Strategic Mining Embracing Energy Volatility as the Competitive Advantage | Bitcoin 2026

Good morning and welcome to the energy stage. Today we're going to be talking about embracing energy volatility as the competitive advantage of Bitcoin mining. My name is John Paul Beric. I'm the founder and CEO of Mining Store and I'll be moderating this discussion. David Chernos, director of flexible uh compute platforms, been living uh very close to the mining sector since 2018 uh working with cower doing demand response. We quickly realized that they're the best uh flexible assets the grid has. They're basically digital batteries that can come offline in minutes to seconds. Uh really pioneering the way for what we're about to see with AI factory design as well. >> Yeah, my name is Nick Hansen and it seems like these lights get brighter every time uh I get up here. But uh my name is Nick Hansen. I'm the CEO of Luxer. Uh we build all sorts of uh software enabled services for miners. One of those being something we call intelligent minor which actually activates these um uh the volat you know grabbing the volatility from from the uh from the grid and uh yeah on to you Scooter. Yeah, I don't think it's the lights. It's I think it's your star. Keeps getting brighter every time you step up here. Nick Hansen, uh Scooter Wak, CEO, uh founder of Vega Energy Advisors. So, primarily focused in Texas. Been in the space for, you know, 8, nine years now. Seeing the evolution of compute happening in energy only markets and capacity markets. Uh we got a lot of, you know, great stuff to talk about here, but you know, let's embrace some volatility. Yeah. So our goal with this first question is to understand the energy markets and break it down from someone who's just a consumer and buying it at their house. For most people who don't know, energy prices change and are traded every hour and as a Bitcoin miner or as a flexible load, we're able to trade that energy and participate in those markets. So the first question to the panelist is what does energy volatility actually mean? And when we say pricing of power changes by the hour, by the location or the market condition, can you explain what is really happening and what is driving those changes so the audience could understand better? >> You want to go for it, Nick? >> No, I was going to give it David >> power guy. Yeah, happy to happy to feel that. So, uh, energy u, you know, it's supply and demand, right, in real time. uh the more constrained the supply come becomes either at the at the transmission node very locationally um or in a wider uh ISO scale uh supply and demands based on usage and then you have constraints based on extreme weather um infrastructure local transmission constraints um and just generally like peak usage. Air conditioning globally is the largest load that creates a constraint. You have like electrification loads below that, data centers, mining, AI loads below that. But certainly in the US here, uh data center loads, mining loads, AI loads are going to be the big one. >> Yeah, I mean just to kind of follow up that you know price whether it's energy or really anything else reflection of risk, right? So risk on the grid. So it's basically a a manifestation of what we call net demand, right? Uh the ability for generation to be online, the ability for those transmission networks to work all the way down to, you know, zonal or nodal uh distribution uh levels there. So it's really a combination of many many things happening in real time. Um and it's I mean you know any trader will tell you without volatility you don't make any money, right? So everybody there, I mean, it's it's constantly traded back and forth. It's just a manifestation of buyer and seller, demand generation. Uh, and and pretty much every market has has evolved that way, whether it's an energyonly market like we have, you know, we're based in Texas, like we have there, uh, ink, maybe you've heard that term before, or say a capacity market like an SP or a PJM or some of these other, you know, ISOs or system operations that are that are out here in the country. Yeah. So, energy volatility is actually quite intuitive. Um, you know, at four or five o'clock in the afternoon, everybody gets home, turns on the air conditioner, um, starts charging their Tesla, all of those things, which drives up uh the demand. Uh, and so, of course, prices end up going up. Most people don't know, but actually over the last several months in the early morning hours, power has been negative in uh, in parts of Texas. So, uh, you're actually getting paid to use energy. So, u that's something that you know at at Luxer we we monitor with something called intelligent minor and basically we tell our customers hey you're actually getting paid for every uh kilowatt hour that you megawatt hour that you use now um so you should crank up your machines as high as they'll safely go um because really you're just getting paid to use energy um and that's because in the early morning hours uh you know wind is going gas generation is on but there's really nobody using energy meaning at a consumer level um you know you haven't woken up yet and turned on the lights and all the things that start using energy Um, and that produces a lot of volatility. So, you can go from having multiple hundred per megawatt hour in the afternoon to negative pricing, you know, in the early morning hours. And it's really up to minor miners that are, you know, really dynamic uh are able to capture a lot of value from that, meaning turning off during those high uh energy price hours, ramping up during the negative hours, that sort of thing. So, >> I'll just add that there are the day ahead markets and the real-time markets. So, some miners are