Power plants produce more energy in response to increased demand.

Some do. With hydro, nuclear, solar or wind the production is driven by other factors and can lead to market imbalances at times http://fortune.com/2016/05/11/germany-excess-power/

Can you elaborate on how this process works? How the fuel gets used based on demand?

Last I checked, a majority (plurality?) of peaking power plants[1] burn natural gas. When demand increases enough, the base load[2] increases and more power plants are added to the grid.

The grid is not a battery; generated power in is always close to the current demand output. Any claims that crypto-mining uses "clean" power just indicates the claimant doesn't understand that power is patently fungible[3].

[1] https://en.wikipedia.org/wiki/Peaking_power_plant

[2] https://en.wikipedia.org/wiki/Base_load

[3] https://en.wikipedia.org/wiki/Fungibility

I'm not an expert, but I think the broad strokes are pretty straightforward. Let me take a shot.

It depends on the type of plant.

There's a concept in power generation of "base load", https://en.wikipedia.org/wiki/Base_load , which is the minimum usage. Some plants are expensive and slow to start up and shut down. If they're cheaper per kwH, then it makes sense to use them, but only for base load.

Then there's https://en.wikipedia.org/wiki/Load_following_power_plant , which are halfway compromises. They spin up and shut down perhaps twice a day. If load starts falling (or grows more slowly than predicted), these'll definitely get spun up less often. If load rises (faster than predicted), more of these will be used while plans are made to bring up more base load power plants.

Then there're peaker plants, https://en.wikipedia.org/wiki/Peaking_power_plant . These are expensive but responsive. They spin up and shut down within seconds of a change in demand.

This is all controlled by auctions, at various timescales.

A example that might be popular among the Musk fanboys of HN (e.g. me) would be https://www.theguardian.com/technology/2018/feb/23/tesla-bat...

Hmm, I bet the auction process could use a blockchain.

Happily. I used to work at a power company.

So the power company has a grid, and they monitor the amount of power generated with the amount of power consumed.

They know this because they have sensors at the substations that can tell how much power is being used.

If too much power is being generated, they can sell the power to another company, or turn off excess capacity.

If not enough power is being generated, they can buy the deficit from another company, or increase the generation.

It's really straightforward.

How does the fuel in your car get used based on demand?

In all seriousness, there are many types of power plants, the exact mechanism depends on how the actual energy is produced. It is true that for some renewable energy sources like e.g. solar energy, you cannot regulate production and need to store excess energy. But for fossil fuels, you (roughly) produce by demand.

No they don't?