Why is Illinois’ largest electric utility mining Bitcoin near one of its coal-fired power plants? | Business

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WEST ALTON, Illinois – In farmland near the banks of the Mississippi River, the state’s largest electric company has filled a shipping container with high-powered computers, under the shadow of one of its coal-fired power plants.

The project, which was quietly launched this year at Ameren Corp’s Sioux Energy Center. here is a controversial experiment: what wastes energy and stresses plants.

But the company needed something to make the computers work. Ameren therefore devised a task for the servers: “Mine” for Bitcoin, the polarizing digital currency now on a Wall Street tear.

The book is new. Experts are not aware of any other regulated U.S. utilities that mine cryptocurrencies. Ameren said the company believed it was “one of, if not the first in the country” to engage in the business.

If successful, the experiment could reduce carbon emissions from power plants and earn Ameren millions, both through more efficient operations and through the bitcoins themselves. The company has already collected more than 20 bitcoins, valued at over $ 60,000 apiece on Friday.

But critics are baffled. They fear the data center is a ploy to artificially increase demand for struggling coal-fired power plants, allowing them to run more than warranted. They argue that the company will burn more coal and pollute more, not less, while missing out on opportunities to use that same energy to power other technologies, such as battery storage or electric vehicle charging stations.

Meanwhile, state watchdogs that monitor utility spending and impacts on consumers want to ensure taxpayers stay safe from the costs of “speculative products, like virtual currencies.” .

“Should a utility get into cryptocurrency?” “, Asked Andy Knott, local manager of the Sierra Club. “It seems like a bizarre activity for a monopoly utility.”

Bitcoin – which only exists digitally and has no physical medium, such as a real coin or banknote – is the original and most valuable set of cryptocurrencies that are acquired and traded using a ledger on a shared network, known as a blockchain, which tracks every transaction and the addition of new “coins”.

Since Bitcoin’s perceived value is largely based on scarcity, mining individual bitcoins is difficult by design. It requires powerful computers to solve a gigantic number of math problems, or hashes, in the hope of receiving new coins available. Globally, billions of gigahashs – which means billions of billions of problems – are being calculated every second, according to academic experts who have testified before Congress.

All of this calculating consumes enormous amounts of energy. And it’s not just mining new currencies: Bitcoin transactions alone can each require twice as much electricity as the average American home uses in an entire month, experts say. Meanwhile, cooling computers can create a need for even more power, especially in hot climates.

Bitcoin consumes more electricity than all TVs in the United States, according to a University of Cambridge website dedicated to Bitcoin’s energy consumption, and more energy than entire countries, even the largest ones, like Argentina.

‘Fill the valleys’

Ameren says he did not increase peak power generation and that Bitcoin mining was never his original intention. He set out to use high-powered computers as a flexible and controllable electrical load. It is not efficient, officials say, to get power plants to suddenly and drastically change their output. They compared it to the improved fuel efficiency motorists see when driving regularly on the freeway, as opposed to more demanding miles with city stops and starts.

Ameren says its data center can replace it when energy demand drops.

“The goal here is to help bridge the valleys,” said Warren Wood, vice president of regulatory and legislative affairs for Ameren Missouri. “It helps make the system work more efficiently.”

The company has declared itself open to other uses of computing power. “A data center can do a lot of different things of value,” said Wood. “Bitcoin just happens to be one of them.”

The company has talked about using firepower for other data-intensive tasks, like DNA sequencing.

The key feature of the installation is the speed of activating and deactivating computers. When you use dips, they can quickly increase activity. When it peaks, they can slow down at any time.

This kind of flexibility, Ameren says, can be increasingly valuable in the modern electricity grid, where electricity supply and demand are now subject to greater fluctuations. Solar panels and wind turbines produce more in sunny and windy conditions. And demand is also becoming more variable. For example, when the sun goes down, houses with rooftop solar installations may suddenly need electricity from the grid.

The company’s data center project cost around $ 1 million to install and has been running since April. Ameren said it was installed in Sioux due to the space available, and that it was not exclusively connected to the coal-fired power plant as a source of power.

