Sep 20, 2022

Offset Industrial Energy with Bitcoin Mining

Subsidize American Manufacturing with Bitcoin Mining

The year is 2022 and energy is simultaneously becoming more scarce and more in demand.  America is hellbent on onshoring manufacturing.  But our energy costs are mooning.  And we're seeing industrial businesses shut the doors due to unsustainable energy prices.  This is why bitcoin mining is revealing itself to be a budding industrial tool that could convert into critical infrastructure to onshore manufacturing, and ultimately subsidize all of our manufacturing.

Industrial plants are shutting down due to electrical costs.  As stated by Bloomsburg, Century Aluminum and Alcoa are the largest aluminum producers in America, and they are being strong armed by energy prices to shut down significant sizes of their production.  The article assumes that high energy prices are forcing the shutdowns.  However, it could also be questioned if demand is lagging.  But if it is a demand problem, that too could be a result of inflated prices seen by both consumers and manufacturers.

And inflated prices are only the beginning.  The EIA is estimating natural gas prices to nearly double in price.  And a significant amount of electricity is created from natural gas.  These price rises are first hitting energy intensive business first (aluminum smelting), but will bleed out to remaining manufacturing.  

This will be a major monkey wrench in our country's adjustment to strengthen our domestic supply chains.  Because the pandemic revealed how insecure our supply chain is.  So we must progress with more homeland manufacturing, regardless of the rising expenses.  So what's the solution?  Continue to depend on overseas manufacturing?  Or raise our consumption costs due to increased manufacturing costs?  The best solution is to find a way to offset these energy expenses.  One creative solution is shaving peak demand with solar and batteries.  Clever, but the upfront cost can easily exceed millions of dollars of construction, which would take years to recoup the investment.  At this precise moment (and hopefully I rattle enough minds to grow a chanting bandwagon), I am the only one pitching that these industries should be mining bitcoin to offset energy prices.  

Bitcoin Mining Subsidy - American Manufacturing

Commercial and industrial facilities are unique in that they have 2 major line items on their energy bills - they get charged for their consumption (KWh) AND their peak demand (KW).  Residents are not familiar with peak demand because they don't typically require enough electricity to run their homes to jeopardize the grid's stability.

Commercial and industrial plants do draw SIGNIFICANT energy.  This means that power providers have to be ready at a moment's notice to provide peak demand for these monstrous energy consumers.  Here's a graph that can be found on this document from  the US Department of Energy:

In this example, this plant's peak demand (max load) is 340 KW.  That means, at any given moment, the power provider has to have 340 KW of capacity available for this plant.  Because of this max capacity, this plant gets billed for 340 KW of capacity.  But if you look closer, they are only using max capacity for about 20 minutes throughout a 24 hour day.  So they're basically getting billed for energy they are not even using!  All the green in the graph below is inexpensive, industrial-rate energy they aren't using, but they're still getting billed for:

I went into more detail on the economics in a previous article.  But it's clear this unused capacity can be used to mine bitcoin.  Industrial plants have privileged electrical pricing, and get some of the biggest discounted electricity rates in the country.  which can then be used to offset rising electricity costs.  

It should be noted that this is not a perfect fit for every facility.  The right facility will have high peak demand costs, and low consumption costs.  And the difficulty of bitcoin mining also has to be fulfilling to make this work.

Beyond the economic engineering, there's also the physical engineering.  Heat emission, sound reduction, storage, IT set up, power connection are all components that these plants need to figure out.  But these plants are already equipped with the infrastructure and man-power to hook this up!  I've been in over 100 different manufacturing plants, and each one has engineers, IT pros, HVAC specialists, and electricians on staff.  Every plant already has a team in place to work out these important details.  

With this forecast, I see a strong future where bitcoin mining becomes an industrial tool for EVERY commercial and industrial building, which will offset electrical costs,  AND subsidize American manufacturing to give us back our control on our supply chains.


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