WBD561 Audio Transcription
Bitcoin & the Energy Transition with Nima Tabatabai
Release date: Friday 30th September
Note: the following is a transcription of my interview with Nima Tabatabai. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
Nima Tabatabai is co-founder of Optimize Infrastructure. In this interview, we discuss how battery technology for energy grids, solar’s overwhelming economic case, energy sovereignty, and how combining batteries, Bitcoin and solar results in the most flexible energy assets possible.
“The fact that you had the opportunity to even consider becoming an energy generator, that’s purely because solar panels as a technology became so cheap and so accessible…in the hands of every person soon is going to be the ability to participate in the energy system and to be self-sovereign.”
— Nima Tabatabai
Interview Transcription
Peter McCormack: Afternoon, Nima. How are you, man?
Nima Tabatabai: Really good.
Peter McCormack: Thank you for coming on the show.
Nima Tabatabai: You're welcome. Yeah, glad to be here.
Peter McCormack: You haven't had to come too far, which is rare for our podcast.
Nima Tabatabai: And you haven't had to go too far!
Peter McCormack: No, you're here in my home in, I'm going to say sunny Bedford, but the weather turned yesterday, finally.
Nima Tabatabai: Thank goodness.
Peter McCormack: It's been hot.
Nima Tabatabai: Yeah, I've got two young kids, two under 2.
Peter McCormack: Holy shit!
Nima Tabatabai: It's been about 32° in their bedrooms for the past three weeks.
Peter McCormack: Two under 2? You're in the mental zone!
Nima Tabatabai: Yeah.
Peter McCormack: Oh my God! What, like one-and-a-half and a baby?
Nima Tabatabai: Our son just turned 2, and we have a 5-month-old.
Peter McCormack: That's the insanity zone.
Nima Tabatabai: Yeah.
Peter McCormack: I remember it well; I'm in the other insanity zone. It's a weird thing, it's kind of like another S-curve, but basically you go through this bit in the middle where it's a bit calm and then they become teenagers, like adult teenagers, and it's a new insanity zone. The difference is is their fuckups are expensive; my son's fuckups in the last couple of months have cost me literally thousands of pounds.
Nima Tabatabai: Oh my God!
Peter McCormack: He smashed his car into a kerb and it was £800 to fix the wheel and it gets expensive. But I'm at the other end, my son's off to uni, I'm done, "See you later".
Nima Tabatabai: Congratulations.
Peter McCormack: Freedom's coming in!
Nima Tabatabai: It does feel like a long journey coming for us; we're two years in and, yeah, I can see it's going to be a lot of ups and downs.
Peter McCormack: Honestly, it's mainly brilliant, it's mainly brilliant just watching a child grow and become an adult and the things they get interested in and the personalities they develop, it's mainly brilliant; but they fucking test you, honestly they do, but it's mainly brilliant. I would never say don't do it; it's expensive but brilliant, and you're going to have the best time. I mean, you'll be seeing it with your 2-year-old already, right, he's talking and saying funny shit.
Nima Tabatabai: It's hilarious.
Peter McCormack: Yeah.
Nima Tabatabai: You laugh a lot more but you're tired!
Peter McCormack: Listen, I'm sure your wife is more tired, so never play that card if you know what's good for you! Well, anyway, welcome to the show; it's good to have you on. Occasionally, I ask people to tell their backgrounds, maybe if the audience might not know them as well. So, Nima, could you just give a bit of a background and tell people what is it you're doing and why we've got you here today?
Nima Tabatabai: Yeah, sure. I'm not surprised people don't know my background, I'm certainly not a big hitter in the Bitcoin space.
Peter McCormack: Not yet!
Nima Tabatabai: Not yet, yeah, maybe now, but yeah, I'm Canadian; I'm from Calgary, which is in Western Canada on the Rockies.
Peter McCormack: I've been.
Nima Tabatabai: Oh, have you?
Peter McCormack: Do you know why British people love Calgary? And there's actually another connection to Bedford; do we know why we love Calgary?
Nima Tabatabai: No.
Peter McCormack: Have you ever heard of Eddie the Eagle Edwards?
Nima Tabatabai: Yes.
Peter McCormack: You know the -- what do they call it?
Danny Knowles: Ski jumping.
Peter McCormack: Yeah, its long ski jumping, isn't it?
Danny Knowles: I think it's just ski jumping.
Peter McCormack: He's a ski jumper, right; so, do you know his story?
Nima Tabatabai: Not really; I know there's a film recently put out, right?
Peter McCormack: Yeah, it's worth watching. Basically, he was terrible, like the absolute worst; he would come last in every competition. He looked funny, he had big glasses, but he was in the Calgary Olympics.
Nima Tabatabai: Yeah, 1988.
Peter McCormack: And I think he had one decent jump, so he become like this national hero; everybody loves him. He also lived in Bedford.
Danny Knowles: Did he?
Peter McCormack: Yeah, Eddie the Eagle Edwards was from Bedford. So, I've been to Calgary.
Nima Tabatabai: Nice.
Peter McCormack: I've driven past that ski jump.
Nima Tabatabai: Yeah, on the way to the mountains you drive past it.
Peter McCormack: On the way out, yeah; I was on the way to Lake Louise.
Nima Tabatabai: That's right, yeah. It's a beautiful place and, yeah, I grew up there. My background in energy, my whole story is in energy, but it starts from when I was a kid. My dad was a geologist and he actually worked on the oil rigs in Western Canada, because Calgary's like the Houston of Canada.
Peter McCormack: Yeah.
Nima Tabatabai: All the oil and gas companies are there and there are loads of drilling, so I would spend pretty much every summer holidays and every Christmas literally on an oil rig, because he would live right next to it because he was on site. So, a lot of exposure to the energy industry from a young age, and it was just kind of like destiny at that point; I was going to be in energy in some way, and that's the story of a lot of people that come out of Calgary, because it's a bit of a one-industry town, but yeah, a lot of exposure to that early on.
Went to university, engineering, did mechanical engineering there and decided I didn't want to work in oil and gas. The energy industry's huge, and I'm not saying there's anything wrong with oil and gas or working in that field at all, but for me, I just wanted to kind of explore a bit further and see where I could go. So, moved in Switzerland, worked in gas turbines, so the huge jet engines strapped to the ground basically that make a lot of our energy, in the UK in particular, worked on that. Then came to the UK, worked in gas, in wind and then, the last ten years, more in software and batteries, which is kind of like the real leading edge of what's happening in the energy transition now, because it's an industry being digitised in real time; we can talk a bit more about that.
Peter McCormack: Yeah, we'll come to that. What's your Bitcoin story?
Nima Tabatabai: Bitcoin story is, 2013, I was at a start-up in London, CTO there was a really smart guy and he was a bitcoiner; I don't know when he got in but obviously early. He explained it to me in a way that still is probably the best explanation of Bitcoin I've ever had, after being in the space for like ten years.
Peter McCormack: Bold statement!
Nima Tabatabai: He said it in a way that I got it and I managed to convince my wife as well, so that had to be pretty effective.
Peter McCormack: Money for buying weed; that's how he did it!
Danny Knowles: She's a massive stoner!
Peter McCormack: Yeah, right now, she's on that bong!