bidding into both and are trading those markets with their power. The nice thing about the mining loads is that they're running and they're adding base load power to the grid. And when when the grid needs it, we're shutting off completely. We're reducing our load by 95 to 99%. And then that power is going back to the grid uh when the consumer needs it. So, we're not contributing to peak power, which is the most expensive energy hour uh of the day or in that market. That peak power is usually going to be the least green power. That's when you're turning on your natural gas peaker plants. In Texas in UrkOT, Birkshshire Hathway um because of the miners wasn't able to build over I think $18 billion of peaker plants because we had 2 gawatt of mining load come in and act as that alternative method of reducing load. And that's one of the amazing benefits of miners. Now let's talk the next question is why are miners uniquely set up to respond to this versus let's say a consumer at their house or a um maybe electric vehicle or a factory that makes aluminum? Can you each one of you touch on why miners were the perfect ingredients to make the power markets work better and keep prices lower for consumers? >> Well, I'm I'm going to quickly hand it over to Nick because I mean this is their core business. I mean they they they operate these things all over the world. Uh but high level macro answer uh AS6 don't have feelings um ultimately right uh whereas we may want to not have our house at 80 or 85° right just because you know somebody else needs power uh the A6 don't get to talk back. >> Yeah. Exactly. When I'm uh I'm not very price sensitive when it's 90 degrees inside or uh or you know it's it's it's 10 degrees outside and my house is 40 degrees. I'm not very price sensitive. So I'm just going to pay whatever it costs. Now, Bitcoin miners are purely price sensitive, meaning if it becomes unmarinable or sorry, if it becomes unprofitable uh marginally to mine at a particular point in time, uh then you just turn off uh they don't care. So, that's um that's yeah, pretty much the long and short of it. They are not they don't have feelings. I like that. They don't have feelings. >> I mean, as far as we know, we don't know. >> Well, actually, we don't know what the next couple years is going to look like. >> Now, with AI, Mythos might have feelings and maybe doesn't want to get turned off. So that's a whole another story, but a Bitcoin miner does not. >> Uh I love this question. So something happened, something really interesting happened in a new program we have in my home ISO, which is New York. Uh by the way, uh New York has some very low power pricing around Buffalo, Niagara. I'm just saying. So we have this new model that's been designed for battery storage called the deer participation model. have to be very fast acting, which miners are fully automated through, you know, our friends uh at Foreman Jeremy and uh at Hiveon and and and all of our other minor partners. Um so we're able to dispatch in seconds. We can even follow a sixse second uh NICO base point signal. So we're doing regulation with A6 there if we wanted to. What happened in January is our miners who weren't yet in this program which offers you access to ancillary, day ahead, and real-time markets for the first time. highly automated, flexible loads much like a battery. Uh they were able our miners who weren't doing the program shut down January, shut down February, power costs were too high. Our miners in this program not only uh made a ton of money getting offline 35% of the month of January, their net blended cost of power plus DR revenues uh went negative overall negative $55 per megawatt to run 65% of January in the the most expensive month of the year. It literally inverted the economics of mining with act because of access to day ahead real-time markets and ancillary. >> Well, let's jump into the January freeze. So, we had this very cold weather event in the Midwest in January. It's affected markets in the MYSO, SP, which are in the Midwest, PJM. And during that time period at Mining Store, we were curtailed for 13 days. And that curtailment event let us enjoy a negatively priced power bill the following month because of the amount of revenue we generated by turning off. When these curtailment events happen, we are being paid like a generator for reducing our load on a day ahead basis. Can you guys talk through maybe how some of your clients were able to capture additional revenue and how the low hash price environment how in this low hash price environment it's so important for miners to be flexible to be in these DR programs to compete and have lower energy prices. >> Well, so it's it's different by market, right? I think that's a really important distinction to make, right? So in in say Niso or somewhere up in PJM or capacity market you the loads get paid or or act as a generator effectively. So if you're not participating as a load you're not creating demand then you're directly giving that generation back. It's effectively a onetoone and you're getting paid you know the paid the proceeds of that. Whereas in URKD or you know in an energyonly market you'd have to go out and take either a physical or financial position in the day ahead or as a term trader or as a term position and that's how you would kind of get paid back there. So it's a little bit you know in in URT what we experienced was actually instead of selling back the physical power it was actually arbing the day ahead uh and and selling in the day ahead market forward because it was just so overdone right and it and it gets trickier. It does not get easier as we see markets evolve as we see technology evolve. There's actually a little bit more of a disconnect