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Crypto miners in Texas shut down their operations ahead of a heat wave many anticipate will test the limits of the state’s power infrastructure.
The request to shut down came from the nonprofit Electric Reliability Council of Texas as electricity usage peaked at 78,206 megawatts on July 8, 2022, surpassing a previous high of 77,460 MW three days earlier. ERCOT issued a statement to its 26 million customers, encouraging them to conserve electricity in anticipation of a fourth heat wave this summer.
The heat wave began over a week ago, with temperatures in Dallas exceeding 100 degrees Fahrenheit since July 3.
In times of increased demand, crypto miners in The Lone Star state are required to shut down operations to reduce the chance of significant system outages since there is no built-in reserve capacity on the Texan grid. Mining is the energy-intensive process by which “nodes” on the blockchain earn cryptocurrency for securing the blockchain network. Mining is done using powerful computers that consume significant power. One of the top models, the Bitmain Antminer S19 Pro, consumes 3,250 W of electricity.
According to Lee Bratcher of the Texas Blockchain Association, commercial mining operations accounting for 1,000 MW of power were turned off, making that capacity available for retail and commercial purposes.
Argo Blockchain PLC, which in May 2022 secured a loan from the New York Digital Investment Group to expand its 200 MW facility in Dickens County, has already shut down operations, according to an official tweet. Riot Blockchain suspended operations at their Rockdale facility on June 9 but resumed mining 14 hours later. Bloomberg reports that the company has subsequently shut down its facilities in response to ERCOT’s latest statement. Core Scientific has also suspended mining.
Deregulation provides no protection against adverse weather
Rising energy prices and the crypto market rout which began earlier this year may reduce profitability for big miners, many of whom have set up shop in Texas because of friendly legislation and a deregulated energy grid.
The deregulation of the grid in 1999 was a double-edged sword. While it lowered costs and gave consumers more choice, it lacked clear guidelines regarding the hardening of the grid against adverse weather conditions. ERCOT was formed under the supervision of the Public Utility Commission to help regulate the wholesale electricity market, but both bodies lack accountability.
Crypto mining companies still ramping up in Texas
According to a recent press release, Riot Blockchain deployed all of its 23,000 S19 miners in June at its Whinstone facility in Rockdale. It began participating in ERCOT’s Four Coincident Peak (“4CP”) initiative in June 2022. In this program, miners accede to ERCOT’s requests to lower electricity usage during the summer months. In June 2022, the company reduced its energy consumption to 8,648 MW-hours.
In a note to investors at the end of June 2022, Core Scientific disclosed that it operates over 180,000 owned and colocated mining machines, called ASICs, and has significant plans to expand further into Texas and Oklahoma in 2022.
ERCOT expects electricity demand for crypto mining to increase by 6 MW by the middle of 2023.
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