During the crypto boom of 2021, Riot Platforms was raking in cash from bitcoin mining. Now the company is losing so much money that it's counting on energy credits from selling power back to the Texas grid to keep its costs under control. Riot said on Wednesday that it earned $31.7 million in energy credits last month from Texas power grid operator ERCOT. The company generated the credits by voluntarily curtailing its energy consumption during a record-breaking heatwave. The total value of the credits dwarfed the 333 bitcoin the company mined in August, worth about $8.9 million dollars as of the end of the month.IOW, the only reason bitcoin miners made money this year is because we paid them not to throw the state into a blackout.
Texas, which governor Gregg Abbott wants to be a “crypto leader,” has seen major stress on its grid in recent years, particularly rolling blackouts in February 2021 and a failure in 2022 that left 70,000 people without power.
In the heat of the summertime, he says, Texas (in total) has a peak demand of around 80,000 megawatts. Bitcoin mining consumes around 2,200 megawatts, or about 3% of the entire state. This is a lot.
Okay. next question:
Riot Platforms, the largest miner discussed in the New York Times story, said it paid 2.96 cents per kilowatt-hour of electricity in Texas in 2022. Other industrial power users in the state paid 7.2 cents, while residents paid 13.5 cents.Apr 10, 2023
Must be nice to pay cheap for electricity to run computers to solve algorithms, and then get paid again to NOT run them.
That article also points out that electricity rates in Texas have risen 5% thanks to bitcoin mining. And yes, Riot is the same company mentioned above, the one only making money because ERCOT paid it NOT to mine bitcoin.
Attached to these mining operations is a Texas-sized use of power. In order to “mine” for cryptocurrency, computers must run computation algorithms to verify transactions. The computers that solve an algorithm get a “reward” in the form of cryptocurrency – such as Bitcoin – according to the Texas Comptroller. The more calculations a computer can solve, the higher the chance of receiving the reward, per the Texas Comptroller.
The more the computer runs, the more it is rewarded with fake, virtual money that can’t be used to buy anything except fake, virtual money. But it consumes more and more electricity.
In a nutshell, it is an extremely energy-intensive process to mine a Bitcoin. That is why the scale of these computing demands has reached the point that they can rival the consumption of a city’s worth of electricity,” said Le Xie, professor in the Department of Electrical and Computer Engineering at Texas A&M University.
The Texas Comptroller estimates that by 2023, cryptocurrency mining facilities in the state could demand as much power as Houston, the fourth-largest city in the U.S. Already, mining facilities in the state are consuming roughly as much energy as Austin, Xie said.
Well, sure, they can have it. It’s not like we need it. And no, that article isn’t 2 years old; it’s three months old. Courageous journalism, indeed, because it assures us everything is O-K!
Their impact substantially depends upon the way you model them,” Xie said. “If they were modeled as sort of a [constant] demand, then there will be a substantial impact on grid reliability” because they must be served at all times and would stress the grid .
Conversely, if the facilities are “flexible – meaning they can be turned off in times of grid precarity — they can actually be utilized to provide more energy to the Texas grid, Xie said.
Xie’s team’s findings were published in the March issue of the Institute of Electrical and Electronics Engineers Transactions on Energy Markets, Policy and Regulation and the June issue of Advances in Applied Energy.
“We are pleased to say that the kind of model and data that we have utilized can be useful not only here in Texas but also around the country for decision-makers to take a look and understand their performances during stressful situations,” he said.
Cryptocurrency and crypto mining is still a relatively new industry. Bitcoin – the most well-known cryptocurrency – has only been around since 2009.
“Any kind of demand going beyond certain thresholds would always have to be studied and integrated with careful analysis,” Xie said. “That’s the reason we’re doing the study, to understand [crypto mines] characteristics so that we can provide better decision support for the policymakers.”
Funny, no mention of paying the largest operation in the state $31 million to please give us our electricity back, please. Or any analysis of the impact of 3% of all electricity generated going for computers to solve pointless problems on the rest of us. Or the rise of 5% in price, overall. Or that few, if any, generating plants have been built in the last two years. Or that crypto is bleeding money while sucking up power and providing few jobs or other value for Texas.
And please note the crypto miners are “returning” power to the grid the same way taking a coin from my right pocket and putting it in my left is “returning” my money to me. I didn’t make any money; I just didn’t spend it yet. Just so, the electricity crypto mining “returns” to the grid is just used later. Yes, it saves us from a blackout, but it’s not generating power, and if it didn’t use it in the first place, we wouldn’t need them to forego it in the first place. So basically this guy’s argument is: crypto is fine as long as we turn it off when we can’t afford it. Which doesn’t answer the question: can we afford it?
Can anybody?
And the “decision support for the policymakers” is that they throw money at the problem and hope it will go away. In the meantime, the almost daily requests from ERCOT to turn the thermostat up and the dishwasher and washing machine off, and unplug unnecessary appliances (I am NOT exaggerating this*) go on. We’ve been doing this since June, all, apparently, so computers in Round Rock can “earn” crypto by solving algorithms.
I’m beginning to be sympathetic to Mike Lindell.
Temperatures are expected to stay well over 100F until Saturday. By next week we expect highs in the low 90’s. It’ll feel autumnal. The only silver lining is that Riot won’t look forward to any more profit this year. Oh, well, there’s always next summer…
By the way, Bitcoin…the actual cryptocurrency called “Bitcoin “? Not worth a plugged nickel.
*I’ve got about a month’s worth of these e-mails with this language:
Ways to conserve:
Set your thermostat 2-3 degrees higher and run your ceiling fans counterclockwiseRun dishes and laundry overnightUnplug nonessential electronics and appliances
Nothing about suspending your crypto mining, though.
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