between the legacy forecasting systems etc. And I know it's a little bit wonky. It's a little bit nerdy, but when I say that Urkot as an as as the reliability grid reliability operator, um they missed the forecast on one of the days by 10 gawatt um uh of peak load. I think it was the Monday or Tuesday. That is insane. That's that that's an 18% miss. uh and and as a reliability operator, it just really highlighted to me the you know the disconnect that we have with this crazy advanced disruptive technology versus the legacy systems that we have now. The the opportunity there for us was to advise clients to sell in that market still be able to run and now you're collecting that spread. And so that's how it manifested itself at least at least in Texas and we certainly didn't have the extended outages that you guys did. So, uh, be interested to see, you know, kind of what Nick was seeing on on that side. >> Yeah. The, uh, just for some context, the he said about missed by about 10 gigawatts. Just for context, the entire Bitcoin network, every minor in the entire world is probably about 20 gigawatt. So, that's like half of the entire Bitcoin network missed. So, um, I'll speak a little bit about how that actually affected um, the network as opposed to how it affected miners in the power markets. So we actually saw really big difficulty decreases during that time and people were wondering like what's what's going on? Are minor turning off? Are they becoming unprofitable? It actually had to do with power prices because and and these force curtailments uh which is kind of one of the first times I think we've seen that before. Uh we've seen negative difficulty adjustments in the past typically because of poor economics. like I kind of think of well right now uh summer of 2020 um those were all really really low hash price environments and we saw some some um downward corrections but in this case it was really specifically because of power prices here in the US and that's actually driving network difficulty um for Bitcoin which is um pretty unprecedented we saw block times were 11 to 12 minutes and difficulty drop by like 14% so huge difficulty drop one of the largest ones we've ever seen to Nick's point completely driven by weather at the end of the day. >> So, so when are the meteorologists starting, Nick? >> What's that? >> When when when do your when does your meteorologist >> When do we start getting meteor? Yeah, you actually have to uh you actually have to monitor weather um to be participants in these things. It's pretty crazy. The the amount of data that you have to process to be uh to be really dynamic like this is is pretty wild. you have to take in u all the power prices of course all the grid uh you know all the grid metrics but then you have to take in like weather data and uh it's it's it's a really really complex market and again going back to how volatility is a competitive advantage if everything were all the same all the time there's really no way to make any money so you're not you know you're not improving your models you're not getting better faster uh that sort of thing and and here we are in a very volatile market and miners are really well positioned to take advantage of that >> yeah Scooter and Nick nailed it. I'll just say that uh with the new let's say anthropic cloud capabilities um Nick's team you know these third parties are really bringing uh astonishing uh forecasting clarity future forward visibility into these energy markets predictive weather uh beyond what the grid operators have. I mean like way beyond. So we're we're at a a pretty amazing time here from a tech perspective. So our next question is how does the AI pivot change the energy strategy for miners as most of the public mining companies are now retiring their fleets and building out AI data centers and they're in that transition. How can AI compute still play in the energy markets? Would love to hear each one of your opinions on that. Um I you know I've I love hybrid computing. I think mining and AI loads are really sympathetic to each other. Uh the miners are years and years ahead of the uh real estate investment trusts, the colo develop, you know, like the the hyperscaler uh hosts of the world because miners understand energy in a really granular way. It is their business model. Uh so uh continuing to mine while you build out some uh uh GPU hosting. Um, we're seeing that, you know, now I I advocate hold on to your hold on to your infrastructure. Um, if you need to add some AI load to it, great. U in my opinion, I'm bullish on the miners being the innovators on the AI side of the house, too. Direct liquid cooling, immersion, uh, understanding energy in a complex way. The mining community is bringing all this to center to the AI factory design, right? whereas the traditional CPU airond conditioned uh colo model is is moving to center also all the innovations here. Um, so what we want to do for those miners who are adding AI infrastructure to their powered land, which puts them what 3 to 5 years ahead of anyone looking for powered land, now you're already connected. Um, let us help you design the flexibility on the AI side too through energy storage. Uh, we've already demonstrated that we can flex GPU clusters without pausing the workload and maintaining the SLAs's. our friends at Emerald AI, Mercury, Neuralatt, our partnership with Benthouse and Super Micro at the at the hardware level. So, uh we want to work with you to design flexibility on the AI side of your house as well. >> Yeah, you um you said earlier that AS6 don't have feelings. Um GPUs actually kind of do. They uh they do have a pretty strong opinion about staying on. The reason for that is like training workloads, you can't really preempt