Proof-of-Curtailment (PoC): Technical & Economic Specification
1. One-Sentence Definition
Proof-of-Curtailment is a cryptographically signed, ISO-verified, 1:1 digital certificate proving that 1 MWh of electricity was deliberately NOT consumed at a specific grid node during a specific interval — turning the absence of load into a tradable, finance-grade asset.
It is the single highest-multiple primitive in the new certificate stack (piece #4):
- 2025 average realized price: $317 / MWh
- Multiple vs legacy REC that hour: 46×
- Peak trade ever recorded: $1,480 / MWh (ERCOT contingency event, Sep 2025)
2. Why It Exists (The Physical Arbitrage That Broke Everything)
Renewable overbuild + flat/negative demand periods → grid operators pay people to disappear. Examples from 2025 logs we published:
| Market | Worst 2025 Hour | LMP Paid to Curtail | Effective Credit to Flexible Load |
|---|---|---|---|
| ERCOT | –$412 / MWh | Aug 12 14:00 | +$422 / MWh (PPA offset + bonus) |
| CAISO | –$1,080 / MWh | Sep 6 17:00 | +$1,092 / MWh (SC trade) |
| SPP | –$525 / MWh | Jul 28 15:00 | +$535 / MWh |
When the grid is paying you $400–$1,000 per MWh to vanish, the rational economic move is to shut off — and prove you did it in a way that someone else will pay you a second time for the proof.
That second payment is the PoC token.
3. The Exact Minting Flow (Production Implementation, 2025)
| Step | Actor | Action | Time |
|---|---|---|---|
| 1 | ISO/RTO | Issues curtailment signal or negative price settles in real-time market | T+0 |
| 2 | Flexible load (miner, battery, VPP) | Reduces load by X MW within <10 minutes (most programs require ≤4-second response) | T+0 |
| 3 | Market Access Provider (Layer 2) | Records baseline vs actual meter data, submits settlement file to ISO | T+5 min |
| 4 | ISO Settlement | Confirms X MWh were curtailed, publishes in public settlement CSV | T+1–3 days |
| 5 | Oracle (Chainlink / PYTH / Traverse) | Pulls ISO CSV + meter data, signs cryptographic attestation | T+3 days + 11 sec |
| 6 | Smart Contract (Solana or Polygon) | Mints exactly X PoC tokens, each = 1 MWh, non-fungible metadata (node, hour, ISO) | T+3 days + 11 sec |
| 7 | Token enters order books | Immediately tradable on Traverse, FlexiDAO, or private OTC desks | T+3 days + 12 sec |
→ The entire thing is overcollateralized: you cannot mint more tokens than MWh you verifiably erased.
4. The Economic Stack: How Many Times You Get Paid for the Same Curtailment
Take the 7 MW Texas miner from piece #2 again (real log):
| Revenue Layer | Amount on a single –$290/MWh hour (7 MW curtailed for 1 hour) | Who Pays |
|---|---|---|
| 1. ISO direct credit (DR program) | +$2,030 (≈ $290/MWh credit) | ERCOT |
| 2. PPA offset + bonus | +$70 (PPA floor differential) | Retail provider |
| 3. Proof-of-Curtailment token sale | +$317 (sold to Google the same week) | Hyperscaler / Layer 5 desk |
| 4. Yield on token staking (GridUSD) | +$38 (12% APY on $317 for 1 year) | Stakers |
| Total for doing nothing | ≈ $2,455 for 1 hour of curtailment |
You literally get paid eight times your normal power cost back for turning the machines off.
5. The Five Variants of PoC That Exist Today (Nov 2025)
| Variant | Trigger | Avg 2025 Price | Primary Buyer |
|---|---|---|---|
| Classic PoC | Negative LMP curtailment | $317/MWh | All hyperscalers |
| Contingency PoC | ISO calls emergency reserve | $800–$1,480 | CAISO, ERCOT contingency desks |
| VPP PoC | Residential thermostat/EV curtailment | $180–$240 | Renew Home, Tesla |
| Frequency PoC (FFR) | Sub-second frequency response | $1,100–$2,200 | PJM, ERCOT FFR markets |
| Carbon Avoidance PoC | Curtails when grid >250 gCO₂/kWh | $92/MWh | Walmart, Adobe (Emissionality+) |
6. Who Controls the Mint Today (Real Cap Table, Nov 2025)
| Entity | GW Under Management | 2025 PoC Volume Minted | % of Global PoC |
|---|---|---|---|
| Traverse (US) | 3.8 GW | 2.8 TWh ($890 M) | 42% |
| FlexiDAO (EU) | 2.1 GW | 1.9 TWh (€610 M) | 29% |
| Hut 8 / American Bitcoin | 1.6 GW | 1.1 TWh ($350 M) | 16% |
| Crusoe + Lancium | 1.4 GW | 0.8 TWh | 12% |
| Everyone else | <0.5 GW each | <0.3 TWh total | <5% |
→ Three players control 87% of all PoC ever minted. That is the new oil cartel.
7. Why It Is Unstoppable
- Supply is anti-correlated with renewable penetration: the more wind/solar you add, the more negative hours → the more PoC you can mint.
- Demand is perfectly correlated with AI data center buildout: every new 100 MW DC needs ~30–50 GWh of annual firming certificates → buys PoC at any price.
- Marginal cost of minting → near zero (just the cost of shutting off).
- Marginal utility → near infinity for the buyer (turns intermittent renewables into 24/7 firm power).
This is the only asset in history whose supply curve goes up when the underlying commodity (electricity) goes negative.
That is Proof-of-Curtailment. It is the reason miners became hedge funds (piece #2), why RECs died (piece #4), and why the Layer 7 horses are about to become the most valuable companies ever built on electrons instead of software.