industrial Systems. The kind that controls machines that are hurling material at meter per minute or lifting steel that weighs the same as 20 pickup trucks. I learned very early that whatever happens on the electrical side of the system, can also be seen at the mechanical or pneumatic side of it. This way voltage becomes pressure or force, and current becomes flow or velocity. These analogies can be drawn in many other scenarios, and the models that emerge from them can be very useful.
In the case of the “mining utility”, the price of the coins, is the energy spent to produce them, and the quantity of coins generated per period of time, is a measure of unused capacity. If -on the average- there is more capacity than demand, the amount of coins will increase over time, if it is the other way around, the bitcoin reserves will be depleted. The miner acts like a battery and stores energy, even though it is usually considered a financial asset.
For more on this, checkout the Bitcoin Clean Initiative’s website. What other domain translations have you used?