those very easily. Maybe there's some techno tech breaking technology that allows you to preempt like a big training run. Um, but you know, if you're running a training uh that takes say, I don't know, a month, uh, doesn't really matter what the power price is during that time. The output of that uh of that work is so much more valuable than the energy. We were actually having a little bit of a discussion just backstage about like what the break even price for turning off a GPU would be right now. Uh, and it's something like5 or $6,000 per megawatt hour. for context right now. I I don't know exactly what it is, but the the power price in Texas is probably like 50 or $60 per megawatt. So, you're you're talking like a 100x uh um margin on on those GPUs. So, you're pretty much always going to keep them on. Now, that's all that is to to say that that's not going to stay that way forever. Probably uh as we build out more supply on the AI side, that then becomes more dynamic and then the AI HBC guys need to start learning from the miners. How do you actually do these curtailments? How do you turn down the the you know, how do you turn down underclock your GPUs effectively? That sort of thing. >> Yeah. I I think also just for some context because we're we're used to talking in megawws and megawatt hours and gigawatts. I mean uh you know a lot on the mining side it's in kilowatts cents per kilowatt hour etc. So for relative, if anybody doesn't want to do the decimal math there, I mean, when when Nick's talking about 50 or $60 a megawatt hour, you know, it's half a penny or or, you know, half a penny, 5 a.5, you know, pennies or so versus the break even for these training models, these large HPC and AI guys are talking about five or $6 per kilowatt hour, which is astounding. Um, and I think there's there's a couple of opportunities in there. There's some challenges in there. So, I'd take it more on a on a financial level and maybe even a messaging level. Um, so yes, they do have feelings they don't want to turn off, but now what do you have to do to be a good steward of the grid and the market that you're in in a different way, right? So, maybe it's not if you can't give back energy to the grid, you're constrained in that way. I think the opportunity as we bridge through um margin compression uh with with these workloads and also uh the buildouts we're gonna we we need more hedging. We need more uh forward term uh out of these folks um you know that are going to be running these models. So at that point you are incentivizing grid level generation. You are incentivizing capital investment for the rateayer for the folks in in in our homes, right? And so you're not becoming a burden there um for for all of those costs, right? So it doesn't matter what the real-time price of power is if you've already taken a forward position uh in power, right? So that could be $50 or $60 a megawatt hour for years, right? And you just run and you don't have to worry about, you know, uh the economics of of giving back or the stewardship of giving back power. You express your stewardship of the grid in a different way. And I think that's a message that that really needs to be picked up among these workloads. Uh and I think it's an opportunity to to to message that in a big way as we you know face you know the new boogeyman conversations around AI and data centers uh in in a lot of our communities across the across the country. >> Thank you guys. Appreciate it. >> Just one just one statement uh uh to tag on to what uh Nick and Scooter said and to add to my original statement. Uh it's important to say right up front, no compute will ever be harmed in the flexing of this AI factory uh inference load. It's always going to run maintain this SLA QoS. Uh so I totally agree. We would never we would never stop a training or a or an inference workload. And these are these are small incremental curtailments just a little bit right like like the hash rate optimization example. That's the perfect way to frame it. uh and then all the all the in the hybrid model all the uh flexibility on the mining side of the house. >> Welcome to predict. The world is a market. Everything is a market. Every headline moves the line. Every moment is your market. Call the moves. Bet on your instinct, your prediction, your edge. Dual bits predict where everything is a market. >> As public miners and private miners move their Bitcoin mines to AI, how do you see Bitcoin mining and AI loads working together? understanding that there are commitments that miners are have made to the grid and there's a transition period and different infrastructure upgrades needed and even when they are running their AI loads utilization of those inference loads when when we're using the models is not always 100% but sometimes the power contracts require closer to 100%. Can each one of you touch on how you view this transition and utilization specifically of energy? Yeah, I mean I would just go back to like take, you know, taking it from a from a trading perspective and a risk perspective. I think it just, you know, the same thing I just I I just said, right? I mean, you're going to have to have a combination, a hybrid strategy. You can't just go binary, you know, where you're all this way or all that way. I think it's going to require um you know, it doesn't take too much sophistication, but uh I think you have to to understand the the use case, right? truly understand the use case and then plan accordingly and and model accordingly and contract accordingly and that's it. I think the biggest like from a uh from the volatility uh opportunity that we see is in term trading uh for for these loads right uh when you're looking at and something that we you know advise and and