Apr 30, 2024 - Business

Bitcoin miners offer solution to AI power demand: Just power down when needed

Illustration of an exclamation point with the dot resembling a power button.

Illustration: Annelise Capossela/Axios

As the looming electricity demand from artificial intelligence datacenters has lawmakers and grid operators scrambling for solutions, Bitcoin miners point to a partial solution: powering down when a utility needs them to.

Why it matters: AI is projected to be one of the most transformative technologies in decades, but only if it can access torrents of new electrical power.

The big picture: So-called demand response programs are partnerships between grid operators and large energy consumers, where the latter curtails their use during times of peak demand.

  • And Bitcoin miners all seem to agree, the way for AI datacenter operations to get good deals on new sources of electricity comes down to getting good at it.

Axios spoke to leaders in the mining industry, one that lives and dies by its ability to access surplus electricity, to see what lessons they could offer for this new power-hungry electricity customer.

Between the lines: New clean sources of power, particularly wind and solar, don't tend to be located where the demand is. To convince financiers to back building such projects, it helps to know that they can guarantee some kind of base load.

  • This is where Bitcoin miners have come in. They can take out long-term contracts at a consistent power load, to guarantee a minimum return on capital.

What happens when the grid upgrades and gets more customers for those new sources, and then demand peaks? Certain customers, like Bitcoin miners, can just turn off.

  • Those customers get sweetheart deals on power for making such commitments.
  • As executives at Terawulf and Riot Platforms explained, Bitcoin miners don't need to save work when they shut down, so they can be off in less than a minute.
  • This flexibility is extremely valuable in places with seriously variable demand. It allows generators to justify capital expenses on greater capacity while also delivering consistent service at peak demand.

Case in point: In Texas, which has a robust demand response program due to high variability in demand, "it's often the case that a Bitcoin mining facility turns off rather than a natural gas plant turning on," Pierre Rochard, head of research at Riot Platforms, explained to Axios.

Reality check: AI providers will probably never be able to power down nearly instantly like Bitcoin miners do, but they can optimize their systems to power down as quickly as possible.

  • If they can strike deals with power companies to shed loads within a certain timeframe, miners explained, AI companies will be able to get more favorable deals on long-term power supply.
  • The Department of Energy, meanwhile, is contemplating using AI to make both the electrical grid and data centers more productive and efficient, Axios' Andrew Freedman writes. Instead of running at 90% energy demand all the time, data centers could be made more flexible, the agency said.

Flexibility was a common theme. Bitcoin miner Terawulf runs on nearly 100% carbon-neutral power, with hydro and nuclear power. The firm is now dabbling in AI as a way of diversifying revenue.

  • Terawulf's founders are energy industry veterans, and co-founder Nazar Khan argued that the geographies where big tech has gotten accustomed to parking data centers are running out of capacity for new load.
  • "There's a convergence between where we operate, and where [AI datacenter] operations are going to want to be," Khan told Axios.

The bottom line: "These AI loads are going to have to be more responsive than they are envisioning today," Khan said.

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