Distributed Energy and Energy Storage Currency Bitcoin

Chapter 0 Introduction

Bitmain recently announced a new mining project, the Bitmain Xinjiang Mine, which looks magnificent from the renderings. But what surprised me even more was that the project is said to use solar and wind power for mining. Solar and wind power both rely on the weather, so is it too risky to use them for mining? This requires a discussion on distributed energy technology.

Chapter 1 Centralized Energy and the Challenges of the National Grid

Centralized energy refers to the concentration of chemical energy and potential energy in a certain geographical location, such as coal mines, natural gas reservoirs and dams, which can then be used to build power stations and generate a large amount of electricity. This forms a large supply side of electricity.

However, the user side of energy consumption is distributed, that is, cities across the country are distributed, and factories across the country are also distributed. The demand for electricity from these geographically distributed users is distributed, while the supply side of electricity is highly concentrated.

The State Grid connects power stations across the country to form a supply-side grid connection. Then the user side all draws electricity from the grid, thus achieving a balance between the supply side and the demand side. The supply side generates as much electricity as the demand side needs.

Here is a digression. Our country has a territory of 9.6 million square kilometers, and the electricity needs of more than 1.4 billion people, as well as the electricity needs of the world's factories, are all met by the State Grid, which is really a great thing. Don't say I am a 50-cent person, people who understand the manufacturing industry understand that this is a great initiative.

This national grid connects the supply side and the demand side and can balance the difference in electricity consumption at different times. However, due to the need for the operation of power generation equipment, the power generation of all power stations must have a minimum limit. Once it falls below this value, the power station and even the entire power grid itself will be unstable or even collapse. However, in some time periods, the demand side really cannot use so much electricity. For example, the country built too many hydropower stations and thermal power stations in the past few years, but China's status as the world's factory has declined in the past three years. The electricity demand on the demand side of the power grid has declined relative to the total power growth of power stations, and the power generation on the supply side is close to the minimum value. At this time, the State Grid, as a company, began to shut down some small hydropower stations. This is the phenomenon of a large number of abandoned hydropower in China in recent years.

Centralized energy has another defect caused by external forces. That is, after the advancement of science and technology, a large number of new energy and renewable energy have emerged, including wind power, solar energy, biomass power generation, etc. These new energy sources have low stability, but the long-term operating cost is also low and environmentally friendly. However, the output power is unstable, which makes it difficult to connect to the power grid. The volatility of power grid power is very fatal. The emergence of a large number of new energy sources has brought new technical problems to the State Grid.

In order to encourage the development of new energy, our country not only provides large subsidies to new energy companies, but also directly shuts down many hydropower stations to make way for new energy.

The national power grid built with centralized energy also faces a huge challenge, which is the weakness of centralization. When the entire system is attacked or faces sudden failure, the whole country will face a disaster that is difficult to bear. This kind of thing happens from time to time around the world. For example, in February 2008, due to heavy snow, Hunan Province suffered a power outage, and 4.5 million people lived without electricity for two weeks. In August 2003, there was a power outage in the northeastern United States and Canada, and more than 50 million people were without electricity for two days.

In order to solve these three contradictions, the concept of distributed energy has been technically proposed.

Chapter 2 Distributed Energy

Wind energy, solar energy and biomass energy are called distributed energy because their energy distribution is not as concentrated as that of coal mine chemical energy and dam potential energy. Distributed energy can also be used to build power stations for power generation, or it can be connected to the national grid and become a member of the supply side.

The total amount of these distributed energy sources is huge. In theory, solar energy is enough to meet all human energy needs. However, the utilization rate of distributed energy is very low, and the energy volatility and randomness are large. In particular, it depends on the weather and the power generation is difficult to control. This characteristic makes it difficult to directly integrate these distributed energy sources into the national power grid, which will eventually lead to instability of the entire power grid. Therefore, the state has also issued a large number of restrictions on the access to the grid of this distributed energy, and power stations that cannot achieve stable power are prohibited from accessing the grid.

When the world was promoting carbon trading (CDM) around 2012, our country invested heavily in building new energy power stations, especially photovoltaic and wind power. But in recent years, carbon trading has also failed, and the State Grid has put forward new requirements for distributed energy, resulting in a large amount of abandonment of these production capacities, causing terrible waste.

The use of distributed energy is an irresistible trend. First, it is environmentally friendly. Second, it is renewable and its overall cost tends to decrease. Third, it overcomes the shortcomings of centralized energy, such as its potential for easy collapse and weak ability to resist attacks.

The development of science and technology has brought new ways out for these early investments.

Chapter 3 Energy Storage Technologies and Microgrids

The use of centralized energy generation involves two major costs: the cost of power generation itself and the cost of transmission. Distributed energy, however, requires an additional technology, energy storage, because the output power is difficult to control, which is another cost.

