Episode Summary: TFTC – How Bitcoin Miners Respond to Real-Time Power Pricing

Podcast: TFTC: A Bitcoin Podcast
Host: Marty Bent (A), guest hosting is Parker
Guest: Brad Cuddy, Center of Hash, Cholla Inc.
Released: September 9, 2025
Episode: Center of Hash E007

Overview

This episode dives deep into the intersection of Bitcoin mining, real-time power pricing, and grid stability in Texas, with a particular focus on the ERCOT (Electric Reliability Council of Texas) grid. Brad Cuddy of Cholla Inc. shares in-the-weeds insights about how Bitcoin miners operate as "large flexible loads," the unique flexibility miners offer ERCOT, the challenges and incentives surrounding demand response, and how this all relates to the burgeoning AI and battery storage sectors. Listeners get a crash course on the mechanics, incentives, and future challenges for both miners and grid operators, rounding out with commentary on policy, national security, and the future evolution of energy markets.

Key Themes & Segments

1. Real-Time Power Pricing and Bitcoin Mining Behavior

[00:43]–[11:19]

• Winter Scarcity Events as a Case Study:
  Brad and Parker dissect ERCOT grid behavior during Winter Storm Heather (Jan 2024). As power prices spiked from $15 to over $1,000/MWh, Bitcoin miners rapidly curtailed operations, demonstrating economic rationality and supporting grid reliability.
• Break-Even Calculation Transparency:
  ERCOT actively models the break-even power price for leading Bitcoin mining hardware (S19J Pro at $122/MWh), indicating increasing operational awareness.
• Conservation Appeals:
  Brad explains ERCOT's tiered system for alerting users (including retail) to grid scarcity, and how miners "front-run" appeals by cutting load purely in response to price.
• Quote:

  "It's a completely economically rational responder to a price signal...the miners are doing this purely off of an economically rational decision."
  – Brad, [02:32]

2. Scale and Grid Impact of Bitcoin Mining in ERCOT

[11:19]–[16:04]

• Rapid Growth:
  The flexible load from Bitcoin mining grew from 1.5 GW in 2022 to an estimated 3.5–4 GW by 2025, a meaningful share of ERCOT's peak load (~85 GW).
• Deregulation and Uniqueness of ERCOT:
  ERCOT distinguishes itself by giving consumers (mines) direct access to real-time prices—unlike other grids, e.g., CAISO or PJM. This enables miners to act as immediate load balancers.
• Quote:

  "Because of that you have the access to this real time market and the day ahead market that ERCOT has created in their energy only market."
  – Brad, [13:08]

3. Load Flexibility: Why Miners Are Different

[16:04]–[20:00]

• Electrons Directly Into Money:
  Unlike manufacturing or industrial processes, mining converts electricity to money, allowing for instant shut-downs or startups at negligible operational risk.
• Benefit to Grid:
  This flexibility enables miners to act as a “shock absorber” for demand, especially as intermittent renewables proliferate.
• Quote:

  “We have no customer, we have no output besides money. We're directly transferring electrons into money.”
  – Brad, [11:48]

4. Reliability and Grid Participation Responsibilities

[20:00]–[32:11]

• Beyond Price Signals:
  ERCOT’s islanded structure (minimal external interconnections) necessitates precise supply-demand matching for frequency stability.
• Complexities of Ramping:
  Miners must ramp up/down responsibly, not abruptly, to ensure grid reliability. Increased visibility and participation in ERCOT’s “controllable load resource” programs is highlighted.
• Ancillary Services:
  Bitcoin miners now bid into ancillary service markets alongside batteries, providing fast frequency response, non-spin, and other essential grid services.
• Quote:

  “We are making a material impact… It’s time to put on your big boy pants and act like it.”
  – Brad, [31:32]

5. Education, Policy, and Public Perception

[32:11]–[38:53]

• Policy Vulnerabilities:
  Miners must continually educate ERCOT, PUC, and state legislators on economic and reliability benefits, especially as new legislation could limit their ancillary services participation.
• Public misunderstandings:
  Addressing the misconception that new mining sites inherently raise costs for consumers, Brad clarifies that miners mainly monetize surplus or low-use capacity, smoothing costs and stimulating new generation.
• Quote:

  “We just can't rest on our laurels... The rules can change in ERCOT... It’s on us to make sure that we are still successfully selling ourselves and performing to the standard...”
  – Brad, [32:38]

6. Technical Nuances: Pricing, Utilization, and Market Function

[38:53]–[44:13]

• Capacity vs Usage:
  Much of ERCOT's capacity is underutilized except during brief peak windows. Bitcoin mining increases the load floor, improving economic utilization of existing assets.
• Input Cost and Pricing:
  The marginal input cost of many renewables is $0/MWh—so mining helps scoop up excess supply when prices are lowest.
• Generation Investment:
  High real-time prices serve as direct incentive to build new generation. Bitcoin mining helps provide the “off-peak” demand foundation that makes these projects viable.
• Quote:

  “Having these large loads... it's only increasing utilization and the economic output of a generator."
  – Brad, [39:38]

