Bitcoin Mining: Solving Curtailment and Expanding Renewable Energy

he world’s transition to renewable energy is accelerating, but a growing challenge threatens to slow progress: curtailment. Curtailment occurs when renewable energy sources like wind and solar generate excess power that the grid cannot absorb. As renewable energy penetration increases globally, curtailment rates are rising, leading to wasted energy. However, Bitcoin mining offers a novel solution to this problem. By acting as a flexible, on-demand energy consumer, Bitcoin mining can help renewable energy producers avoid curtailment, stabilize power grids, and catalyze the growth of renewable energy infrastructure.

The Curtailment Problem: Wasted Renewable Energy

Curtailment is becoming an increasingly common issue across regions with high renewable energy penetration. In California, the state’s grid operator, CAISO, is on track to curtail more energy than the bottom 36 nations combined by 2030. This occurs because solar power peaks during the day, while energy demand typically spikes in the early evening. Without adequate storage or transmission infrastructure, this excess energy is wasted.

Texas which has been dominating in renewable growth, particularly wind and solar, also faces significant curtailment issues due to grid constraints, especially in the western part of the state where renewable generation is abundant but far from population centers. The Electric Reliability Council of Texas (ERCOT) has experienced increasing curtailment as transmission infrastructure has struggled to keep pace with the rapid growth of renewable energy. In 2022, around 8.5% of wind and 9% of solar generation were curtailed at times, primarily due to bottlenecks in the grid and periods of low demand. This equates to approximately 14,250 gigawatt-hours (GWh) of wasted energy.

Chile faces a similar challenge, with 18.7% of renewable energy curtailed in early 2024 due to inadequate transmission lines and storage facilities, particularly affecting the vast solar power generation in the northern region. As the country continues its aggressive push towards renewable energy, aiming for 70% renewable generation by 2030, curtailment rates are likely to increase without significant infrastructure improvements. Generators in Chile recently reported curtailing as much as 30% of their generation. The mismatch between renewable energy production in remote areas and demand centers in the south exacerbates the issue in Chile.

Germany, as a global leader in renewable energy, particularly in wind and solar power, faces significant curtailment challenges. Curtailment occurs when renewable energy generation exceeds grid capacity or demand, leading to wasted energy. In recent years, curtailment in Germany has increased due to the rapid expansion of renewable energy and delays in grid expansion. For instance, about 10,400 GWh of renewable energy was curtailed in Germany in 2023, primarily from wind farms in northern Germany where energy production is high, but demand is concentrated in the south. This imbalance is exacerbated by bottlenecks in the country’s transmission infrastructure, which has struggled to keep pace with the growth in renewable capacity as country moves toward its goal of achieving 80% renewable electricity by 2030.

As these examples demonstrate, curtailment is a growing global problem, one that threatens the potential of renewable energy to power the future. Without solutions, renewable energy producers may face diminished returns on their investments, potentially slowing the deployment of clean energy projects. This is where Bitcoin mining steps in.

Bitcoin Mining as a Flexible Load

Bitcoin mining’s flexibility is its most valuable asset in combating curtailment. Unlike traditional energy consumers, which operate on a fixed schedule and require constant power, Bitcoin miners can adjust their operations based on energy availability. This makes them an ideal partner for renewable energy producers, who often generate power intermittently based on weather conditions.

For instance, during periods of low demand and high renewable energy output, Bitcoin miners can ramp up their operations to absorb the excess energy that would otherwise be curtailed. Conversely, when demand on the grid is high, miners can scale back their energy use, allowing more electricity to flow to households and businesses. This on-demand flexibility not only prevents energy from being wasted but also provides economic value to renewable energy producers, who can sell power that would have otherwise been lost.

In Texas, the Electric Reliability Council of Texas (ERCOT) has actively integrated Bitcoin miners into its grid to act as flexible load resources. These miners absorb surplus wind energy when demand is low, stabilizing the grid and preventing curtailment. According to a 2023 study from Cornell University, early-stage renewable energy projects in the U.S. could generate hundreds of millions of dollars by selling excess power to Bitcoin miners during pre-commercial operations, where energy generation exceeds grid capacity.

