The US state of Texas is suffering from enormous heat. Age-old records are currently being broken. This has an impact on bitcoin miners in the region too.
Power problems
The state’s grid operator warned on 11 July that there would “probably” be power outages. It asked consumers and industries to reduce their power consumption.
Since last year, bitcoin mining has been hugely popular in the state. After the exodus of mining companies from China, the US state has proven to be an oasis for these data centres — cheap electricity and a friendly (political) business climate attracted numerous mining companies.
Lee Bratcher, head of the Texas Blockchain Association, says that “almost all industrial bitcoin miners” in Texas closed their facilities on 11 July.
As a result, 1,000 megawatts of power were freed up for grid redistribution. According to Bratcher, that is the equivalent of 1% of the total grid capacity in Texas. Other charts show that it would be even more than 1%.
Texas avoided blackouts today. A Gigawatt of demand reduction from cryptocurrency miners helped. https://t.co/Kur846E4Qc pic.twitter.com/V0JKbQ5fh8
— Nat Bullard (@NatBullard) July 12, 2022
Flexible decline
During previous crises, such as a winter storm in February, bitcoin miners did the same. As the miners took less electricity, there was more remaining for essential services such as heating or, in this case, cooling systems.
This time, however, there is something else at play besides altruism. The grid operator the Electric Reliability Council of Texas (ERCOT) arranges “demand response” deals with companies.
Bitcoin miners are paid if they reduce their usage during periods of peak demand. These deals are designed to relieve pressure when there is a greater amount of off-take than the yield. For example, it has been windless in Texas lately, while some of the electricity is generated by wind turbines.
This is accurate. @ERCOT_ISO is a professional organization performing a valuable service to Texans. https://t.co/9lBem0qp5y
— Lee ₿ratcher (@lee_bratcher) July 12, 2022
Bitcoin mining companies are excellent counterparts for the ERCOT in these situations: it is a relatively flexible load.
Voltus, a company that provides energy management services, estimates that a miner can earn up to 10% of his annual income by offering shutdown services to the grid. As the value of bitcoin has fallen sharply, profit margins have also dropped significantly, making this fee alternative suddenly not such a bad thing.
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Gabriele Spapperi is a veteran cryptocurrency investor and blockchain technology specialist. He became fascinated with Bitcoin and distributed ledgers while studying computer science at MIT in 2011.
Since 2013, Gabriele has actively traded major cryptocurrencies and identified early-stage projects to invest in. He contributes articles to leading fintech publications sharing his insights on blockchain technology, crypto markets, and trading strategies.
With over a decade of experience in the crypto space, Gabriele provides reliable insights and analysis on the latest developments in digital assets and blockchain platforms. When he's not analyzing crypto markets, Gabriele enjoys travel, golf, and fine wine. He currently resides in Austin, Texas.