Nima Tabatabai: She a hodler; she won't let me touch it.
Peter McCormack: Good woman.
Nima Tabatabai: Yeah. He showed me how to do it, held my hand, and you needed handholding at that point; this is 2013, it was scary. I went on LocalBitcoins, sent £500 to some guy's bank account and hoped that some Bitcoin was going to show up.
Peter McCormack: With a picture of you; do you remember that?
Nima Tabatabai: Exactly, yeah.
Peter McCormack: Those were the days, Danny, back in 2013. I was the same, LocalBitcoins and they'd give you their bank details and then you would have to send a picture of you with like --
Nima Tabatabai: With the date or something written.
Peter McCormack: Yeah, something like that, and they would confirm it's you, and then you send the money and, once they've got it, they would send you the Bitcoin. The Bitcoin wasn't in escrow, was it; it was a trust-based system?
Nima Tabatabai: I think it was trust-based, yeah.
Peter McCormack: Reputation-based.
Nima Tabatabai: Yeah, you'd look up the guy as if that made a difference.
Peter McCormack: Yeah.
Nima Tabatabai: I didn't know what I was looking for.
Peter McCormack: Yeah, like, "Bloody hell, it's like £80 a Bitcoin; this is expensive!"
Nima Tabatabai: Yeah, and it was scary, because I didn't know what to do with it when it arrived; I didn't know what a private key was. It was all in these podcasts and educational materials and companies educating everybody; I was like clueless. To be honest, I don't even know how, but I received it somehow, and I think the guy that got me into Bitcoin he realised and he said, "I think you should set up a Coinbase account and put it in there", because he knew otherwise I was going to screw it up.
Peter McCormack: Yeah.
Nima Tabatabai: That was probably really good advice, and I did put it in there and, of course, you know, I bought the top, 2013 top.
Peter McCormack: $1,200?
Nima Tabatabai: Yeah, probably the day that it peaked; I was the ultimate newb, just bought in right at the peak. As you know, it went down so much to the point where I don't even think I logged into my account for like two years or something because I was like, "This is worthless"; it was a sad story at that point. But to that point, the fact that it was just sitting in an account and I didn't have to do anything, I wasn't really responsible for it, was probably a blessing.
Peter McCormack: Forced hodl.
Nima Tabatabai: Yeah, a forced hodl, and I wasn't able to screw it up, I wasn't able to lose the seeds and yeah, obviously 2017, figured out how to log in again; took a look and said, "Oh okay, this is looking a lot better". But yeah, now, since 2017, been doing a lot more education, private keys, multisig, all that stuff, all that good stuff. I'm not advocating for just giving your Bitcoin to a custodian and leaving it there, but that was my journey, and I'm glad I didn't lose it in the process.
Peter McCormack: I don't think I'd heard of a private key until 2017.
Nima Tabatabai: Yeah, I didn't even know what it was. Honestly, I didn't know what a wallet was really. I didn't understand how I received the Bitcoin when they sent it to me on LocalBitcoins, because I had someone helping me; he obviously knew what was going on but it was intimidating.
Peter McCormack: Yeah.
Nima Tabatabai: You had to kind of be a bit techy and, if you weren't a bit techy, you were going to screw it up; that was my feeling.
Peter McCormack: Yeah, I'm exactly the same. I didn't have a wallet apart from what I had on LocalBitcoins. Similar to you, I put mine in a custodian, Silk Road, and now Tim -- what's his name? Tim? Wears the Bitcoin tie.
Danny Knowles: Oh yeah, Draper.
Peter McCormack: Tim Draper, yeah. So, Tim now has, I think, 3.5 of my Bitcoin; I've asked for them back, he won't give it to me. I was on the Silk Road buying books.
Nima Tabatabai: Yeah, sure.
Peter McCormack: There were certain books you could get on the Silk Road. Yeah, so I couldn't get those books anymore, which is really disappointing, and I realise we need censorship-resistant book access, and so hopefully that's coming.
Nima Tabatabai: Those were some good books!
Peter McCormack: There were some great books, man, honestly; they really chilled me out! Anyway, moving on, tell me about the company you work for.
Nima Tabatabai: I guess I have two companies I'm in at the moment. I'm Chief Product Officer at a company in London called Modo Energy; we do data analysis and insights for the battery industry, which is probably not that visible to people day to day, but it's booming behind the scenes and playing a huge role in the energy transition. I'm also a co-founder of a company called Optimize Infrastructure, and the mission of that company is to unleash the global potential of solar power using Bitcoin mining.
Peter McCormack: Can we talk about the battery company first?
Nima Tabatabai: Sure.
Peter McCormack: I'm doing my best to understand the energy mix. I've gone from a point of being somebody who's highly concerned about the climate to somebody who now understands the risks of not having enough energy. Parts of Europe are discussing the idea of blackouts or energy rationing, which has significant consequences. We're also fully aware that, if energy get expensive, that has a knock-on effect on the rest of the economy which can drive a massive increase in prices. At the same time, with energy, there's a compounding effect in that there are certain people now who literally cannot afford to heat their homes, which is concerning as we come towards winter.
I've come to appreciate both the perspectives of climate scientists who are raising the issues of climate change, but also some of the perspectives of someone like Alex Epstein who's made me consider some of the risks of not having enough energy. I'm trying to understand what the best energy mix is. We've spent some time recently with somebody from the nuclear industry, and I'm trying to get the most nuanced view I can, or understanding of what is required.
With regard to renewables, there are certain people who are very critical of renewables, will make claims against solar and wind with regards to there are only specific geographies where they can exist, which is great, also the waste that comes with them and what they mean for baseload, and all things like that. I'm not always sure whether they're being intellectually honest or they're critical because there are people on that kind of the end of the political spectrum that wants us just to burn fossil fuels. I'm trying to understand it all.
One of the criticisms that comes from renewables is the variable wind that you get with wind farms and also the variable sunlight you get for solar; sometimes it can overproduce and underproduce, and one of the great solutions would be if we had amazing power-storing batteries. But my understanding of the battery industry, and hopefully you're going to correct me here, is that it's one part of industry that's not kept up with the speed of technological development elsewhere. Are batteries a reasonable and feasible part of the energy grid?
Nima Tabatabai: Sure. Yeah, I guess the first thing I want to say is I agree with a lot of the things you said there, and I do think there's a nuanced view to be found in the middle, and one of the things that makes it really hard to work in energy at the moment, I think, is the politicisation of energy. It's all black and white and you're either pro this or anti this and all that, and the reality is that this is a transition, it's unstable because we're trying to go from one type of system to another; it's not a smooth line, it's not linear, and it's not something that can be that smoothly centrally controlled and managed. So, we're seeing a lot of messiness in the system, right, and it's playing out in different ways in different countries.
The point about batteries is batteries are a great technology today and they are keeping the lights on in a country like the UK 24/7, and I'll explain how, and this is probably going to trigger a lot of people.
Peter McCormack: Here's my sceptical face!
Nima Tabatabai: Sure. So, there are kind of two types of batteries; the one that is easier for people to imagine is what we would call long-duration energy storage, and that's the one where you can store weeks' or months' worth of power in that battery and it can hold its charge for a long time and they would have to be massive. So, that would be the scenario of like it's windy in the winter in Scotland and you build massive long-duration energy storage batteries that soak up all of that and then you basically supply the country during the less windy months.
