Power Markets

PJM: All Clear This Summer

Power Markets for Bitcoin Miners, 5/15/23

David Bellman

Key Takeaway #1

PJM’s summer assessment shows less concern but less detail than ERCOT’s summer report.

Key Takeaway #2

Capacity prices have fallen 3 years in a row as renewable growth and gas plants have grown more than coal retirements and load growth.

Key Takeaway #3

There are signs of higher load growth, per the forecast for electrification and data centers projected by PJM.

Key Takeaway #4

However, the report also fails to show increasing demand response, which would be likely if data centers were to represent large amounts of future growth.

PJM released its summer assessment with fewer details and concern than ERCOT’s assessment. It notes that “PJM Interconnection, the nation’s largest electric grid operator, has released its annual summer assessment and predicts sufficient supply to meet summer electricity needs for the 65 million people it serves across 13 states and the District of Columbia under anticipated conditions.”

Like ERCOT noted, PJM’s extreme scenarios will require the use of demand response/demand resources: “PJM can deploy demand response by instructing customers who have agreed in advance to be temporarily interrupted in exchange for a capacity payment to reduce their load. This scenario could occur in the event of extraordinary electricity demand and high generator outages – an unlikely but possible set of circumstances.”

Another interesting trend to note is that capacity prices in PJM have been falling, as noted in the EIA Monthly Report: “The auction value of generating capacity in PJM has been declining in recent years, and at its latest auction, the price of capacity fell to $29 per megawatt-day (MW-day), marking the third annual decline in a row.”

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PJM released its summer assessment with fewer details and concern than ERCOT’s assessment. It notes that “PJM Interconnection, the nation’s largest electric grid operator, has released its annual summer assessment and predicts sufficient supply to meet summer electricity needs for the 65 million people it serves across 13 states and the District of Columbia under anticipated conditions.”

Like ERCOT noted, PJM’s extreme scenarios will require the use of demand response/demand resources: “PJM can deploy demand response by instructing customers who have agreed in advance to be temporarily interrupted in exchange for a capacity payment to reduce their load. This scenario could occur in the event of extraordinary electricity demand and high generator outages – an unlikely but possible set of circumstances.”

Another interesting trend to note is that capacity prices in PJM have been falling, as noted in the EIA Monthly Report: “The auction value of generating capacity in PJM has been declining in recent years, and at its latest auction, the price of capacity fell to $29 per megawatt-day (MW-day), marking the third annual decline in a row.”

This trend of declining capacity value is a result of the supply/demand balances, where we see large renewable growth and relatively stagnant demand with some impact of demand resources. Demand resources in PJM are around 7 GW.

There is an expectation that electrification and data centers will once again grow load faster than the supply can keep up. In the energy transition report published this year from PJM, they showed the graph below that depicts the impact of that load on forecasts.

However, they did not show a significant growing demand resource, even though at some point data centers should be able to cycle on and off at opportunistic times. Margin compression is inevitable in the Compute world, and so a focus on energy management will increase.

Digital convergence is coming (as we noted in our recently published High Performance Compute Primer). At BitOoda, we are uniquely positioned – with our deep expertise from power to mining and Compute – to guide you through this convergence.

**Figure:** Impacts of electrification and data center load on forecasts
**Source:** PJM

Miner WoW View

Mining economics improved this week.
The S19JPro breakeven price is between $70-$80/MWh.

**Figure:** Weekly Average Cash Contribution After Power Expense
**Note:** Assumes a PUE of 1.12
**Source:** BitOoda, Bloomberg, Coinmetrics

Henry Hub WoW

Henry Hub slightly weakened.

PJM WoW

For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
PJM saw only minor changes WoW.

ERCOT WoW

For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
ERCOT saw only minor change WoW.

CAISO WoW

For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
CAISO minor changes.

NYISO WoW: NY-G

This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
NY-G dropped in winter months.

NYISO WoW: NY-A

This slide adds NY-A for the NYISO region.
NY-A prices minor changes compared to previous weeks.

‍

Disclosures

Purpose

This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.

Analyst Certification

David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Conflicts of Interest

This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.

General Disclosures

Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.

The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.

Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.

BitOoda Technologies, LLC is a member of FINRA.

“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.

‍

PJM released its summer assessment with fewer details and concern than ERCOT’s assessment. It notes that “PJM Interconnection, the nation’s largest electric grid operator, has released its annual summer assessment and predicts sufficient supply to meet summer electricity needs for the 65 million people it serves across 13 states and the District of Columbia under anticipated conditions.”

Like ERCOT noted, PJM’s extreme scenarios will require the use of demand response/demand resources: “PJM can deploy demand response by instructing customers who have agreed in advance to be temporarily interrupted in exchange for a capacity payment to reduce their load. This scenario could occur in the event of extraordinary electricity demand and high generator outages – an unlikely but possible set of circumstances.”