But even though it derives its energy from the global electricity grid, the region is teeming with electricity from coal, which accounts for about two-thirds of Ameren’s production. And Missouri, overall, burns more coal than any state except Texas, according to the latest government data.

The data center can use half a megawatt of electricity, if it is operating at full capacity. By comparison, the 54-year-old Sioux plant, the third of Ameren’s four coal-fired plants, has a production capacity of 972 megawatts.

‘Games’

Knott, acting central region director of the Sierra Club’s Beyond Coal campaign, called the data center “essentially a way to support the use of coal.”

“It really increases the demand on the system, and therefore the demand for coal-based power,” said St. Louis-based Knott. “I think what they’re trying to do is avoid having to slow down their generators.”

Knott said the company could better serve the public by using alternative technologies that would still help balance demand for electricity and provide other benefits, such as electric vehicle charging stations or battery storage projects that can accompany renewable energy production.

“At least with batteries, you would store that energy and reuse it later,” Knott said.

The move has also been met with caution and resistance from some regulators in the State of Missouri Office of Public Counsel, who advocate on behalf of consumers of public services.

The company initially sought to include $ 8,000 of data center energy costs in a recent round of price adjustments for customers. Ameren backed down, but the OPC said it aimed to ensure that the company’s exploratory cryptocurrency review was not backed by taxpayer dollars.

“Captive Missouri taxpayers should not fund non-essential bets in the commodities market,” wrote Geoff Marke, chief economist of the OPC, in testimony filed last month.

Ameren said its mining efforts collect new bitcoin every two weeks or so. The company currently holds its bitcoins, rather than selling them immediately.

#bitcoin

External experts say the project could make immediate financial sense for the company, but also incur terrible costs in global warming emissions.

“I understand why they’re doing it: it’s extremely lucrative right now,” said Joshua Rhodes, University of Texas associate researcher with the Webber Energy Group in Austin, alluding to Bitcoin’s current and sky-high prices. . “But if they use more charcoal than they could have been otherwise, that’s not a good situation for the environment.”

Ameren last year announced plans to invest $ 8 billion in renewable energy projects over the next two decades and accelerate plans to reduce carbon emissions, achieving “net zero carbon emissions.” By 2050.

But the more the company runs its coal plants, the less likely it is to retire them faster and move on to something cleaner – and cheaper – according to experts.

Coal-fired power plants like Sioux typically only run a fraction of each month, as lower-cost power generation is usually rolled out first. In April, for example, Sioux only ran 17% of the time, according to the Sierra Club, and for the past seven years the plant has never run more than 76% of the time in a single month.

Experts agree that adding load to reduce the “ramp” of power plants can potentially reduce emissions, if done in a smart and careful manner. But in some scenarios, the concept also threatens to increase carbon emissions, especially if it results in greater use of fossil fuels that would not have happened otherwise.

Ameren’s smaller-scale trial “doesn’t completely stop the ramp-up, maybe it slows it down a bit,” Rhodes said, noting that he had not seen any data on the project. “It’s likely to end with more shows at this point.”

Rhodes said Ameren is the only regulated utility to its knowledge that operates cryptocurrencies. This is an unusual case, he said, as a regulated electricity supplier generating demand for its own energy.

Other examples could exist, still secret. Ameren’s operation came to light only after state regulators organized an appeal with the company to understand a case that sought to defer costs related to a research project capable of “producing evidence. digital assets “.

But Ameren executives said other utilities have reached out to express their own interest in the lawsuit.

And the interest extends beyond utilities.

Researchers at the University of California at Berkeley examined the links between Bitcoin mining and energy prices, concluding that demand-modifying activity can drive up local electricity costs.

Square, the California-based financial technology company with offices in St. Louis, has launched a Bitcoin Clean Energy initiative. Earlier this year, he posted a multi-page memo on how the unique flexibility of Bitcoin mining could make it a “complementary technology for clean energy production and storage.”

The focus is just a sign that the currency has taken certain key spheres of technology and popular culture by storm.

Jack Dorsey, the co-founder of Square and Twitter, and originally from the St. Louis area, last year changed the bio on his personal Twitter page to a single word: “#bitcoin”.

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