Peter McCormack: That technology exists?
Nima Tabatabai: It does not, not really; that's kind of the holy grail that people think about when they think about storage, and that's a technology that's still very early stage and people are trying to crack that. There are companies, well-funded companies in the States and in the UK and Europe that are trying different approaches to solving that, but that is, I would say, at best pilot-stage-type technology today.
Peter McCormack: When we think of batteries we think of Duracell Bunny, the batteries we use day to day. Are we talking about massive versions or these or it is a completely different technology?
Nima Tabatabai: The long-duration storage is likely to be a different technology. It might still be a battery in the sense of a chemical cell, but it's going to be different chemicals than what we use today; the chemistries will differ. That's exactly what people are trying to do, they're trying all different approaches to that to crack long-duration energy storage. That's probably one of the keystone technologies that needs to be unlocked and commercialised for proper widescale adoption of intermittent energy sources to be possible.
But what we do have today is lithium-ion batteries, which is the technology that's going into EVs, it's in all our devices; that is being deployed globally really, really quickly. Those systems, you can think of them as like being a battery that can hold enough charge to fully discharge for somewhere between one to eight hours.
Peter McCormack: One to eight hours of what; for who?
Nima Tabatabai: Of power.
Peter McCormack: For where; for a town, for the entire grid; for a house?
Nima Tabatabai: Like a small power station.
Peter McCormack: Okay.
Nima Tabatabai: Big; we're talking hundreds of megawatts of power, like a medium-sized gas power station. The whole fleet in the UK, all the lithium-ion batteries in the UK -- these are, by the way, huge shipping containers that are connected to the grid; these are like energy infrastructure projects, not like the batteries in your house, we're not talking about a Tesla Powerwall in your garage. These are massive sites with like maybe 30, 40 shipping containers at high voltage.
The fleet in the UK today is about 1.5 GW, so that's, I would say, the size of one cell in a nuclear power station, so that's like one nuclear power station worth of batteries today in the UK, growing really fast. And what these batteries do is, batteries are so fast in responding they can instantly charge or discharge in a way that almost no other device can, and they are keeping the grid perfectly balanced every microsecond of the day.
So, the grid is a miracle, first of all; it has to be perfectly balanced every second of every day for the lights to stay on, and that's what National Grid does. You can broadly try and balance it ahead of time, like you say, "Okay, at 2.00pm, we're going to have 20 GW of demand, so we need 20 GW of generation", and you can get it pretty close. But pretty close is not good enough, it has to be literally perfectly balanced at the second of real-time delivery.
Peter McCormack: And the batteries are used for balancing?
Nima Tabatabai: That's right.
Danny Knowles: Is that like at 50 Hz; is that the thing it's trying to get to?
Nima Tabatabai: That's right. It's trying to keep the grid in the UK at 50 Hz.
Danny Knowles: Well, the only reason I know this is because I think Australia might be 60 Hz, I could be wrong, but when I had my webcam on, because it's an Australian laptop, it flickers because the lights are different.
Nima Tabatabai: So, America, Australia and half of Japan are 60 Hz; Europe, UK and the other half of Japan are 50 Hz. But that's the thing, that frequency has to be pretty much exactly 50 Hz; it cannot deviate from that. If you have too much demand, the frequency drops; you have too much generation, the frequency goes up. These batteries are so fast they are able to basically control the frequency, instantly charging and discharging to keep that perfectly in check, and without that today, we'd have to have something else doing that.
Peter McCormack: What did we have before we had these batteries?
Nima Tabatabai: So, power stations can do it, but they have limitations in how they can do it, and it's more expensive.
Peter McCormack: Do these batteries play a role in supplying power when perhaps there's a drop, or are they purely just as a balancer?
Nima Tabatabai: What they do when they balance is supply power.
Peter McCormack: Okay.
Nima Tabatabai: As soon as the frequency drops, they push power into the grid; as soon as the frequency goes high, they charge from the grid.
Peter McCormack: What I'm saying is, can they burn less coal, use the power from the battery and then recharge the battery from other sources?
Nima Tabatabai: Yeah, a good question. That's basically what they do because, to optimise the battery, you need to charge it, maybe you need to get it to 50% or 80% charge, so you can go both ways. If you're going to charge it, you charge it during the cheapest hours.
Peter McCormack: Yeah.
Nima Tabatabai: Those should be the hours when there's an oversupply of energy on the grid. So, they'll go into the market and try and charge when prices are cheap before going into the balancing markets. Or they can also just arbitrage the market; they can just charge the battery to full, and some batteries do do this when they can forecast that there's going to be high price volatility in the market, they'll go and charge the battery at negative prices where it's near zero and then wait for the price spike and they'll discharge. So they're arbitragers and they help dampen the price volatility in the market.
Peter McCormack: Right. Is there enough lithium in the world to support the demand for these types of batteries, both in the grid and with EVs?
Nima Tabatabai: That's a good question.
Peter McCormack: Because my assumption is we run out at some point.
Nima Tabatabai: Yeah, I don't know the answer to that; it's something being discussed in the industry. There's lots of research being done on that, and I think there are lots of views. I'm sure there are responsible ways to mine lithium and less responsible ways to mine it, and I think that's something that has to be grappled with.
What could be happening is that lithium is becoming one of the core commodities of the future of humanity if batteries fulfil their kind of destiny. The same way, probably what happened with oil like 100 years ago, where you have this new commodity that just became the primary kind of commodity that everyone needed to secure access to and stuff. We know that that's been a messy story and how much it becomes a part of geopolitics and the rise and fall of nations and all types of things. I don't know, maybe lithium could be part of that story going forward. If it becomes a strategic issue for a country like the United States or China, well, I don't know what they're going to do to secure that supply.
Peter McCormack: Do these lithium batteries deteriorate?
Nima Tabatabai: They do, yeah, all batteries degrade over time, same as your iPhone, after a few years they do deteriorate; so it's like any other machinery. As a mechanical engineer, I can tell you all machines deteriorate, even conventional gas turbines, their efficiency goes down over time. They need work; they need maintenance; they have to be upgraded; they break; they have outages.
I think a lot of the criticisms that people point at these new emerging technologies, like batteries or solar or wind, those problems exist in pretty much any machinery or energy generation equipment. They're not perfect; they still need maintenance, upgrades, replacement, new parts, all of that, just like anything else. They're not like these magical things that you put a battery in and it can suddenly work at 100% efficiency for the next 50 years; that's not the truth.
Peter McCormack: What's the connection to Bitcoin here for you then?
Nima Tabatabai: So, 2017, when I started to look into Bitcoin again, as we said earlier, I guess that's when I started to connect the fact that the energy industry and Bitcoin mining were going to be the same industry in the future. That was kind of the key insight; these two industries are going to merge. What me and my cofounders at Optimize realised is, first of all, we believe solar is going to be one of the pillars of the energy system in the future; nothing is growing faster and nothing is getting cheaper faster.
Peter McCormack: So, you see solar as a viable part of the grid?
Nima Tabatabai: Absolutely.