Another interesting trend to note is that capacity prices in PJM have been falling, as noted in the EIA Monthly Report: “The auction value of generating capacity in PJM has been declining in recent years, and at its latest auction, the price of capacity fell to $29 per megawatt-day (MW-day), marking the third annual decline in a row.”

This trend of declining capacity value is a result of the supply/demand balances, where we see large renewable growth and relatively stagnant demand with some impact of demand resources. Demand resources in PJM are around 7 GW.

There is an expectation that electrification and data centers will once again grow load faster than the supply can keep up. In the energy transition report published this year from PJM, they showed the graph below that depicts the impact of that load on forecasts.

However, they did not show a significant growing demand resource, even though at some point data centers should be able to cycle on and off at opportunistic times. Margin compression is inevitable in the Compute world, and so a focus on energy management will increase.

Digital convergence is coming (as we noted in our recently published High Performance Compute Primer). At BitOoda, we are uniquely positioned – with our deep expertise from power to mining and Compute – to guide you through this convergence.

Miner WoW View

Mining economics improved this week.
The S19JPro breakeven price is between $70-$80/MWh.

Henry Hub WoW

Henry Hub slightly weakened.

PJM WoW

For the PJM region, we use PJM-W hub as the benchmark. PJM-W is the most traded power hub in the US.
PJM saw only minor changes WoW.

ERCOT WoW

For the ERCOT region, we use ERCOT-North hub as the benchmark. ERCOT-North is the most traded power hub for ERCOT.
ERCOT saw only minor change WoW.

CAISO WoW

For the CAISO region, we use SP-15 hub as the benchmark. SP-15 is located in Southern California.
CAISO minor changes.

NYISO WoW: NY-G

This slide uses the NY-G hub as the benchmark for the NYISO region. NY-G is the most traded power hub in NYISO.
NY-G dropped in winter months.

NYISO WoW: NY-A

This slide adds NY-A for the NYISO region.
NY-A prices minor changes compared to previous weeks.

‍

Disclosures

Purpose

This research is only for the clients of BitOoda. This research is not intended to constitute an offer, solicitation, or invitation for any securities and may not be distributed into jurisdictions where it is unlawful to do so. For additional disclosures and information, please contact a BitOoda representative at info@bitooda.io.

Analyst Certification

David Bellman, the research analyst denoted by an “AC” on the cover of this report, hereby certifies that all of the views expressed in this report accurately reflect his personal views, which have not been influenced by considerations of the firm’s business or client relationships.

Conflicts of Interest

This research contains the views, opinions, and recommendations of BitOoda. This report is intended for research and educational purposes only. We are not compensated in any way based upon any specific view or recommendation.

General Disclosures

Any information (“Information”) provided by BitOoda Holdings, Inc., BitOoda Digital, LLC, BitOoda Technologies, LLC or Ooda Commodities, LLC and its affiliated or related companies (collectively, “BitOoda”), either in this publication or document, in any other communication, or on or through http://www.bitooda.io/, including any information regarding proposed transactions or trading strategies, is for informational purposes only and is provided without charge. BitOoda is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information is being distributed as part of BitOoda’s sales and marketing efforts as an introducing broker and is incidental to its business as such. BitOoda seeks to earn execution fees when its clients execute transactions using its brokerage services. BitOoda makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. BitOoda undertakes no duty to amend, correct, update, or otherwise supplement the Information.

The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances or requirements of any person, and it should not be the basis for making any investment or transaction decision. The Information is not a recommendation to engage in any transaction. The digital asset industry is subject to a range of inherent risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or digital assets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products or digital assets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance.

Ooda Commodities, LLC is a member of NFA and is subject to NFA’s regulatory oversight and examinations. However, you should be aware that NFA does not have regulatory oversight authority over underlying or spot virtual currency products or transactions or virtual currency exchanges, custodians or markets.

BitOoda Technologies, LLC is a member of FINRA.

“BitOoda”, “BitOoda Difficulty”, “BitOoda Hash”, “BitOoda Compute”, and the BitOoda logo are trademarks of BitOoda Holdings, Inc.

‍

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PJM: All Clear This Summer

Power Markets for Bitcoin Miners, 5/15/23

Key Takeaway #1

Key Takeaway #2

Key Takeaway #3

Key Takeaway #4

Premium Content

Table of contents

Research By

Miner WoW View

Henry Hub WoW

PJM WoW

ERCOT WoW

CAISO WoW

NYISO WoW: NY-G

NYISO WoW: NY-A

Disclosures

Table of contents

Research By

Miner WoW View

Henry Hub WoW

PJM WoW

ERCOT WoW

CAISO WoW

NYISO WoW: NY-G

NYISO WoW: NY-A

Disclosures

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