give access to all of our industrial clients uh about where you know where forward marks are uh in every different ISO. So where you can hedge power, buy power, sell power, and it's it's really really dynamic as well. I mean, you can buy power for multiple years, you can sell months, you can sell a week, you can sell specific days, you can get in and out of positions. And I think that's what we're going to see ex, you know, uh these loads do is going to become active forwardterm traders. >> So that's his business. >> That's right. miners uh with with this is actually kind of unironically true. I believe that that right now mining it might be like one of the best times to buy mining in like the last few years. Um the reason being is every AI uh machine that's being plugged in B2000, B2, B300, etc. is taking a Bitcoin miner off of a rack most likely in a lot of places. um and you know like clean spark and all these guys that are doing the AI transition, they're pulling machines off to plug in to plug in u AI machines. So what that means is that there is less competition for Bitcoin blocks than there ever than there has been you relatively um than ever uh right now based on how much demand there is for power for other types of workloads. um you know they're they're scrambling to plug in B1 B200s basically every one of the AI machines anywhere they possibly can and those are pulling machines offline. So it does feel like we we've kind of reached I know it's been a rough couple of years for the miners here uh and it but it kind of feels like we're reaching that that bottom point where you know any machines that have getting taken off are are getting are already taken off um and so it feels like right now is a really good time to be a minor even though it really really hurts right now but that's the best time to buy. Yeah, as Nick would say, it's this time when you're in mining and you're running your returns and Bitcoin was $120,000, your model that you're in your when you're plugging in those costs is going to show a return that looks amazing on paper. Today, the returns look horrible. But that's showing if the output stays the same and if difficulty doesn't keep going down and if Bitcoin price doesn't go up, which as a minor, you have a long perspective on Bitcoin. You're hoping that hash price is going to go up and recover. And we the pre previous three years have resulted in house price crashing simply because these public players have been incentivized to simply grow megawws at no cost. And now those players are now going to be removing themselves from the market effectively. I've got one quick banger. Um all of the big miners that you see, CleanSpark, Marathon, Iris, they were formed during the summer of 2020, which was one of the worst times to be a minor in in in memory. And now look at them >> breach. So, it's uh it could be it could be the time. I don't know. Maybe I'm I'm talking my own book here, but >> I think it's a great time to start mining. I'm thinking about starting mining. If you understand energy right now with the with the depressed cost of AS6, um it's a great time. Uh I'll take another angle on this. Um from a regulatory angle, so we have Senate Bill 6 in Texas, which mandates large loads over 75 megawatts have to be flexible. We're starting to see other regulation in other areas. If you're a minor, you're already you already have a great relationship with the grid operator with the at the ISO level and likely at the utility level. So if you're running hybrid load uh both mining and AI, they're more likely to give you a capacity increase because you've got all that flexibility on the AS6 side. That's actually really super valuable to us to the to the in uh the utility and to the ISO. It's a great bargaining chip. It's a great uh way to partner with the grid operator and the utility. Um so we we love we love to see hybrid uh mining uh a good part of mining load stay there as some AI in infrastructure comes in. >> Okay, last question. Is energy volatility in the United States going to increase or decrease over the next 3 years? >> I mean I'm I'm bullish on volatility long term. Um, I think it's just a it's just a requirement of where we are with all of the loads coming on with the types of generation that we have available. I think it's going to be a acute volatility will will will show its head again. Sustained long-term volatility over multiple hours, maybe not. It's outside of like winter and extreme events, but I'm bullish on on on V uh across the country. >> You've got an immovable force up against an un or immovable wall up against an unstoppable force. Anyway, everybody's trying to lower volatility, but they're also adding tons and tons of generation and the load. So, I don't actually know. I don't know. It's a great question to think about, though. >> Uh, I think more and more volatility what we're trying to do with demand response as a near-term solution, we're trying to get from today to 2030 when more generation comes online. We're still losing uh generation in the US, nuclear, fossil. um we don't have any bridge to get to 2030 right now. Small modular nuclear micronukes are way off. So I think more volatility um and more need for flexible resources and with that uh greater and greater uh value of highly nimble fast acting demand response resources like mining and uh AI compute. >> Thanks again guys for listening in. Remember to mine on. >> All right. Thank you guys. Thank you. >> Thank you. >> Every year, this community comes together to celebrate, to debate, to build what comes next. And every year, the stage gets bigger. Sound money, center stage. So, where do you go to celebrate the next chapter in Bitcoin history? You come home. Nashville, July 2027.