7. AI vs Bitcoin Mining as Grid Loads

[45:51]–[62:58]

• AI Load Characteristics:
  AI’s appetite is even greater than mining's—sites of 500 MW to 1 GW are planned. However, AI workloads are less flexible: their “uptime value” is orders of magnitude higher, leading them to pay vastly more for power ($1,000+/MWh vs. $70–150/MWh for miners).
• Interconnection Bottlenecks:
  ERCOT’s process for approving large loads has ground to a halt due to unprecedented demand—making operational Bitcoin mines attractive takeover targets for AI/hyperscale data centers.
• Quote:

  “Bitcoin mining paved the way for these AI technology data centers to come to Texas…”
  – Brad, [45:51]

8. Flexibility: Can AI Play the Same Role?

[61:35]–[67:41]

• AI: Less Flexible, More Complicated:
  While miners can simply switch off, AI data centers prioritize uptime and service delivery to customers—they may buffer brief interruptions with UPS and diesel but can’t offer the same scale of demand response or grid flexibility as mining.
• Sector-Wide Implications:
  The migration of large flexible load from mining to AI would reduce the system’s flexibility—potentially raising costs and reducing resilience to scarcity events.

9. Batteries, Ancillary Services, and Synergies

[74:05]–[90:43]

• Co-Location & Ancillary Markets:
  Huge batteries are increasingly co-located with renewables, offering ultra-fine frequency and voltage regulation. Their main constraint is limited run-time (2–4 hours typical).
• Bitcoin: The 24/7 Flexible Load:
  Mining, while not providing incremental generation, can instantly and for long periods turn off, freeing capacity for more critical services or consumers during tight grid conditions.
• Quote:

  “Batteries are better at like very, very nuanced... Bitcoin mining, also flexible, maybe not as nuanced, but the benefit... you can oversize it considerably and... for a larger amount of time.”
  – Brad, [77:44]

10. Nodal vs Zonal Pricing & Technical Grid Nuance

[82:04]–[88:20]

• Local Price Signals:
  Batteries operate at the “nodal” level (specific localized price), while miners traditionally responded to “zonal” (regional) pricing—however, qualified mines can also act at the node level if registered as controllable load.
• Complementarity:
  Batteries can provide supply for a few hours when needed; miners provide load reduction for as long as economics demand it.

11. The Future: Decentralization, Off-Grid, and Energy Innovation

[92:16]–[99:43]

• Distributed Mining:
  Brad predicts a move away from mega-mines toward smaller, more distributed mining operations co-located with smaller renewable sites, or behind-the-meter at wind/solar farms, especially as AI soaks up “big” capacity.
• Policy & National Security:
  More AI and mining in the US (and especially Texas) is framed as vital for American energy resilience and technological competitiveness against international rivals.
• Quote:

  "We are a complement to the grid, we're important for ERCOT. Like, we're here to stay. We're not competing against AI. It's a different class at this point. But of course, decentralization. Not all bitcoin mining needs to go to Texas… Bitcoin will be a part of this and we all know it."
  – Brad, [99:43]

Notable Quotes & Memorable Moments

• Economic Rationality:

  “We have the purest, most rational price behavior and response that there is.”
  – Brad, [11:48]

• Critical Role During Peak Events:

  "If you're making 120 bucks a megawatt hour and power costs $200 a megawatt hour, you're losing money. It's a quick way to go out of business... so bitcoin miners are responding to the price."
  – Brad, [04:04]

• On Coexistence with Batteries and AI:

  "ERCOT needs everything. We need gas, we need solar, we need batteries, we need wind. The more load grows, the better Texas does."
  – Brad, [90:43]

• Future Vision:

  “Bitcoin is going to just continue to be like the pioneering species... opportunistically siting these around areas that have an excess of power generation.”
  – Brad, [93:41]

Timestamps for Key Segments

• ERCOT Scarcity Events and Price Response: [00:43]–[11:19]
• Why Bitcoin Mining is Uniquely Flexible: [11:19]–[20:00]
• Grid Stability and Reliability Explained: [20:00]–[32:11]
• Policy, Public Perception, and Education: [32:11]–[38:53]
• Grid Utilization, Generation Economics: [38:53]–[44:13]
• AI vs Bitcoin Mining as Large Loads: [45:51]–[62:58]
• AI Flexibility and System Impacts: [61:35]–[67:41]
• Grid-Scale Batteries and Mining: [74:05]–[90:43]
• Technical Pricing Discussion, Node vs Zone: [82:04]–[88:20]
• Looking Ahead: Distributed Mining and Grid Innovation: [92:16]–[99:43]

Where to Follow

• Brad Cuddy: Twitter: @_BradCuddy, LinkedIn (look for the pirate flag and laser eyes)

Conclusion

This episode is a masterclass in how Bitcoin mining, far from being a mere energy consumer, is increasingly a strategic tool for grid management, economic optimization, and the future of energy infrastructure. As Texas and the world grapple with surges in both mining and AI data center demand, the lessons and vigilance shown in ERCOT will have outsized global influence.