Does Virtual Powerline Technology Make SA-NSW Inconnector Obsolete Before It’s Built?

Virtual Powerline technology is due to disrupt the poles and wires business. Image Credit: BiTchain

The cornerstone of the new South Australian Liberal government’s energy policy, a new $740 million electricity interconnector with NSW, may be rendered obsolete before construction has even begun thanks to a new blockchain based ‘virtual powerline’ being built between the two states.  The technology was developed by the US company BiTchain and has already avoided the building of billions of dollars worth of transmission capacity between the United States and Canada.

The virtual powerline is able to work because with the rise of both the internet and bitcoin mining 19% of the developed world’s electricity is used to either power the internet or for mining cryptocurrencies.  This figure can be much higher in locations with low electricity prices where bitcoin miners like to set up shop.

Most of the world’s servers spend their time sitting idle operating at an average capacity of 31%.  This rises during times of higher internet use and peaks during special events such as the release of celebrity nudes or a meme going viral in a major way.  The ability of the internet to affect power supply first became apparent back in 2006 when the spread of the “sneezing panda” meme resulted in a surge in server electricity consumption that caused a circuit breaker to trip, resulting in a small blackout in upstate New York.

Because of security and coordination issues many internet servers are located close to the end users.  But the development of blockchain technology has allowed for 100% secure transmission of information which means unused server capacity anywhere in the world can be used to support local needs.  Because the largest cost of operating server farms is electricity and what they pay for it is normally based on wholesale spot prices, server loads can be shifted in real-time to wherever the cost of electricity is cheapest.  This load shifting is nothing new, but what is exciting is how the technology is now being applied to grid stability. Virtual powerline technology uses proven technology to shift server loads to wherever it would best support the stable functioning of the grid – a service that is becoming increasingly more lucrative as renewable penetration increases.

BiTchain developed the software that makes the secure transmission of server capacity possible and they currently have contracts in place with service providers that allow them to control exactly where 15% of the United States and Canada’s internet computation occurs.  The resulting efficiency gains have avoided the need for 2.4 billion US dollars in transmission capacity between the two countries and almost that much again in internal domestic transmission costs.

BiTchain is currently in negotiation with Australia’s major internet service providers to put in place the contracts and software required to create a virtual powerlines across the nation.  South Australia is half an hour behind the eastern states and has the most volatile wholesale electricity prices in the country while NSW has the greatest demand for internet processing services. So a virtual powerline between them is considered the nation’s most profitable opportunity and that is where BiTchain is currently focusing its efforts.  The CEO of BiTchain, Alexander Paine, says the virtual powerline could immediately reduce peak electricity demand in South Australia by 150 megawatts and within two years could reduce peak demand by up to 480 megawatts during peak periods, which is 17% of South Australia’s maximum demand.

The internet consumes a huge portion of the world’s electricity. This picture alone resulted in the consumption 0.64 gigwatt-hours of electricity and 2,400 tonnes of soft pine, short fibre, wood pulp.

I attended the Australian Blockchain Seminar at the Sydney Convention Centre on Wednesday where the CEO of BiTchain gave a presentation on virtual powerlines.  Afterwards I talked with the Chief Technical Officer of the company, Damien Laghari, and was talked at by the CEO, Alexander Paine.

Alexander Paine is an imposing man.  In his late forties, his lanky 6 foot 3 frame is infused with the frentic energy of a much younger man.  His hair was like a sea of sculptured white waves resembling a deflated opera house and his mouth was a mass of ivory tombstones that made it appear he was so hungry he just ate a piano.  He wore a suit without a tie and his his presentation told us this was his style.

Damien Laghari looked like an Engineer.  He wasn’t wearing a tie either but I could tell he was wearing one in his mind.

SolarQuotes:  Thank you both for taking time out of your busy schedules to talk to me.

Alexander Paine:  It’s my pleasure, Ronald.  I just want to say I love your country.  I love coming to Australia.  I think you Aussies are great.  I’m looking forward to doing a lot of business here and subverting some outmoded paradigms you have.

Damien Laghari:  Hello.

SolarQuotes:  So, Alexander, when you say you want to subvert some outmoded things we have, what exactly do you mean?

Alexander Paine:  Well, basically, we want to germinate your assets.

SolarQuotes:  Really?  And what does that mean?

Alexander Paine:  Our business model involves injecting our IP into your assets to germinate them and create an investment platform that instigates synergies between your telecommunications data and electricity arbitrage streams.

SolarQuotes:  You want to inject your what into my what?

Damien Laghari:  If I may…  What we do is enter into agreements with internet service providers and grid operators to use our propriety software to shift server loads so they occur either where the cost of electricity is lowest, or shift them in a way that contributes to grid stability.

