With effective management software, bitcoin miners can take full advantage of the industry’s unique efficiencies and potential profits.
This is an opinion editorial by Mitch Klee, an analyst at the mining management platform Foreman.
After China banned bitcoin mining in May 2021, nearly 75% of global hash rate was dispersed and relocated to other countries such as Kazakhstan, Russia, the United States and Canada. Since the seemingly-devastating mining ban took hold in the mining hotbed of China almost two years ago, the landscape of Bitcoin mining has dramatically changed. Remarkably, hash rate has continued to grow and currently stands at around 320 exahashes per second (EH/s), with the U.S. alone estimated to account for almost 37% of all hashrate.
This hypercompetitive growth has prompted miners to seek more efficient ways to manage their operations at scale, with miner management software being a vital part of their strategy.
Utilizing Bitcoin Mining Management Software
Management software is changing the landscape of Bitcoin mining by allowing mining facilities to manage their site effectively while saving costs and responding to energy grid demand.
Miner management software is a way to organize and coordinate miners at scale. Starting up, configuring, and programming each ASIC is daunting, involving multiple steps such as establishing pool connections, completing firmware updates, managing power control, and diagnosing problematic hash boards. This setup process can be incredibly difficult when not using the right software. However, with effective miner management software, users can effortlessly manage their mines, ensuring optimal performance and productivity.
The programmable nature of this software empowers users to take control of various processes through conditional statements. For instance, if ASIC temperature reaches a certain threshold, it can activate sleep mode, or if the electricity price exceeds a certain threshold, it can curtail mining operations. The dynamic nature of the software allows users to control exactly how they’d like to set up their mine. Moreover, the dynamic nature of the miner software unlocks powerful capabilities such as managing the power grid and initiating demand response, providing users with a comprehensive solution for optimizing their mining operations.
The Importance Of Demand Response
Demand response is the act of power consumers reacting to an increase in demand for a set amount of electricity on the grid. In a previous article, I expanded on Bitcoin miners’ unique leverage through Demand response, which I recommend reading to learn more about how this relationship functions. In short, Bitcoin miners can respond more quickly to grid signals and at a larger scale than any other industry consumer can, without significantly hindering their profit margins.
Mining sites percolate across global energy markets, both on-grid and off-grid, finding any and all energy arbitrage opportunities. Similar to the properties of water, Bitcoin miners will follow and flow into the lowest-cost energy sources, consuming excess energy when needed. The flip side is that miner management software allows miners to respond to an increase in demand instantaneously, lowering operating expenses and increasing the bottom line. This flexibility enabled by the software allows miners to optimize their operations continually, participate in unique grid service programs, and stay ahead of the competition.
One example is the strike price. When production costs exceed revenue, miners should shut off and management software enables this automatic trigger.
Miner management software allows users to automatically and programmatically respond to the high demand for electricity through the strike price mechanism. Couple that with demand-response programs, and miners are now lowering their overall costs and getting paid to shut down by utility company demand-response programs.
This programmatic response to increased demand adds an operating system to the century-old grid, with large flexible loads responding in real-time at scale. Spread this out to grids worldwide, and Bitcoin mining has just created an equilibrium-responding mechanism to keep the grid balance in check. By funding excess production, can keep the lights on at scale while lowering overall grid electricity costs.
Over the long run, bitcoin mining is a race to zero. Competition chases lower and lower spreads, looking for stranded and excess electricity, moving closer to power producers and eliminating all excess costs. It’s hard to say what the future holds for Bitcoin mining at scale. Still, software-enabled management over sites is becoming non-negotiable for miners as competition for more hash rate and lower electricity costs heats up.
This is a guest post by Mitch Klee. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.