Monetizing Excess Energy: A Financial Lifeline for Renewables

Bitcoin mining offers renewable energy producers a valuable revenue stream, particularly during the pre-commercial development phase of wind and solar projects. During this phase, renewable energy facilities are generating electricity but may not yet be connected to the grid. Without a buyer for this excess power, producers face financial losses. However, Bitcoin miners can act as “anchor tenants,” purchasing the energy that would otherwise go to waste.

For example, a Cornell study found that Texas alone could generate $47 million in additional revenue from Bitcoin mining during the pre-commercial phase of its renewable energy projects. This added financial stability allows developers to recoup their investments faster and reinvest in future clean energy projects, accelerating the deployment of renewables.

By acting as a flexible load and monetizing excess energy, Bitcoin mining helps renewable energy producers overcome curtailment issues and stabilize power grids. This symbiotic relationship enables renewable energy developers to optimize their assets, improve financial returns, and expand capacity, all while contributing to the global energy transition.

Addressing Common Criticisms: Bitcoin’s Environmental Impact

Bitcoin mining has faced significant criticism for its energy consumption and carbon footprint. Critics argue that the electricity used to power mining operations contributes to climate change, especially when sourced from fossil fuels. However, these arguments ignore the potential for Bitcoin Mining to be utalized as a tool to enhance clean energy.

Multiple, recent peer-reviewed articles provide evidence to show that Bitcoin mining can be a tool to enhance and expand variable renewable energy. These papers surmise that Bitcoin mining can act as tool to monetize excess generation ensuring the long term viability of VRE sources such as wind and solar.

Bitcoin mining provides a market-driven solution for reducing energy waste. Unlike traditional methods of curtailing power, which often involve shutting down production, Bitcoin miners offer a way to convert surplus energy into economic value. Bitcoin mining can act as an off-taker for renewable energy, allowing producers to sell power that would otherwise be curtailed. This improves the carbon footprint of the Bitcoin network by reducing its reliance on fossil fuels, creating a win-win scenario for both Bitcoin miners and renewable energy producers.

Bitcoin Mining and the Future of Renewable Energy

As renewable energy penetration continues to grow, curtailment rates are expected to rise. The International Energy Agency (IEA) has predicted that renewable energy will account for 90% of global energy growth by 2030. However, without adequate solutions to manage this intermittent power, much of this energy could be wasted. Bitcoin mining offers a practical solution to this growing problem, providing a flexible and scalable consumer of surplus energy.

As countries around the world push for net-zero emissions by 2050, the integration of Bitcoin mining into renewable energy grids can play a pivotal role in stabilizing power systems and accelerating the deployment of clean energy infrastructure. By absorbing surplus energy, providing flexible load resources, and offering additional revenue streams for renewable projects, Bitcoin mining can help solve curtailment issues and foster the growth of renewable energy.

This symbiotic relationship between Bitcoin mining and renewable energy is not just theoretical; it is already being implemented in regions like Texas and Georgia, where miners are working alongside grid operators to stabilize the power supply. As renewable energy penetration increases, the role of Bitcoin mining in solving curtailment and enhancing grid flexibility will become even more crucial.

In the long term, Bitcoin mining has the potential to be a driving force in the global transition to renewable energy. By acting as a flexible, on-demand energy consumer, Bitcoin mining can help renewable energy producers overcome curtailment issues, stabilize power grids, and catalyze the growth of renewable energy infrastructure—transforming Bitcoin from an environmental liability into a powerful tool for the clean energy revolution.

Whats Next?

As the world moves toward a future powered by renewable energy, curtailment remains a major challenge. Without solutions, renewable energy producers face significant financial losses and wasted power. However, Bitcoin mining offers a promising solution. By absorbing excess energy, providing flexible load resources, and generating additional revenue for renewable projects, Bitcoin mining can help solve curtailment issues and foster the growth of renewable energy infrastructure.

As renewable energy continues to grow, Bitcoin mining has the potential to become a key player in the global energy transition, providing a sustainable and scalable way to harness the full potential of wind and solar power. With its unique ability to act as a flexible load, Bitcoin mining offers a win-win solution for both the energy sector and the environment, making it an essential tool in the fight against climate change.

If you are an investor looking for how to navigate the intersection of VRE and Bitcoin mining, reach out to our team so we can share the opportunities at Horizon.

If you are an energy regulator, get in touch with SatoshiAction.io to learn more about potential policy solutions so you can ensure your energy system can be fully optimized by Bitcoin mining.