Peter McCormack: So, what about the criticisms that come? For example, I've seen people regularly criticise the cost of production, that you have intermittent energy supplied from them, that they come with a lot of waste, etc. What are the valid criticisms and what is the FUD?
Nima Tabatabai: Okay, the way to think about it in my view is, from the point of view of the grid, there are two big variable costs to running the grid; one is generation. You have to generate enough power at any given moment to meet the demand of the country, and you have to pay for that. So, you have to build infrastructure in a country to generate that amount of power. You need to build whatever your energy mix is; you have to pay for that. The other part is you have to balance the grid. So, just having generation, like bulk generation, is not enough; you also have to balance the thing in real time, which is what we were just talking about earlier with the batteries.
On the generation side, solar, wind, etc, they are the cheapest forms of generation in the right geographies; there's no debating that fact that, just on a megawatt-hour basis, it's the cheapest form of generation.
Peter McCormack: Including infrastructure cost?
Nima Tabatabai: Yeah, everything, all in; you build the capex. I mean, where the costs are low for solar are in, there's no fuel input, maintenance is low, you have to clean the thing, you replace the invertors every five, ten years, etc.
Peter McCormack: There are no margin costs.
Nima Tabatabai: Yeah, there are not really any variable costs, and you kind of amortise that over the life of the project and it's very cheap per unit produced.
Peter McCormack: So, anyone claiming that solar energy is more expensive than, say, I don't know, natural gas or coal, they're lying or it is geography dependant again? See if you can find some.
Nima Tabatabai: Yeah, you can find it if you look at like Bloomberg New Energy Finance you'll see, right now, building new solar is even cheaper than just putting fuel in your gas turbine, never mind building the turbine, just putting fuel in it is more expensive than building a new solar site and having it built.
So the thing is, generation is just one side of the cost bucket. So, you can inject very cheap generation into the energy system right now with solar and wind, but you'd still need to balance the system in real time. That's where these intermittent sources of energy introduce some complexity and some new costs, because you've now got very low-cost generation at certain times in the day that you're pushing into the system, but that's not the whole story; 24/7 you need to match supply and demand and --
Peter McCormack: "The cost of renewable plants are rising after years of declines due to soaring prices for materials".
Nima Tabatabai: This is the inflation story.
Peter McCormack: Yeah. But they're still cheaper than gas or coal?
Nima Tabatabai: Yeah, but that's if you just look at it as purely generation against generation, right, you still need to balance the system; those are real costs. As billpayers in the UK, we pay for the generation on the system, but we also pay all the costs of all the actions taken to balance the system. That means on a day when it was forecast to be sunny but it turned out to be cloudy and they had to, at the last minute, call up other forms of generation, often at higher prices because it's kind of short notice and late, we bear those costs; we pay for all of that, we have to pay for the whole thing. All those costs flow down to us as the billpayers, and this is where the debate gets mixed.
Depending on where you kind of draw the boundary of the cost, you could say, "Solar is a lot cheaper", or you could say, "Well, it looks like it's not cheaper actually because we have to do all this balancing stuff on the side", and no one's quite nailed it. That's why I'm saying long-duration storage is one of the things that could unlock this, because if you could store the energy that's being generated, if you could overbuild your solar and wind massively, store it and then discharge it over long periods of time, you use that stored energy to balance the system rather than having to call up your gas, your coal, your other types of generation.
Peter McCormack: Tell me if I've invented this or I have heard about it, I'm sure I heard some new form of battery which is some kind of like tension coil that stores energy; look that up, Danny.
Nima Tabatabai: There are people doing flywheels.
Peter McCormack: Yeah, is that what it is? Explain a flywheel.
Nima Tabatabai: Well, I guess the flywheel's going to be a massive heavy disc that they just spin up. When there's excess energy, they put energy into a motor that spins it and it starts spinning at a really high speed, and when they have a shortage of energy on the grid, that same motor will slow down the wheel, suck the kinetic energy out of the wheel and put it back into the grid as electricity.
Peter McCormack: That acts like a kind of battery really?
Nima Tabatabai: Yeah, but all of these other ways of trying to do storage at the moment, they're all really early stage and none of them are being done at scale; lithium-ion storage is being done at scale and the costs are falling fast. Every other type of storage is struggling to keep up with that cost curve because they're not scaling, whereas with lithium-ion, also with EVs coming into picture, you're going to see a massive scaling of the supply chain. Obviously, that has some of the issues you mentioned around lithium, but in terms of a cost basis, in the long term that should drive a scale up of battery production and costs to continue falling. The learning curves for solar, wind and storage are all aggressive.
Danny Knowles: What about solar in places like the UK where there's not very much sun?
Nima Tabatabai: Yeah, good question. You can build unsubsidised solar power in the UK profitably; that's how cheap solar panels have become. Never mind places like Australia and California and Nevada, Arizona where the sun is shining and it's blatantly obvious that you should build solar there; even in a place like the UK, it still makes sense.
The wind is blowing better in the UK, so you should build a wind turbine because we have a fantastic wind resource, but it's not just the amount of sun, it's also how easy is it to build a wind turbine? Well, you get criticism from people from 30 miles around saying, "I don't want to look at a wind turbine in my backyard". For solar: less visible, easier planning, quicker to build, more modular, etc. So, some people build solar even if it's not the sunniest country.
Peter McCormack: What is it from the sun that is being converted into energy in the solar panel?
Nima Tabatabai: Oh, this is getting into like solar physics.
Peter McCormack: I'm really getting to the point whereby, even if it's not sunny, by virtue of the fact that it is light and daytime, are the panels still useful because there's something coming down on them?
Nima Tabatabai: Yeah, it doesn't have to be blazing sunshine, but a bright, cloudy day is still a pretty good day for solar; it doesn't have to be cloudless, but it's not going to produce as much as it would if it got direct sunlight. Also, the angle of the sun matters, so you want it hitting the panels square on.
Peter McCormack: I know this; do you know why I know this? I had a guy come to the house to discuss putting solar panels in, and they have to go on the back of the house because of the angle of the roof.
Nima Tabatabai: That's right, and obviously a north-facing roof you wouldn't do in the Northern Hemisphere. You want to do a south-facing roof, or east or west; east, you're going to get your production in the morning. There are loads of engineering that goes into picking the right sites and making them work, but the point is solar's getting so cheap, the panels themselves are so cheap that it still makes economic sense, even in marginal places. That's the story of solar today, that's why it's being deployed faster than any energy technology we've ever deployed. If you want to see an exponential curve, go look at the deployment of solar everywhere around the world, in every country, because it's easy to transport, low maintenance.
Peter McCormack: Takes up a lot of space.
Nima Tabatabai: Takes up space, yeah, it does. A good way to deploy solar though is what you were trying to do on your roof.
Peter McCormack: Yeah.
Nima Tabatabai: So, put it on warehouses; I saw a lot of warehouses in Bedford on the drive up here, all those logistics sites and stuff.
Peter McCormack: It's about an eight-year return for me to have it here.
Nima Tabatabai: Eight-year return?
Peter McCormack: Yeah, it was about an 8-year return and the life of the panels, I think he said were about 25 years; does that sound about right?
Nima Tabatabai: Yeah, I think that does sound about right. It's not a knock-it-out-of-the-park investment, but it's not bad either.