SolarQuotes:  So when electricity is cheap in South Australia our servers will work harder and send the results to New South Wales and vice versa?

Damien Laghari:  Exactly.

SolarQuotes:  And what’s so special about this propriety software you use?

Alexander Paine:  BiTchain uses blockchain technology to allow real time payment from an automated and trustless reconciliation and settlement system…

SolarQuotes:  Wait, wait… You just said it can’t be trusted?

Alexander Paine:  No, I’m saying there is no trust.  It’s a trustless system.

SolarQuotes:  So you say you’re selling software that isn’t trustworthy.  That’s refreshingly honest.  But kind of dumb.

Alexander Paine:  No, I’m saying that trust isn’t an issue.  No one in the system has to trust anyone because the blockchain is 100% secure.  It can’t be read, broken, hacked, or interfered with.  No trust is required, so the system is trustless.  Currently your Australian government is worried about the Chinese firm Huawei building your 5G network because they are concerned about Chinese spying.  But if the information was transmitted using our blockchain software then it would be completely secure and eavesdropping would be impossible.

SolarQuotes:  But surely there must be some way to hack or get around your security?

Damien Laghari:  Blockchain is a registerless system distributed across many servers.  The only possible way to interfere would be to take control over the majority of those servers.

SolarQuotes:  And where are the majority of BiTchain’s servers located?

Damien Laghari:  In China.

SolarQuotes:  So aren’t you worried they might take control of them?

Damien Laghari:  If there is an attempted takeover we can always virtually sub-divide a server under our control so it appears to be 2, 4, 24, or 1,024 servers.

SolarQuotes:  So what’s to stop China from doing that?

Damien Laghari:  Absolutely nothing!

Alexander Paine:  I just want to say that BiTchain is prepared to comply with any security arrangements the Australian government may require, regardless of whether or not they understand them.  But until they are required, BiTchain has a fiduciary duty to its shareholders and China offers the best rates on server farms.  And you’ll find it’s not just BiTchain but US banks, insurance companies, bitcoin exchanges, and almost all major information technology companies that have the majority of their servers in China.

SolarQuotes:  So you are saying the United States, a country that is currently spending $700 billion dollars a year on its military for the purpose of protecting itself, has allowed its only potential competitor to be in a position where it can crash the US economy any time it wants simply so US businesses could save a few bucks on servers costs?

Damien Laghari:  Yes, but China would never do that because it would destroy their server farm industry.

SolarQuotes:  That is so nuts… it actually kind of makes sense.  Way to contribute to world peace, guys.  But back to the virtual powerline.  You say it can transfer as much electricity between the two states as the physical interconnector the new South Australian state government plans to build with New South Wales, which is estimated to cost $740 million?

Damien Laghari:  That’s right.  And the fibre optic connection required to carry all the blockchain data will only  require $300 million to build.  A clear saving for the people of Australia.

SolarQuotes:  And you’ve said in the future it will be possible for the virtual powerline to transfer even more power.  How will this possible?

Damien Laghari:  At the moment we are concentrating on shifting server processing loads.  But we are also looking at letting people use virtual powerlines at the individual level to trade power.  For example, if there was a high demand for power in Seattle my girlfriend in Vancouver…

SolarQuotes:  You have a Canadian girlfriend?

Damien Laghari:  Yes.  She’s a model.  But you wouldn’t know her.  Anyway, she could turn off her sauna or otherwise reduce electricity consumption and receive a payment for doing so.  We’ve already designed a voice activated phone app so people can simply say, “BiTchain, I’ve turned off the TV” or “BiTchain, I’ve turned off the space heater,” and they’d instantly receive a credit to their electricity bill.

SolarQuotes:  So you would install some sort of energy meter in people’s homes so they could use this service?

Alexander Paine:  Well, Ronald, let me just stop you there and tell you that’s the beauty of our propriety blockchain software.  There’s no need for any energy monitoring system.  We’re already running trials in Canada and we have compete faith in clients.  It’s a trustless system…

SolarQuotes:  Yeah, but that’s not going to work.  I could tell your app I’m shutting down everything but without an energy monitoring system you’d have no way of verifying that.  There has to be some form of monitoring.

Damien Laghari:  (Gives Alexander Paine a sideways look.)

Alexander Paine:  Let’ just say we have more than one reason for investing so much money in Chinese server farms…

Regrettably, the interview had to be concluded there and that evening I contacted the new South Australian Premier, Steven Marshall, to get his position on the virtual powerline and his response was, “Who are you?  How did you get this number?  Don’t call again!”

Full Disclosure:  BiTchain did pay for my trip to Sydney and for my suite at the Hilton, but I want to assure readers this is a normal part of technology journalism and in no way swayed my reporting on the company.  It was the drugs and hookers they supplied that did the trick.