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Many aspects of the Bitcoin mining industry are poorly understood and often misrepresented. But one practice in this sector stands apart for the misunderstandings and underappreciation that surround it: intermittent mining.

While most miners aim to achieve as much uptime as technically feasible meaning their machines are online and hashing instead of offline or powered down some miners dont. Instead of continuously mining, their uptime is far below industry norms and operates on more complex schedules built around variables like power supply and demand, time of day, intraday profitability and even temperature.

This article aims to give a brief but detailed overview of the economics and general operations of intermittent miners, and it highlights some discourse that shows how and why this part of the sector is often misunderstood.

This type of mining activity is often associated with renewable energy sources (i.e., wind and solar) since these types of power are also generated intermittently. Wind doesnt blow all the time, and the sun wont provide as much power on cloudy days renewable power is categorically intermittent. But bitcoin miners can easily adapt to the fluctuations in these power generation schedules, unlike most other energy consumers. Lancium is one example of a mining company building intermittent mining farms. Compute North is another example.

In fact, under normal operating conditions (meaning, without the balancing effect from miners demanding renewable power), these intermittent energy sources can create unnecessary stress on electric grids. The demand from miners, as discussed in more detail later, can serve to create a floor price for renewable energy generation projects, making them more attractive as infrastructure investments. Improving the economics of renewable power sources isnt the only use case for intermittent mining, but it is one of the most commonly discussed.

Demand-response programs that provide interruptible power sources to miners can be fueled by coal, natural gas or any other common fuel used to generate electricity. But to remain specifically focused on renewables, for examples sake, when bitcoin mining operations are paired with an intermittent renewable source of energy, both teams win.

A recent spate of somewhat negative commentary on intermittent mining came from Twitter posts written by several prominent proof-of-stake consensus advocates, including Ethereum co-founder Vitalik Buterin.

Martin Kppelmann, CEO of the decentralized trading protocol Gnosis, told his 33,000 Twitter followers that the idea of intermittent mining helping develop more renewable energy sources requires mental gymnastics. Buterin hopped in the tweets replies to say, I never understood how this concept of switching miners on and off frequently makes any sense at all. The end of the tweet betrays that, apparently, Buterin hasnt considered the issue closely though. He wrote, If you're paying for hardware but only using it half the time, in a competitive market you'll be running at a loss.

And these tweets are not exceptions. Alex De Vries (aka, Digiconomist), a long-time irrational mining critic, former Dogecoin promoter and an ex-employee of the Dutch Central Bank, has argued (without much supporting evidence) that Bitcoin mining and renewables make for the worst match.

Multiple bitcoin advocates and actual miners have attempted to clarify and correct the ideas behind intermittent mining strategies for Buterin and Kppelmann. Mining increases the elasticity of demand for electricity, explained HODL Ranch CTO Jesse Peltan. Cryptocurrency research and developer Noah Ruderman also countered Buterins misunderstanding. Mining monetizes energy that nobody wants. Much of that energy is renewable. It's just an energy subsidy, Ruderman wrote.

Intermittent mining is in fact widely praised across most of the Bitcoin industry. For example, Gideon Powell, CEO of Cholla Petroleum, wrote that [renewable energys] intermittent nature pairs beautifully with #bitcoin mining flexible load. And Mike Colyer, CEO of Foundry, described bitcoin mining as one of the most important innovations for the electrical grid in over 100 years. What innovation exactly? A large base load that is intermittent, Colyer wrote. The most obvious use case for bitcoin mining, according to Max Gagliardi, co-founder of Ancova Energy, is being paired with intermittent energy resources.

To the potential surprise of some critics, intermittent or interruptible mining strategies can sometimes be more profitable than continuous mining. A mining analyst at Galaxy Digital, for example, notee the case study of Riots Texas mining facilities in July. By selling power back to the grid instead of mining with it itself, it netted 30% more revenue over that period of time. And with that in mind, the next section takes a deeper look at intermittent mining economics.

One of the most important ways that interruptible mining operations are seeking a competitive edge in the current market is with increasingly sophisticated power purchasing agreements (PPAs). And when dealing with inconsistent power sources, miners need to develop customized strategies for determining how much power they can use, when that power is available, and what type and generation of mining hardware and firmware theyll energize with that power.

Hardware lifespans are also a consideration, since repeatedly shutting off and turning on hardware can limit its long-term utility. According to analysis from Braiins, even if miners arent running the machines at full capacity, minimal hashing to prevent fully powering down can be a winning strategy. Miners participating in load balancing programs and those using intermittent energy sources can help preserve their hardware by keeping it running in all but the most extreme peak demand scenarios, a blog post from the mining company suggests.

Where is this need for intermittent mining as an energy subsidy seen in the real world? California is seeing the economic case for building more solar supply significantly undermined when prices drop and excess supply has no buyer. Bitcoin miners power buyers of last resort could easily mitigate these problems.

Interruptible mining strategies will certainly become more dominant as the number of farms with 99% uptime or higher begin to represent a slightly smaller share of the industry. This will happen as pure-play mining companies negotiate lucrative PPAs with generation companies. And, more importantly, intermittent mining will come to the industrys fore as power companies themselves build mining teams to either improve or salvage the economics of their power generation plans. Either way, the future of bitcoin mining is bright.

This is a guest post by Zack Voell. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

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The Continual Power Of Intermittent Bitcoin Mining - Bitcoin Magazine