Last Updated: 13 July 2022
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.
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%.
— Nat Bullard (@NatBullard) July 12, 2022
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.
— 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.