Elizabeth Warren Calls Texas ‘Deregulated Safe Harbor’ for Bitcoin Miners

Massachusetts Senator Elizabeth Warren and a group of six other US lawmakers have requested information on the energy use and potential environmental impact of Bitcoin mining in the state of Texas.

In a letter to Pablo Vegas, executive director of the Electric Reliability Council of Texas (ERCOT), the senators called Texas a “deregulated safe haven” for crypto mining companies, adding that the state’s “cheap power and laissez-faire regulation” raises concerns. about the potential for mining “to increase stress on the state’s power grid.”

One specific piece of information the senators requested concerns how much electricity cryptomining operators in Texas have consumed and how much carbon dioxide emissions they have emitted over the past five years.

Lawmakers also want to know how much Texas regulators pay Bitcoin mining companies in subsidies to turn down energy consumption during periods of high demand.

“Simplified, the Bitcoin miners make money from mining operations that produce heavy loads on the electrical grid: and during demand peaks when the profitability of continuing to mine decreases, they collect subsidies in the form of demand response payments when they shut down their mining operations and do nothing,” says the letter.

Among the companies operating a Bitcoin mining operation in Texas, the letter cites Riot Blockchain, the operator of a 750 MW plant in Rockdale, which announced in July of this year that it made about $9.5 million by shutting down operations and selling power back to the web.

The senators noted that this was more than the $5.6 million the company made from actually selling Bitcoin that month.

Texas Energy Grid and Bitcoin Mining

The letter further estimates that Texas is responsible for about a quarter of all US-based Bitcoin mining operations, and 9% of crypto mining worldwide, “a share expected to reach 20% by the end of next year.”

About 30 crypto mining companies have come to Texas over the past decade, encouraged by vast amounts of open land, easy access to affordable power and low state taxes, according to a recent report by Texas Tribune.

The increased demand raised fears that the state’s already fragile power grid, which crashed during an extreme winter storm in February 2021, could further cripple it.

“Cryptomining adds significant demand to an already unreliable grid, poses enormous challenges to the transmission and distribution system … and contributes to the global climate crisis,” the lawmakers wrote in the letter.

This is not the first time that Elizabeth Warren, a strong critic of cryptocurrencies, has spearheaded attacks on the industry, including Bitcoin mining activities.

In July, the senator took aim at New York-based Bitcoin mining company Greenidge Generation, raising concerns about the company’s impact on the environment.

Before that, Warren took to Twitter stating that “one of the simplest and least disruptive things we can do to combat the climate crisis is to crack down on environmentally wasteful cryptocurrencies.”