Thread by @brandon

We at @LAYER1OFFICIAL are building a virtual power plant.

The technology making this possible: #Bitcoin as a battery.

Here's how our "Bitcoin Batteries" work, and how they help stabilize electrical grids. 👇

Renewable energy sources account for a growing percentage of electricity production each year. ♻️

But renewables vary in output. Wind and solar don't generate predictably.

Relying on renewables means an unpredictable electricity supply. This is a problem.

The electrical grid must balance electricity supply with demand or risk catastrophic failure.

When supply < demand (for example, due to low wind output), two options exist to get back to equilibrium:
• Adding to supply
• Curtailing demand

🔴 SUPPLY-SIDE:
An obvious way to add to supply is with a traditional, electrochemical battery.

These batteries charge at periods of grid over-supply, and sell the energy back in periods of under-supply.

The trillion-dollar question: are these batteries viable? Generally, no.

Selling electricity back to the grid when it's needed is a form of "energy arbitrage."

Traditional electrochemical batteries cost hundreds of thousands of dollars per every MWh they store.

Energy arbitrage is insufficient to recoup that initial investment in a timely matter.

🔴 SUPPLY-SIDE:
Another supply-side option: burn fossil fuels to generate the difference when renewable output is low. 🦕

This means the more we adopt renewables, the more we rely on fossil fuels to keep the grid balanced.

This defeats the purpose of using renewables.

🟢 CURTAILING DEMAND
Instead of focusing on supply, there is "demand-response."

During electricity shortages, power companies can pay customers that elect to power down.

This, again, is energy arbitrage. By powering down, consumers are "selling" electricity back to the grid.

Energy arbitrage alone is not profitable enough to justify creating a demand-response business.

A viable demand-response candidate thus:
1. has a "default" business model
2. draws meaningful power (MW/h) for that default business model
3. can power down at a moment's notice

Finding a business fitting all three criteria is rare.

AWS, for example, draws meaningful power but could never power down.

Retail options, like smart fridges and dishwashers, would require hundreds of thousands of homes to match the power draw of even one industrial consumer.

Enter Bitcoin.

👩 Bitcoin mining has no clients, and no requirement for uptime.

🔌 Bitcoin mining's operational expenses come entirely from electricity. A subsidy has a ripple effect on profitability, creating perfect incentive to enroll as a demand-response provider.

💻 Bitcoin mining provides granularity in demand-response that alternatives can not. Miners can be shut down in batches, providing the precise wattage the grid needs.

⚡️ A miner's incentive is to always increase power consumption. The more power drawn, the more hashes computed.

💵 Mining Bitcoin requires zero additional infrastructure. Its most profitable use case is doing nothing once created.

If Bitcoin is money, miners can provide demand-response, yielding subsidized power prices. We add miners, draw more power, and the cycle continues.

This loop, predicated on Bitcoin being money, is how we can build a virtual power plant.

Our Bitcoin mining containers (batteries) can sell electricity back to the grid -- enough to power cities -- instantly, and without burning a single non-renewable.

https://twitter.com/alexanderliegl/status/1265689353537433600?s=20

In effect, @LAYER1OFFICIAL builds batteries that are viable as a standalone business.

Our Bitcoin Batteries consume megawatts of electricity, ready to be released to the grid at a moment's notice.

It's not electricity "storage" in the traditional sense. In practice, it is.

(h/t @alexanderliegl: "Bitcoin Battery," "virtual power plant")