Peter McCormack: One of the questions I put to him was to say, "I don't just want to do this to have cheaper energy bills long term", because that's one of the reasons to do it, if it pays back over eight years then and you plug back into grid, but I said, "If there's ever a scenario where there's a blackout, I don't want to be without power, so I have to have a battery storage in the house". It's possible to do it, he explained that to me, but that was one of the things I looked at.
So, do you follow the debates with regards to energy and the energy mix; are you following on Twitter or my podcast?
Nima Tabatabai: Yeah, I do. Yeah, I know the arguments for conventionals, like fossil fuels, and conventional sources, and again, I've worked in those industries as well, and my family has, and I don't think they're intrinsically bad or that they're negative things; they've gotten us to where we are.
But what's happening with the energy transition, I think one of the problems is a lot of people in fossil fuels view the energy transition as something that's being kind of forced down our throats by big government, and I can understand why it feels like that sometimes. But what's actually driving the energy transition is technology; three key technologies have gotten so cheap so fast, solar, wind and batteries, that they're being adopted by the market.
Peter McCormack: So, why do you think people are arguing against it? There are plenty of people, especially in the Bitcoin space, if you go out there and you read their arguments, they are very, very against renewables. They say they're not renewable, they say they put a risk on the grid and, therefore, you risk blackouts, and they themselves are creating a lot of waste; is there anything fair in any of that and where do you think their arguments are coming from?
Nima Tabatabai: I think, on the point of the grid, the points are valid.
Peter McCormack: But you can mitigate?
Nima Tabatabai: You can mitigate.
Peter McCormack: Okay.
Nima Tabatabai: It makes the energy system more complex. Think of it like this, if you were running National Grid 50 years ago, there were ten coal power stations in the UK, you knew the phone number for the guy that was operating each of those, and that was basically how you balanced the grid; "Oh, it looks like the football ended early tonight on TV; can you turn down?" I'm oversimplifying here, but that's how the energy system used to be; highly centralised, a small number of power stations with a totally central operator.
Today, if you put solar panels on your roof, you would be one of millions of small generators on the grid. The whole system's becoming way more decentralised and it just becomes more complex to manage. How does National Grid know how much generation there's going to be? Well, they have to basically predict the weather and know how many solar panels are out there, and is it going to be cloudy on this part of the country or that part? It makes the whole thing more complicated. That doesn't mean it can't be done; I mean, if we didn't do anything that was complicated, we frankly wouldn't do anything.
Peter McCormack: We wouldn't have put a man on the moon.
Nima Tabatabai: Yeah. So I think in terms of challenges, technical challenges, it can be done. It's not effortless, and I think this is one mistake that people on the side of the energy transition make, is that they make it seem like it's an easy transition to make if we just tried enough; or if you just cared, you could do it. It has real engineering technical challenges; moving from a grid with centralised controllable generation to bringing in more and more intermittent variable generation does introduce genuine engineering challenges into running that grid, balancing it and also economic challenges in terms of the costs. It's not costless, right.
Peter McCormack: But the benefits, I guess I can see three main benefits: protection of the environment; we've seen over 40° weather here in the UK, I'm pretty confident that is down to carbon in the atmosphere. I know someone's going to be on YouTube watching this and they're going to leave a comment like, "You fucking idiot communist, McCormack", but I've lived in the UK my entire life and it was rare to go over 30°. Then we get record temperatures nearly every year, and we're now over 40°. Climate change is happening, and the argument, it always happens, it's some moronic argument. Climate change it happening, it's caused by humans; for me, that is a fact, that's an undisputable fact and I'm not going to waste any more time arguing with people who talk about that. So, that's a benefit in that we become less reliant upon carbon.
The second benefit is that we become less reliable on energy sources, which are at risk to geopolitical tensions; I think that's a secondary benefit. What was the third one I had? Oh yeah, and hopefully it will be long term lower cost.
Nima Tabatabai: Yeah.
Peter McCormack: That's what you would hope.
Nima Tabatabai: That's what you would hope, because you're bringing in the intermittent generation, that brings engineering challenges to running the grid, but now you have entrepreneurs and people building solutions to try and -- there's a problem to be solved there, there's money to be made if you can find cheaper ways of balancing the grid. That's what the batteries are doing; the batteries today, they're making money by balancing the grid for us in a cheaper way than we could do in the past. The need for that is coming from the rise of intermittent generation though, more solar and more wind.
There are two other things to the energy transition though I'd say that are probably pluses that aren't appreciated as much; one is the decentralisation. The energy system's becoming more decentralised; that is a good thing from a resiliency point of view just in general. Moving away from the whole country relying on ten power stations to let's say millions of medium- to small-scale generators dispersed across the country, it's becoming a network rather than a one-way system of, we generate here and we just push the electrons to your house there.
The other one is democratisation. So, the fact that you had the opportunity to even consider becoming an energy generator, that's purely because solar panels, as a technology, became so cheap and so accessible; you can go to IKEA now and buy solar panels, put them on your house. In the hands of every person, soon, is going to be the ability to participate in the energy system and to be self-sovereign.
Peter McCormack: Self-sovereign, yeah, that's the thing in my mind. This is a great thing as a bitcoiner to think I can be self-sovereign with my energy.
Nima Tabatabai: Yeah.
Peter McCormack: I can generate my own energy, I can contribute to the grid, but if I put in the battery power here, I can also build resilience.
Nima Tabatabai: Yeah, the holy grail is solar and storage; if you want to be resilient, you could disconnect your house from the grid. Obviously, you have a limited amount of time that you can do that, it's not endless, but that's what they're doing in California. With all the wildfires there, they're building lots of microgrids, which is basically solar with battery power, so for example, a hospital or something could disconnect from the grid for four hours but keep critical functions running, or other things like that.
So, self-sovereignty is part of that, and one of the ironies I find of the pro-nuclear bitcoiners is the nuclear industry is essentially implicitly, or explicitly, part of the state everywhere that it exists. You need the permission of the state to do anything in nuclear energy. The risks are so extreme, even if they're remote, that it needs state backing in effect, either financially or explicit political state backing, and it's highly centralised.
So, nuclear technology, in general, is only built by very few companies, developed by very few companies, owned by very few companies, and you build these huge, massive stations that become -- if you look at a country like France, they have, I don't know, 50 or something nuclear power plants in the whole country.
Peter McCormack: Do they have that many?
Nima Tabatabai: I don't know the exact number, but a lot of their energy mix comes from nuclear, but those are all run by a state-backed company.
Danny Knowles: 56.
Peter McCormack: And are they all run by EDF?
Danny Knowles: I don't know, I'll have a look.
Peter McCormack: Some people who are maybe anti-state would say, "Well, if there was no state, people could build their own nuclear plants and they could spin them up quicker because there's less regulation".
Nima Tabatabai: Sure, yeah. That's not the state of play today.
Peter McCormack: Yeah, and something about that makes me a little bit nervous due to risks. I think, in certain areas, I am about somebody is pro certain regulations, and I know that will get me flamed in this world, but certain areas I support it. I support the regulation of the skies with regard to aircraft; I think the global air traffic control system is something that should be celebrated as a successful project globally where we've coordinated planes in the sky. I can't remember the last time two planes collided with each other; I think it was when I was kid there was a plane, I think it might have been a Russian plane colliding with a --
Danny Knowles: There was one over Europe --
Peter McCormack: There was one over the UK, collided with a cargo plane I think it was, and I remember it, I think there was like a bunch of kids on it.
