Bitcoin Miners in Texas Weather the Storm
Everything is bigger in Texas – including the weather. In recent years, The Lone Star State has seen dramatic weather-related events, including overly hot summers and unusually cold winters.
For instance, an arctic blast hit Texas in February 2021, leaving many Texans literally out in the cold. Most recently, another winter storm impacted Texas on Jan. 15, leaving a number of residents without power.
Bitcoin miners react to Texas winter storm
Although the latest winter weather has not been as harsh as previous years, Bitcoin (BTC) miners across the State expressed concern about how freezing temperatures may impact operations, along with the Texas power grid. Lee Bratcher, president and founder of the Texas Blockchain Council, told Cryptonews that some Bitcoin miners elected to curtail their operations during the most recent winter storm, while others stood by to respond if conditions on the grid warranted it.
Jamie McAvity, chief executive officer and co-founder of Cormint – a Bitcoin miner headquartered in Fort Stockton, Texas – told Cryptonews on Jan. 15 that Cormint had been offline for 95 percent of the time at the start of the winter storm in response to higher than average grid demand. He said:
“The current Bitcoin mining break for Cormint’s computing fleet is approximately $.095/ Kilowatthour (KWh), so its operations will not be online when power prices are above that. Throughout 2023, Cormint’s mining fleet was online about 89 percent of the year. The 11 percent of the year that Cormint was offline in 2023 coincided with the periods of extremely high demand, especially during the Texas summer of 2023.”
While McAvity shared that Cormint ceased the majority of its operations on Jan. 15, a Riot Blockchain spokesperson told Cryptonews that the company actively participates in demand response programs. This means that the Bitcoin miner allows the Texas power grid operator known as The Electric Reliability Council of Texas (ERCOT) to manage the company’s load when assistance is crucial for balancing the grid amid challenging weather conditions.
Texas’ Role in Bitcoin Mining
To put this in perspective, Riot shut down operations during the heat wave Texas experienced during the summer of 2023. Trudi Webster, head of ERCOT communications, further told Cryptonews that Texas continues to see significant economic growth with Large Flexible Loads, which includes cryptocurrency miners that add demand to the grid. “Currently, the crypto mining industry represents the largest share of large flexible loads seeking to interconnect to the ERCOT system,” she said.
Programs such as ERCOT’s Large Flexible Load Task Force (LFLTF) have encouraged more cryptocurrency miners to establish operations in Texas. According to data from Foundry USA – a crypto mining service provider – Texas made up 8.43 percent of the Bitcoin mining hashrate in the US as of the end of 2021, and that percentage has jumped to 28.50 percent as of July 27, 2023.
Controversy and Payment
Yet this growth has also led to controversy. For instance, when Riot ceased operations during the Texas heatwave last year, it was reported that ERCOT paid the miner $31.7 million in energy credits in August. This was roughly $22 million more than the value of the Bitcoin Riot mined that month just to cut its energy consumption. However, Webster explained that ERCOT does not issue “power credits” to loads that curtail their consumption. “Such credits may be a feature of an individual power purchase agreement. However, this is not something ERCOT controls,” she remarked.
Given this, McAvity pointed out that Cormint didn’t receive any form of payment by the state of Texas or ERCOT to cease its operations on Jan. 15. He said:
“Cormint did not receive payments from ERCOT to curtail its energy usage, it merely followed its economic best interest, which is to not mine Bitcoin when power prices are elevated due to high residential demand.”
Hot Take: Bitcoin Miners Adapt to Extreme Weather Challenges
Bitcoin miners in Texas have had to adapt their operations due to the extreme weather conditions in the state. Freezing temperatures and high grid demand during winter storms have led some miners to curtail their operations for the sake of the grid’s stability. Companies like Cormint and Riot Blockchain have made strategic decisions based on economic considerations and participation in demand response programs. While Texas has seen significant growth in the crypto mining industry, it has also faced controversies surrounding energy consumption and payments. Despite these challenges, Bitcoin miners continue to find ways to weather the storm and contribute to Texas’ role in the mining landscape.
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