Physical and Economic Viability of Cryptocurrency Mining for Provision of Frequency Regulation: A Real-World Texas Case Study

TL;DR

This paper assesses the physical and economic feasibility of using cryptocurrency mining operations to provide frequency regulation services in the Texas power grid, highlighting profitability and operational strategies.

Contribution

It introduces a decision-making framework for mining facilities to optimize participation in frequency regulation and evaluates real-world profitability using ERCOT data.

Findings

Cryptocurrency mining can be profitable for frequency regulation in Texas.

Mining facilities demonstrate competitive response times in transient simulations.

Profitability depends on operational costs and market conditions.

Abstract

Demand flexibility plays a pivotal role in modern power systems with high penetration of variable energy resources. In recent years, one of the fastest-growing flexible energy demands has been proof-of-work-based cryptocurrency mining facilities. Due to their competitive ramping capabilities and demonstrated flexibility, such fast-responding loads are capable of participating in frequency regulation services for the grid while simultaneously increasing their own operational revenue. In this paper, we investigate the physical and economic viability of employing cryptocurrency mining facilities to provide frequency regulation in large power systems. We quantify mining facilities' operational profit, and propose a decision-making framework to explore their optimal participation strategy and account for the most influential factors. We employ real-world ERCOT ancillary services data in our case study to investigate the conditions under which provision of frequency regulation in the Texas grid is profitable. We also perform transient level simulations using a synthetic Texas grid to demonstrate the competitiveness of mining facilities at frequency regulation provision.