Danny Knowles: I remember that story.
Peter McCormack: Yeah, I'm sure it was over the UK. But that is a success, and I know somebody will say, "Private organisations could do this, and they'll have agreements and Yelp reviews" etc. I think that works better. I think nuclear regulation is something centralised. You know what happens when you get greedy corporations who get to bend the rules, or ignore the rules, or they cut corners.
Danny Knowles: That one was over France.
Peter McCormack: Was it over France?
Danny Knowles: Yeah.
Peter McCormack: It was cargo plane, wasn't it?
Danny Knowles: There are a lot, but I think they tend to be like small private planes.
Peter McCormack: Yeah, but I think there's a different form of air traffic control for small private planes. I don't know how it works, but for commercial and cargo, large jets, that was the last one I remember; there might have been others.
Danny Knowles: Yeah, that's the last --
Peter McCormack: Was that in the 1990s?
Danny Knowles: Oh, there was one in 2012, Syrian Airlines, 200 people died.
Peter McCormack: Did that collide?
Danny Knowles: There was one in 2015, 112 died.
Peter McCormack: Collided with what though?
Danny Knowles: That was a Senegal Air business jet with an Intercontinental Airlines flight.
Peter McCormack: I don't even remember those; that's strange. Maybe they didn't want that to be public because people will shit themselves. But still, generally speaking, I think air traffic control has been pretty successful. I mean, we were watching on Netflix -- have you seen the thing about the Woodstock '99?
Nima Tabatabai: I've seen the previews but I haven't watched it.
Danny Knowles: It's worth watching; you're seeing, at first hand, the greedy drive to make money and the impact of that on the festival. You've seen that with so many different cases where greedy corporations will cut corners and it leads to these consequences. There's a really good documentary about Boeing with the development of the 737 MAX, because they were running behind Airbus, and the way they essentially refit the 737, it wasn't suitable, they didn't want to the change their mainframe, and that led to two crashes.
Danny Knowles: I actually got that wrong; I was looking in the wrong column. The Syrian Airlines one was like 200 survived, 3 died; it hit a helicopter.
Peter McCormack: Yeah, but again, that's not hitting another major plane, because probably that helicopter, there's that system, InCAS or whatever it is, in the plane where two are coming at each other, it tells one to pull up and one to pull down, and you also have the guidance from the air traffic control. The last one I remember was two jets hitting each other, or there was, like I say, that cargo plane; I'm sure it was in the 1990s. I just remember it because there were a lot of kids on that plane.
Then you also had the one back in I think it was the 1980s when ETA, in Spain, the terrorist organisation, I think a bomb had gone off, they planted a bomb in Madrid, and they were directing planes to Tenerife; this airport in Tenerife got crowded with planes and a 757 came down and landed on one taking off, and that's the biggest ever; over 500 people killed. You're probably thinking, "How do you know all this?"
Nima Tabatabai: Yeah.
Peter McCormack: My dad was an aircraft engineer and I went through a period of about three years watching every Air Crash Investigation. I used to shit myself flying, so I used to watch Air Crash Investigation because I thought it would help me, and it did. So, you find out all the stupid shit that's happened and they've learnt from, and planes are incredibly safe now because of regulation and you see when people cut corners what happens; we saw it with Boeing, we see it routinely. I don't like the idea of people being able to cut corners building nuclear plants; that's a big step for me.
Nima Tabatabai: The reality is that the nuclear industry is almost not a private industry at the moment. It's almost --
Peter McCormack: Public private.
Nima Tabatabai: It's an extension of the state almost. You need the implicit backing of the state, the financing, the insurance, the waste disposal because it's a long-term -- building a nuclear plant is not just the life of the plant, but it's what you're doing to do with the waste over the long term and all the management of that. That's almost something that's like it seems to be, in the current form, it's almost too big for private corporations to take on; the potential liabilities, even if remote, are too high.
The point is, nuclear is a great technology, carbon-free, baseload power, stable cost. As a generation type, it's fantastic, and I think it should be part of the energy mix, and it is part of the energy mix in most countries.
Peter McCormack: It takes too fucking long!
Nima Tabatabai: It takes ages to build, but that's partly because of these issues.
Peter McCormack: Yeah. The interview we did the other day when we are talking about this, for a new site, it's about ten years just before you start building, just for all the regulations.
Nima Tabatabai: Exactly. It's so heavily regulated, and you need basically financial backing of the government for companies to make the investment. Now, compare that with solar, now it's not baseload power, it has drawbacks and stuff, but one of the advantages are you can build a solar plant in six months. The planning is easy, the risks are low, land use, okay, you could say land use is higher; there are going to be pluses and minuses in the two columns. But, for bitcoiners that are pro-self-sovereignty, pro-decentralisation, want people to be able to take control of their own matters, I don't view building massive state-backed nuclear power at scale is going to lead to some of those --
Peter McCormack: It's a really interesting point.
Nima Tabatabai: It doesn't rhyme with a lot of those values that we do idolise in Bitcoin, like Bitcoin's about decentralisation, democratisation, self-sovereignty, etc.
Peter McCormack: Here's a solution.
Danny Knowles: So, what do you think does provide the baseload in this future world if it's not nuclear?
Nima Tabatabai: The reason we call it an energy mix, in my view, is that it's always going to be a mix, and you're going to have nuclear, you're going to have sun. I don't think we're going to go to a world where you just have solar panels and batteries and that's it. I see the mix evolving over time, and maybe that vision of the grid that people are saying where it's like renewables and long-duration storage and lithium-ion storage and that kind of stuff, I think realistically, that's like 50 years away.
Peter McCormack: But at least we are transitioning towards to that; the trajectory's good.
Nima Tabatabai: Yeah, and that's driven by the costs.
Peter McCormack: Can I ask you a question that might sound very unfair?
Nima Tabatabai: Yeah.
Peter McCormack: Are you not incentivised to sell this vision based on what you do for work; is there any bias, implicit bias in this?
Nima Tabatabai: I would say probably yeah, I am a bit biased, but because I've been working in the energy transition pretty much my whole career, so I've been putting up wind turbines, building batteries, helping the grid balance and stuff, so I see it from that point of view. I'm not saying my point of view is the only right point of view.
It's a complex topic, but there are no black and white answers, there's no, "This is the best; we should only do this and, if we just did this, everything would be fine". Anyone that says that about anything to do with energy is probably not being entirely honest. It's going to be a long transition. There are more technologies that are going to come out. The cheaper and cheaper the batteries get, that's going to drive change across the system as well.
A really interesting thing that's happening right now, and you're going to see it in Texas, is every solar site, like you're building a 500 MW solar farm in West Texas, all the sites that you hear about that can't get their power to Houston and Dallas and stuff, they're all being built with batteries on the site now. So, you don't build solar anymore without batteries; it's called solar and storage, the two work together. You can build bigger sites, you can build a bigger solar site, you can put the power in the batteries, you can discharge the batteries when power prices are high, not just when the sun is shining. You can do lots of things like that, and that's happening in the UK now, that's happening in California, Australia, everywhere.
