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Management of Cryptocurrency Mining Penetration in Electricity Distribution Networks and Provision of the Solutions

Hajiaghapour Moghimi, Mehran | 2023

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  1. Type of Document: Ph.D. Dissertation
  2. Language: Farsi
  3. Document No: 56534 (05)
  4. University: Sharif University of Technology
  5. Department: Electrical Engineering
  6. Advisor(s): Vakilian, Mehdi; Hajipour, Ehsan
  7. Abstract:
  8. Currently, cryptocurrencies have attained a significant role in the financial transactions of the world, especially due to their peer-to-peer and decentralized characteristics, resulting in the elimination of intermediary oversight entities. In the cryptocurrency network, transaction security is ensured through devices known as cryptocurrency miners. People place their cryptocurrency mining devices at the disposal of the cryptocurrency network and, depending on their device’s processing power and capacity, receive rewards in the form of cryptocurrencies. Given the complexity of cryptocurrency networks, regular devices lack the ability to mine cryptocurrencies, necessitating high processing and computational power devices that consume substantial electrical energy. In the regions of low electricity price, the profitability of cryptocurrency mining has spurred a surge in network-connected devices, particularly in distribution networks. Nevertheless, apart from the considerable energy consumption of these cryptocurrency mining devices, this scenario presents other challenges for distribution network’s operators. This thesis primarily focuses on analyzing the quantitative impact of cryptocurrency integration into the distribution networks in terms of the shortage of electric energy supplies and the loss of life of power equipment, particularly concerning changes in consumer consumption patterns and their implications on critical network equipment, such as transformers. The simulation results presented in this thesis highlight the consequences of neglecting cryptocurrency loads in the planning and operation of the distribution network. Failure to consider this aspect can lead to an abrupt increase in the coincidence factor of consumers, placing additional strain on transformers, ultimately resulting in premature aging of these devices. Subsequently, practical solutions for effectively managing the extensive integration of cryptocurrency technology into the distribution network are proposed in the thesis. These solutions take two forms: designing an electricity pricing tariff to compensate for losses and damages incurred due to the premature aging of network equipment and developing various energy efficiency programs for cryptocurrency mining loads. One of the devised efficiency programs incorporates a penalty-reward structure to encourage a reduction in the electricity consumption of these loads while maintaining a consistent output. The simulation results in this section demonstrate a significant reduction in electricity consumption for these consumers by implementing adjusted electricity pricing and the aplplication of the designed energy efficiency programs. Moreover, this approach enhances the profitability of both cryptocurrency miners and distribution network operators. While the penetration of cryptocurrency mining loads in the electricity distribution network may be considered as a threat, it presents an opportunity to balance the energy resources and the consumptions in the microgrids by harnessing electricity from distributed renewable sources to power cryptocurrency mining devices. As a result, this thesis focuses on optimizing the operation and planning of microgrids in the context of cryptocurrency technology. This thesis also, delves into energy management within microgrids integrated with cryptocurrencies to mitigate the surplus energy produced by the renewable distributed resources, in conjunction with conventional energy storage systems. Additionally, a method is proposed for investing in renewable energy sources in small microgrids of different buildings such as the complex apartment buildings, by utilizing cryptocurrency mining to optimize the utilization of surplus renewable energy and reduce the building operating costs. The cryptocurrency mining device is modeled as a virtual energy storage system that converts excess renewable energy into cryptocurrencies, and its technical and economic capabilities are compared with traditional methods employed for reducing surplus renewable energy.Simulation results in this thesis demonstrate the remarkable improvements in the economics related parameters of the grid management achieved by implementing cryptocurrency mining devices in apartment buildings, providing a sufficient motivation for apartment building owners to adopt renewable sources like rooftop solar photovoltaic systems. Furthermore, the results suggest that implementing this proposed method in countries with seasonal variations in solar PV generation and customers' energy consumption can be highly lucrative. Towards maximizing the profitability of large cryptocurrency mining loads and utilizing them for the secure operation of the power network, this thesis examines the specific characteristics of cryptocurrency loads to enhance demand-side flexibility. It demonstrates that this type of load has a very high potential for participating in demand response programs to enhance network flexibility in the presence of high penetration of renewable energy sources. Simulation and modeling results of a large cryptocurrency mining farm, acting as a flexible load, and its participation in day-ahead and balancing electricity markets, illustrate that this engagement leads to a rise in the load's profitability and a reduction in renewable energy curtailment within the wind farm
  9. Keywords:
  10. Cryptocurrency Miners Identification ; Bitcoin ; Cryptocurrency ; Energy Efficiency ; Renewable Energy Resources ; Microgrid ; Energy Management ; Energy Curtailment

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