The peaks and valleys on the supply and demand sides of distributed energy are often mismatched . For example, when the sun is high, the solar power station generates a lot of electricity, but users do not turn on the lights during the day. But at night, the solar power station has no power, but users turn on the lights. What to do? This is where energy storage technology comes in. The electricity generated when the power is high is stored first, and then released when the demand is high.

A microgrid is a small complete power grid that combines a distributed power station with the nearest demand side and configures a set of energy conversion, protection and monitoring devices. This small grid and the large grid have a common connection point (PCC). When the output power of the small grid is high and exceeds its energy storage capacity, it can output power to the large grid. Conversely, the large grid inputs power to the small grid.

This kind of microgrid forms an autonomous system. The most autonomous microgrid can be disconnected from the main grid to form an isolated island. However, this is difficult to achieve technically. Currently, there are not many microgrids in the world that meet this isolated island model.

At present, the more technically reliable energy storage technologies in the world include lithium battery energy storage, pumped storage (used in hydropower stations), compressed air energy storage, flywheel energy storage, etc. These technologies are conducive to the design of microgrids and the full use of distributed energy.

Chapter 4 Bitcoin, the Energy Storage Currency

The Xinjiang mining project released by Bitcoin Mainland this time targets new energy sources for mining, mainly wind power and solar power.

Xinjiang's total wind and solar energy is huge, but the utilization rate is extremely low. When the international carbon trading (CDM) project was popular around 2012, Xinjiang built a large number of new energy power stations. When I worked in an environmental protection company, I also worked on a project in Xinjiang, which was gas power generation. At that time, I saw that Xinjiang was an energy gathering place, but unfortunately it could not be used. Now many such solar power stations and wind power stations are operating poorly.

The main obstacle to the utilization of wind and solar power in Xinjiang is that the energy distribution is too dispersed, resulting in high transmission and storage costs. The electricity demand in Xinjiang is too low. There is no industry there, and everyone is herding sheep. What kind of electricity does this consume? Sheep don’t need to be charged. The State Grid cannot absorb such power with such high output power volatility and randomness.

The state's subsidy policy for new energy also requires new energy power stations to form microgrids and achieve a certain power demand before they are allowed to access the main grid and receive subsidies. Currently, most of these new energy companies in Xinjiang cannot get subsidies, and cannot even sell electricity on the main grid.

But now with Bitcoin, Bitcoin mining is a big power consumer. The key is that Bitcoin mining is a profitable business. A large number of Bitcoin mining sites can be built near distributed renewable energy power station companies, which can effectively increase the demand side of the microgrid there.

This type of microgrid can greatly reduce the energy storage cost when the power generation capacity is high by satisfying its own demand side. Moreover, this kind of self-consumption does not worry about insufficient power when the power generation capacity is low, because there is the national grid, and there are plenty of large grids. Those centralized energy power stations are waiting for you to buy electricity, and they can provide as much as you want. The national grid likes to treat the microgrid as a demand side to supply power. It does not like the microgrid to supply power to the large grid, because it will bring greater power volatility and randomness, and will collapse.

The Bitcoin mining business has increased the demand side of the microgrid constructed by the distributed new energy power station, reduced the energy storage cost of the microgrid, and reduced the cost of transmitting electricity from the microgrid to the outside world. It can be said that the credit is unlimited.

The sale of Bitcoin mining proceeds is simpler, more convenient, faster and more efficient than any industrial product. You can directly deposit it to the exchange and sell it. This process does not incur any additional costs. But if you change to a fertilizer manufacturing plant (which is the most common demand side of centralized energy power plants), it will be troublesome to transport the fertilizer. The cost of establishing a Bitcoin mine is also lower than that of a traditional energy-consuming factory, and the mine is environmentally friendly, which is a huge advantage over the high emissions of general energy-consuming factories.

Distributed energy power stations and Bitcoin mining form a microgrid, with one side being the supply side and the other side being the demand side, which perfectly realizes the great autonomy of the microgrid. This is a very good solution for distributed energy power stations to build microgrids.

Chapter 5 Another benefit of using solar and wind energy to mine Bitcoin

The life of the mining machine is closely related to the operating environment. Currently, mining mainly uses thermal power and hydropower. In particular, Chinese miners mostly use hydropower, but if a mining farm is built at a hydropower station, the air humidity in the mining farm is very high, which will shorten the life of the mining machine. Circuit boards are sensitive to air humidity, and the industrial cost of reducing air humidity is very high, so mining farms will not deal with it.

However, if solar and wind energy are used for mining, there is no problem of air humidity, and the life of the mining machine can be longer. The main thing that harms the life of the mining machine near solar and wind power stations is dust, but the cost of filtering dust is much lower than the cost of reducing air humidity.

Chapter 6 Conclusion

Decentralized social structure has become a trend. Bitcoin has successfully achieved the decentralization of currency, which will guide all walks of life to establish a broader bottom-up, decentralized social structure.