We're very early; we're going to look back on the days when we just put solar panels in a field on their own and say, "Man, that was early days, that was so dumb. Why didn't we put storage on the site; why didn't we put Bitcoin mining on the site and make the whole thing work together, optimise the whole thing holistically, make it a better asset?" because these are energy assets.
Peter McCormack: So, you think that Bitcoin miners should be on every one of these sites as well?
Nima Tabatabai: Absolutely. That's the vision of Optimize Infrastructure, is to have Bitcoin mining, storage and solar paired together on every solar site in the world.
Peter McCormack: So, if these are so successful and it's happening across the UK, and even somewhere like Texas, which is traditionally an oil and gas state, I just want to refer back to the fact there is a lot of criticism of building the grid like this. Do you think there are lobbyists who are financing a tax on this because they want to protect oil and gas?
I do, I'm just saying it, I do, and the reason I do is because I've been seen it with Bitcoin; there are lobbyists financing attacks on Bitcoin, proof of stake verses proof of work. I can only feel like, if this is successful, and everything I've seen, everything I've read, everyone I've spoken to has generally been very supportive of this; when I've done the research, the costs map out. Yes, there some risk to the grid where there is a requirement for more flexibility, but I'm yet to see a credible article or anything that explains that a grid has collapsed because it was renewable based.
Now, I'm going to caveat saying that the war in Ukraine, Russia has put new pressure on Germany, but that pressure's come from a sudden lack of access to a certain type of power. You may criticise and go, "Well, Germany should never have come off nuclear and relied on energy from another country", but I am also aware, correct me if I'm wrong, is it Denmark that is now, some days, producing more -- that some days it's fully 100% renewable, or it achieved 100% renewable; can you check that, Danny?
Nima Tabatabai: Yeah, from wind power, same with Scotland; Scotland has 100% wind power days and, to be fair, those are a little bit of a vanity metric.
Peter McCormack: But first you get there and then you get there again and then you stay there.
Nima Tabatabai: Yeah.
Peter McCormack: "Denmark is well on its way to achieving 100% renewable electricity generation by 2030, according to new research by GlobalData. The country is unlikely to be the only one of the Nordics to achieve this feat, with Norway and Iceland already near 100% renewable generation, but it would mark a notable improvement for a small European nation. In 2014, Denmark saw 45% of its electricity come from a renewable source, namely wind power. However, that has grown significantly, with the country seeing renewables…" Yeah, this is impressive.
Danny Knowles: But presumably places like Iceland are really easy because it's all hydro and a tiny population.
Nima Tabatabai: Yeah, Iceland is geothermal.
Danny Knowles: Geothermal from the volcanoes?
Nima Tabatabai: Yeah, and Norway's mostly hydro.
Danny Knowles: Yeah.
Nima Tabatabai: But a couple of things to point out, it depends how you do that accounting. So, you could say, "Over the year, we used 100 units of electricity in Denmark and we produced 100 units of wind energy in Denmark, so we're 100%", but in real time, every second of every day, was there enough wind generation to power Denmark? That's not the case.
Peter McCormack: No.
Nima Tabatabai: The reason that a country like that can do it is that it's a highly connected grid, so they can import power from Sweden, from Norway, from Germany; they have interconnectors between these countries. Now the UK's building interconnectors to all these European countries as well; that's part of the energy transition as well, more interconnected grids that allow us to move power from place to place. So, again, that is a little bit of a vanity metric, but you're right, we're moving in the right direction. You get to this much renewable penetration on the grid and then there are challenges, and then you have to solve those.
Peter McCormack: But again, the trajectory's in the right way.
Nima Tabatabai: Absolutely, in my view, yeah.
Peter McCormack: If you're listening and you don't believe in climate change, or you don't care, you don't have to care about this, we could never to go to 100% renewable anyway, unless we had some massive breakthrough in battery technology and we'd still need back-up baseload, right?
Nima Tabatabai: Yeah, it's all a bit theoretical, you're right; but yeah, in my view, it relies entirely on long-duration energy storage and that way of storing what you would call seasonal amounts of energy, like you store all the wind in winter to discharge in summer, and that is a way off.
Peter McCormack: But a mix of nuclear, hydro, solar and wind would be a pretty good mix for reducing carbon in the atmosphere.
Nima Tabatabai: Yeah, it would. That is pretty much what grids like the UK, Texas, etc, that is the mix that we have today on most grids; we're going to have 5%, 10%, 15% solar in places. There is a challenge though to getting to higher amounts of renewable mix on the grids, and this is one of the reasons why we founded Optimize Infrastructure, is we saw a problem in solar that's going to be a real restraint on the growth of solar that can be solved by Bitcoin mining.
That restraint is, well let me pose it to you as a question; so, you own a solar farm in Texas and you look at the weather forecast tomorrow and you say, "It's a sunny day", and you say, "Brilliant, I'm going to make a lot of money tomorrow because I have a solar farm and we're going to generate a lot of electricity, we're going to sell it to the market, it's a sunny day".
The reality is it's not just a sunny day for you, it's a sunny day for every solar plant in Texas and you're all going to produce energy at the exact same time and you're all going to flood the market with power. And the exact hours when you're going to export your sunny day electricity are going to be the hours where power prices are extremely low.
Peter McCormack: But I'm smart; I'm going to store mine in a battery, because I've seen the next day it's going to be rainy, and when those mother fuckers are selling it cheap, I'm going to be selling it the next day.
Nima Tabatabai: You just explained the rationale behind solar and storage, but this is a real problem today; it's called solar value deflation. And, once you get past a certain point, like once you get past a certain penetration of wind or solar on a grid, the economics, they don't work; it's an anti-network effect. Every new solar plant erodes the economics of every existing solar plant and every future solar plant, and you basically hit this point where it doesn't make sense anymore to build more.
We kind of have a line at Optimize where we like to say, "Renewables are prisoners of time and geography"; you just don't have any flexibility, you don't have an option, you generate when the sun is shining. That's a real problem, and that is holding back the growth of solar in every geography where it's kind of getting to a meaningful amount of the grid mix.
Peter McCormack: Well, that's like you've been saying, we need a mix, and it's a complex problem to solve, but we need wind, we need solar, we need hydro, we need nuclear, hopefully we can move away from coal and gas and natural gas; that's the kind of dream scenario.
Nima Tabatabai: I think that's the likely outcome, because technology costs are falling so fast. Like what Jeff Booth says about how technology drives deflation, the greatest example of that probably in modern history is solar; costs are down, compared to 20, 30 years ago, solar costs one-tenth of what it did then. It just gets cheaper and cheaper and cheaper, and then it drives change in the system because it just gives you more options. People start to use it in new ways, new solutions emerge; it's like a forcing function on the energy system. That is a perfect example of technology-driven deflation.
So, you can generate a unit of electricity, I'm not saying you can generate it whenever you want, you can generate it when the sun shines, so you do have to think a little bit about that part, but you can generate a unit of electricity for a fraction of the cost of what you could have done 20, 30, 40 years ago.
