Time Of Use Pricing

time of use pricing

Power plants are capital intensive and operate most efficiently near peak capacity.  

Long ago utilities moved industrial customers to time-of-use pricing models which give an incentive to move some electric consumption until off-peak periods.

As utilities install smartmeters at homes and businesses for automated billing purposes, there is now the ability to provide time-of-use pricing to residential and commercial customers as well.

Could this affect Bitcoin mining, where hashing is suspended during the higher-cost peak periods?  Bitcoiners want to know!

That’s not likely to occur, at least not in the foreseeable future.  Mining bitcoins is also a capital intensive activity and the computing hardware that mining rigs consist of are in limited supply.

Even when including the cost of cooling, mining activity with high-end GPUs sees sixty to eighty percent gross margins at current electric utility rates, the current difficulty level and today''s exchange rates – excluding the cost of capital or labor.

As a result, as long as the cost of peak electricity is below the revenue from mining during that same period of time, mining will not likely be curtailed for any part of the day whatsoever.

Written on 21 Jan 2011.