Texas heat wave and energy crisis limit Bitcoin mining
Bitcoin miners in Lone Star State shut down this week as a punitive heat wave stresses the power grid. Texas’ network operator urged residents and businesses to save energy on Monday with “extremely hot weather leading to record power needs across Texas.”
Bitcoin mining companies in the state responded by shutting down their machines that would otherwise have used over 1,000 megawatts of power, according to the Texas Blockchain Council. It released about 1 percent of the network’s total capacity.
“They close for several reasons, but primarily because it’s the right thing to do to be a good ‘citizen,'” said Lee Bratcher, president of the Texas Blockchain Council. The Verge in an email. There are also economic motives, Bratcher said, since spot prices for electricity in Texas skyrocket when there is a shortage of electricity.
Bitcoin miners have flocked to Texas in the past year after China banned the practice, and the United States later became the largest hub for global mining. These crypto miners are expected to inflate Texas’ electricity demand by up to 6 gigawatts by the middle of next year, according to Bloomberg.
Crypto-mining companies mainly set up their own data centers filled with specialized hardware that “extracts” Bitcoin by racing to solve increasingly complex puzzles. The energy-intensive process is done to validate new transactions on the blockchain and allows miners to earn new tokens.
The Bitcoin network, as a result, uses more power annually than the country Belgium. However, energy consumption is estimated to have fallen over the past month after the price of Bitcoin took a dive. A lower value for the cryptocurrency, combined with high energy prices, makes it less profitable to operate mining machines. In Texas, a “large listed miner” plans to close between 8 a.m. and 10 p.m. for “several days this week,” Bratcher said.
Turning off, especially during the busiest hours, also helps Texas’ power grid avoid potential power outages. Warm temperatures typically put more pressure on the power grid when people blow up the air conditioner, and Texas is experiencing triple-digit heat this week. The heat dome that suffocates Texas has also starved it of too much of the wind power, which usually generates about a quarter of the electricity. Texas’ power grid is also particularly vulnerable because it does not connect to power grids in other regions. Other states can usually share energy with each other in an emergency.
The state has so far avoided major power outages after the Electric Reliability Council of Texas, or ERCOT, asked the Texans to voluntarily reduce their power consumption on Monday. Back in February 2021, a deadly cold situation caused massive power outages across the state. Suffocating temperatures are predicted to continue throughout the week in Texas, so the power grid is not out of the woods yet.
This is not the first time Bitcoin miners in the state have responded to a power outage during high temperatures, and it will probably not be the last. Riot Blockchain, a Bitcoin mining company, reduced 8,648 megawatts of energy consumption throughout June, Riot Marketing Coordinator Alexis Brock said in an email to The Verge. This is important because Riot operates a facility in Rockdale, Texas that it claims is North America’s largest Bitcoin mining facility. The company plans for the plant to continue to be phased out as needed this summer when peak demand for power threatens the stability of the grid.
