Eskom is considering a new way to make use of electricity that would otherwise go to waste: offering discounted power to Bitcoin miners and other businesses capable of adjusting their electricity consumption.

The proposal, currently being considered by South Africa’s energy regulator Nersa, would introduce a two-year pilot tariff with a benchmark price of around R1.20/kWh for certain high-voltage customers. The idea is to attract businesses that can increase or reduce their electricity use depending on conditions on the national grid. 

Bitcoin mining is particularly suited to this model because mining machines can be switched off relatively quickly when electricity demand rises. Eskom estimates that it can have several gigawatts of surplus capacity at certain times, particularly when solar generation is high during the day or demand falls overnight.

Instead of curtailing available generation, Eskom could sell some of that excess electricity to flexible customers.

The proposal has received support from parts of the cryptocurrency industry. Luno’s South African country manager Christo de Wit described the approach as forward-looking, arguing that it could turn otherwise unused electricity into productive economic activity. 

However, important questions remain.

Nersa is still considering how miners would be required to respond when the grid comes under pressure. This includes whether they should be automatically disconnected, how quickly they must reduce consumption, what monitoring systems should be installed and whether companies should face penalties if they fail to respond.

There is also the question of whether the discounted tariff should be restricted to cryptocurrency miners or made available to any business that can demonstrate the technical ability to adjust its electricity consumption.

The economics are another concern. While some potential operators believe prices around R1.30/kWh could work, at least one industry participant argues that electricity would need to be considerably cheaper for large-scale Bitcoin mining to become attractive in South Africa. 

Nersa has also warned that poorly designed incentives could create unintended consequences, including additional pressure on the electricity system, higher emissions and the possibility of other customers effectively subsidising the mining industry.

For Eskom, however, the opportunity is straightforward: turn surplus electricity into revenue instead of curtailing it.

Nersa is accepting public comments until 23 October, with public hearings scheduled for November and a decision expected in December. 

The outcome could determine whether South Africa develops a new model for using flexible electricity demand with Bitcoin mining potentially becoming one of the first major tests of the idea.