Five Factors That Make Bitcoin Miners Unique – Bitcoin Magazine

This is an opinion piece by Jaran Mellerud, an analyst at Arcane Research who specializes in Bitcoin mining.

Most people don’t think of bitcoin miners as just another energy-intensive industry, but there is one big difference: bitcoin miners are particularly flexible about when and where they consume energy. Arcane Research’s new report titled “How Bitcoin Mining Can Transform the Energy Industry” found five factors that make Bitcoin miners unique energy consumers, which I will explain here.

Bitcoin miners are price-sensitive energy consumers

A price-sensitive energy consumer has a financial incentive to adjust its energy consumption according to the price of energy. Bitcoin miners refine energy into bitcoin and only have a financial incentive to do so if the price of energy consumed is lower than the price of bitcoin production.

The chart below shows the equilibrium price of energy from bitcoin mining in 2021 and parts of 2023. This equilibrium price of energy is the dollar-denominated revenue per MWh of energy injected in a bitcoin mining machine (Antminer S19). Suppose a bitcoin miner’s price per MWh rises above this line. In this case, the miner has a financial incentive to turn off their machines because they would earn less using that energy for bitcoin mining than they would pay for the energy.

Source: Hashrate Index

Since energy is such an important component of the cost structure, miners always pay attention to their energy prices and can calculate their equilibrium energy prices with certainty. During power shortage events, the spot power price will rise far more than the breakeven price of miners’ power, prompting miners to curtail production and let power flow to consumers. less price-sensitive energy providers, such as households.

Bitcoin Mining is an interruptible process

Not only are bitcoin miners financially incentivized to stop consuming energy if spot energy prices exceed their equilibrium price, but they are also fully able to do so due to the interruptible nature of the bitcoin mining process.

A bitcoin miner can halt production and power consumption at any time without losing more money than the alternative cost of not producing bitcoin. It can not only pause its consumption, but also adjust it granularly up or down in kilowatt increments.

The interruptibility of the bitcoin mining process becomes evident when comparing a bitcoin mining facility to a conventional data center. A conventional data center performs many complex processes and must maintain availability due to its customers. Availability is so critical to data centers that they are ranked Tier One through Four based on their uptime guarantees and power redundancies. Bitcoin miners and some other high performance computing processes are the only interruptible data center processes.

Since bitcoin mining is an interruptible and price-sensitive load, the process is exceptionally suited as a demand-response tool that can help bolster power systems.

Bitcoin mining operations are location independent

Most energy-intensive industries produce physical products that require access to supply chains. On the other hand, Bitcoin miners produce hashes that are sold on the internet. Therefore, a bitcoin mining facility can usually be built in any location with cheap energy and internet access.

The location agnosticism of bitcoin mining allows the energy consumer to be taken directly to the energy source. Bitcoin miners are the ultimate customers of previously locked-in energy resources, which is why oil producers have started using natural gas that they would otherwise use to mine bitcoin.

bitcoin mining in texas

Source: Arcane Research

The location agnosticism of bitcoin mining becomes clear when looking at a map of bitcoin mining operations in Texas. They are almost all located in the desert in the far west of the state, where they feed on the region’s stranded wind and solar.

Bitcoin mining operations can be scaled modularly

A bitcoin mining machine consumes a specific amount of electricity, and it is possible to combine different amounts of these machines in different load levels. It doesn’t matter whether an energy asset owner wants a bitcoin mining load of 5 MW, 20 MW or 100 MW: all load sizes are possible by changing the number of machines.

bitcoin mining windmills

Source: Arcane Research

The modularity of bitcoin mining makes it possible to design a bitcoin mining load adapted to the available energy production capacity. This is particularly relevant when matching bitcoin mining load with the excess production capacity of a stalled renewable energy generator to improve its economy.

A Bitcoin mining operation can be designed to be portable

We can design a bitcoin mining payload specifically to maximize portability. Filling purpose-built shipping containers with mining machinery has recently emerged as a way to maximize portability. These container solutions are designed according to the plug-and-play principle and can be quickly shipped to other sites if necessary.

bitcoin mining portability

Source: Arcane Research

The portability of bitcoin mining makes it easy to relocate a mining rig to absorb excess energy and quickly move the rig to another location if the energy ceases to be excess at the first location.


Bitcoin mining has a combination of properties that makes it a particularly flexible energy consumer. This flexibility allows bitcoin miners to provide positive externalities to various energy systems globally, including strengthening vulnerable power grids, improving renewable energy economics, mitigating natural gas flaring, and reducing heating costs by reallocating waste heat.

What makes bitcoin mining such a promising energy tool is not just that it is a particularly flexible energy consumer, but that the financial incentives add up. With similar incentives, bitcoin’s mining and energy industries are destined to work together to solve some of our biggest energy problems. You can read more about this in the full report from Arcane Research.

This is a guest post by Jaran Mellerud. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.