Texas paid a bitcoin miner more than $31 million to power down during heat wave (2024)

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Did Texas paid Bitcoin miner more than $31 million to cut energy usage during heat wave? ›

Riot said on Wednesday that the state's power grid operator paid the company $31.7 million in energy credits in August — or roughly $22 million more than the value of the bitcoin it mined that month — to cut its energy consumption during a record-breaking heatwave in the state.

As Texas' grid struggled, state paid a bitcoin mining company $31.7M to power down. TEXAS — As Texas faced — and continues to face — another summer of brutal heat, energy consumption is a major concern for the state and its residents.

According to a press release issued Wednesday from large-scale Bitcoin mining operation Riot, the Electric Reliability Council of Texas, a state entity that manages the grid, paid Colorado-based Riot $31.7 million in energy credits to power down its computers during peak demand in August.

The Electric Reliability Council of Texas (ERCOT) paid a bitcoin miner $31.7 million in energy credits in August to not mine bitcoin. During the August heat wave, ERCOT issued eight calls for voluntary energy conservation. People were asked to adjust home thermostats or delay doing laundry during the energy call.

The model bill (formerly called a “Right to Mine” bill and now rebranded as a “Blockchain Basics” bill) includes: A ban on localities enacting zoning and noise ordinances to protect neighbors from the roar of crypto mining operations' high-velocity fans, which are audible for miles.

Hardship across the mining sector was not primarily due to the 2020 halving, but rather resulted from the 2022 crypto winter. This downturn followed a period where mining firms accumulated substantial debt to fund aggressive growth initiatives.

According to Bratcher, there are more than 20 industrial-scale Bitcoin mining operations in Texas that can collectively consume up to 2,300 megawatts of energy a day — enough to power about 460,000 homes during times of high demand in Texas.

The environmental impact of bitcoin is significant. Bitcoin mining, the process by which bitcoins are created and transactions are finalized, is energy-consuming and results in carbon emissions, as about half of the electricity used is generated through fossil fuels.

Bitcoin Cannot Be Regulated

To understand why governments are cautious about Bitcoin, it is important to understand the role that fiat currencies play in a country's economy.

Using recycled heat, Marathon is warming a town in Finland using Bitcoin mining.

Why are Bitcoin miners moving to Texas? ›

The mine owned and operated by Marathon Digital is part of a growing tide of cryptocurrency mining facilities opening across the country, but especially in Texas, where taxes are low, land is plentiful and mining companies can take advantage of the state's deregulated energy market.

Energy Produced Using Coal in Texas

The 15 coal-fired power plants in Texas have a combined, installed capacity of more than 20,000 megawatts (MW) of electricity. Texas is the second-largest producer of lignite in the U.S., with eight active mines in the state.

In Texas, crypto miners can participate in ERCOT's demand-response program (Responsive Reserve Service) and be paid by the grid operator for agreeing to shut down operations to prevent blackouts. The program pays crypto operations even if they are not actually asked or required to shut down.

Forecasters noted that an upper level high pressure area, also known as a heat dome, has been stuck in place, pumping hot and humid air into much of Texas.

According to Bratcher, there are more than 20 industrial-scale Bitcoin mining operations in Texas that can collectively consume up to 2,300 megawatts of energy a day — enough to power about 460,000 homes during times of high demand in Texas.

A 2022 non-peer-reviewed commentary published in Joule estimated that bitcoin mining resulted in annual carbon emission of 65 Mt CO ₂, representing 0.2% of global emissions, which is comparable to the level of emissions of Greece.

The fact is that even the most efficient Bitcoin mining operation takes roughly 155,000 kWh to mine one Bitcoin. By way of comparison, the average US household consumes about 900 kWh per month.

Estimates showed that, in 2023, dedicated mining companies with highly efficient setups would consume about 155,000 kilowatt hours (kWh) of electricity to mine one Bitcoin. The average energy consumed for one Bitcoin transaction is 851.77 kWh, equivalent to about a month of electricity for the average US household.