Danny Knowles: We got the example of the Texas solar farmer with batteries, but do you want to give it with Bitcoin mining as well?
Nima Tabatabai: Yeah. So, that's the problem, solar value deflation. The other problem is curtailment, the grid just says, "It's too sunny in Texas today, we can't handle all of your power, or we can't handle power specifically where you are, because the power lines are maxed out. So, you could produce 100 MW at your farm, Peter, but today, we're only going to let you export 50, sorry. We don't care about your business case and that you have planned to export 100".
Peter McCormack: But I'm smart and I put a Bitcoin mining operation on.
Nima Tabatabai: That's right. So, if you collocate solar, storage, Bitcoin mining and you have a grid connection, you basically have the most flexible energy asset you could.
Peter McCormack: What if the grid needs my energy but I'm making more from mining Bitcoin and I'm like, "Well, fuck that, I'm just going to mine Bitcoin"; is there any risk to the grid there?
Nima Tabatabai: I guess that comes down to the price of Bitcoin -- there are a load of things that go into that.
Peter McCormack: It's all real-time prices and energy, yeah. So, the grid will have to pay --
Danny Knowles: Will have to outcompete.
Peter McCormack: Yeah, would have to outcompete it.
Nima Tabatabai: Yeah, the grid will have to pay, and that's how it works; that is how the energy system works, that's why the prices go up.
Danny Knowles: There was an example of that, like when we spoke a bit before, London's grid nearly went down and you saw that after the heatwave, and they bought energy, I can't remember where from.
Nima Tabatabai: From Belgium.
Danny Knowles: They were paying like £10,000 a MWh.
Peter McCormack: Yeah, from Belgium.
Danny Knowles: Crazy!
Nima Tabatabai: That's an example of a locational problem; it wasn't that there wasn't generation somewhere in the UK, but they couldn't get it to Southeast London and Kent, and obviously Belgium is located just off the coast of the Southeast of the UK. That's where the interconnector from Belgium lands on the UK grid, so that was the way to get -- getting power to a specific place is the challenge, it's not just anywhere on the grid a megawatt is a megawatt, it's about it being in the right place where it's being consumed.
Danny Knowles: The highest price on record for electricity.
Peter McCormack: Fascinating.
Nima Tabatabai: Just to sketch out that vision of what Bitcoin mining would do, why is solar and Bitcoin mining not being done today? There are loads of Bitcoin mining activity going on in the States; most of it is build the biggest miners that you can, connect them to the grid and then try and operate them in a pretty smart way, make as much money as you can. Right now, mining is not coupled with the growth of solar, they're separate things.
We see a future where you, in the industry where you say collocate, you put on the same site solar, batteries and Bitcoin mining, you also have a grid connection; that gives you the maximum flexibility. You now have a system where you basically have free energy input coming from the solar, you can use your storage to kind of shift through time, but you also have optionality; you're not a prisoner to the prices on the grid anymore. You have optionality whether you can mine or export at any given time, or you could even import, if you're allowed on your grid connection, to run your miners.
This is not like you have 100 MW of solar so you should have 100 MW of mining; we're talking about a small amount of mining, so maybe if you have 100 MW of solar, you might have 1 MW of mining, or 2 MW , just a small percent, but it gives you optionality. It gives you a way to use all the stranded surplus power that's been kind of like missed around the edges on solar. In a place like Australia, they're talking about curtailing 20% of solar energy is the forecast; the grid's just not going to be able to take it. 20% of the time, you can build it into your business case from today, that whatever you think you're going to generate, it's probably going to be 20% less than that because we're just not be able to take it.
So, that 20%, where's that going to go? Well today, it's just purely wasted, it just gets burned in the invertors basically; you put mining on that site, you now have free energy going into the mining. But it's not always available, so you need to be clever about how you build that system and you need to make decisions in real time. It's not as simple as just running the miners 100% of the time, it's basically you need a really clever kind of optimisation system that says, "Oh, it's going to be sunny for the next hour, so let's put the excess power into mining", or, "Oh, we're going to curtailed now so let's start the miners". You need real-time decision-making to make it work with solar; so it's complex, that's why it's not being done today.
But there's a genuine opportunity there, and there's a problem that can be solved. That's what we're trying to do at Optimize, is build that software that will take all those inputs in and basically tell the system what to do.
Peter McCormack: It's fascinating. I'm constantly blown away by the way that Bitcoin mining has become this integral part of growing and developing an energy grid; it blows my mind.
Nima Tabatabai: Yeah, and we're from the energy side, my expertise is from the energy side, our company comes from the energy side; we see genuine problems in the energy system today. This is the message that I'm always trying to give to the energy industry; we have genuine engineering challenges on the grid today, and if we give Bitcoin mining an honest chance, it's a novel solution to a lot of those problems, and it's just not being used.
It will be I think in ten years it's going to be commonplace, because solar and storage went through the same thing, it was kind of crazy to put batteries on a solar site. Now that's become commonplace; that took about five, ten years. Mining is going to go through that same curve, in my view, and just become part of the furniture.
Peter McCormack: All right. Well, how do people find out more about the work you're doing? Where do you want to send them?
Nima Tabatabai: You can follow me on Twitter, so @nimacheeps.
Peter McCormack: We'll put it in the show notes.
Nima Tabatabai: And you can check out, if you're interested in the battery side, check out Modo Energy. Or, if you're interested more in the Bitcoin mining side, you can check out Optimize Infrastructure.
Peter McCormack: Amazing. Well, listen, good luck in everything you do. I'm really glad we got to meet. You should come along to our next meetup.
Nima Tabatabai: Yeah, where is it, in Bedford?
Peter McCormack: We host it at the club before a game once a month, you get to watch a bit of football.
Nima Tabatabai: You know, your club is getting traction; I'm hearing about Bedford FC more and more, and more than I should kind of for where --
Peter McCormack: Real Bedford FC.
Nima Tabatabai: Okay, sorry! But I've had people telling me I need to come to a game. I was speaking to a Bitcoin friend of mine and he was saying, "You've got to come up, it's really family-friendly, the games are awesome".
Peter McCormack: It is, and we're going to win the fucking league!
Nima Tabatabai: I heard you're top of the league, right?
Peter McCormack: Top of the league.
Nima Tabatabai: So, if you stay top of the league, will you get bumped up a division?
Peter McCormack: Yeah, we get up to Step 5, and I want six back-to-back promotions to get in the football league; I'm very serious about this.
Nima Tabatabai: I like your long-term plan for this. This would be a huge story; if you get this team into the Premier League --
Peter McCormack: Oh, the Premier League's a different story, the football league, like the top four divisions, that's the goal for now.
Nima Tabatabai: Okay.
Peter McCormack: Let's get there, then we'll think about the Premier League. But come down, man; the next one will be in October, come down, come and watch a game, it's good fun.
Nima Tabatabai: Love to.
Peter McCormack: Well, listen, good luck with everything you do. I hope we stay friends and see you again, and I'd like to do this again sometime, get an update from you in the future; when there's something new happening, you can come and tell us. But I appreciate you coming in, Nima, and this was fascinating, so thank you.
Nima Tabatabai: Thank you.
Peter McCormack: Appreciate you, brother.
Nima Tabatabai: Thanks a lot, thanks for having me.
