It’s Officially Too Hot for Crypto Mining in Texas

An aerial photo of a large compound and electrical substation at a Texas bitcoin mining operation.

The Rockdale, Texas bitcoin mining facility includes its own power switch station seen below the main building.
Photo: MARK FELIX/AFP (Getty Images)

Crypto mining operations in Texas are tugging at their collars, now finding a reason to sweat other than the lingering crypto bear market. Temperatures in Texas are expected to go well over 100 degrees this week, and the lone star state’s electricity system kindly asked big energy users to kindly hop off the grid for when the power usage inevitably spikes. One of those big energy users is, of course, the crypto miners.

Major bitcoin mining operations have acquiesced to turning off their power-hungry systems so as not to tax Texas. The state has already seen temperatures so hot even Satan was sweating last month. This latest heat wave began in early July and is expected to last past this week. Temperatures have regularly blown past 100, and CNN reported that dozens of heat records could be broken before the weekend.

The operator of Texas’ power grid, the Electric Reliability Council of Texas—AKA ERCOT—asked residents and businesses Monday to try and conserve some electricity during peak hours, citing record high electricity demand. The so-called “heat dome” covering Texas has also knocked out a lot of the wind power the state depends on, leaving a lot of the renewable energy production to solar panels.

The Texas Blockchain Council, an industry association which represents over 40 corporate members and individual crypto companies, told The Verge their members were briefly flipping the switch on their operations that would reportedly free up 1% of the Texas Grid. The council’s president, Lee Bratcher, told reporters they were trying to be a “good ‘grid citizen.” Not only that, but grid prices balloon when electricity is in high demand, so there’s another economic incentive to power down in peak times.

At the same time, Riot Blockchain, the state’s biggest mining operation, said they were curtailing power. The company retweeted a statement that said their massive Rockdale center reduced power July 10 until 10 p.m., further adding they would do so again when the grid again needs to be stabilized.

The “Sandow Switch” that once was used by the Alcoa coal power plant now provides electricity for the bitcoin mining facility in Rockdale, Texas.

The “Sandow Switch” that once was used by the Alcoa coal power plant now provides electricity for the bitcoin mining facility in Rockdale, Texas.
Photo: MARK FELIX/AFP (Getty Images)

Yet, even these kindly gestures bely an even more critical future for Texans. Bloomberg reported Monday that ERCOT expects these crypto miners to increase demand by up to six gigawatts by the middle of next year, equivalent to the power of all homes in Houston. These miners have already agreed to ERCOT’s requests that they power down during hot spells, even if that means they mine less crypto than usual.

ERCOT’s leaders told The Block back in June that despite how much power these companies might suck from the grid, they claim they’d have “sufficient generation to meet forecasted demand.” Though you don’t have to look too far in the past to see how often the grid’s own forecasts fail.

Companies like Riot, which have operated in Texas since taking over the Whinstone US bitcoin mining company in 2021, often have heat on the mind. CEO Jason Les said in a recent response video to a Reddit AMA that they’re considering moving toward immersion cooling for the rigs at its facilities, but that is always mitigated by the need to maintain efficiency and keep energy requirements in check. In effect, it becomes a balancing act for bitcoin mining operations, and the main motive is always money, not the local energy demands.

Despite the obvious issues with how hot Texas often becomes, crypto mining operations have flooded the state, incentivized by pro-crypto lawmakers and a deregulated energy infrastructure. The cost/benefit analysis for these companies must have factored in the state’s obvious penchant for extreme temperatures, but CEO of blockchain company Marathon, Fred Thiel, told The Block that high temperatures in a city like Austin would of course lead to more air conditioning, increasing the overall electricity demands. Thiel said ERCOT can ask them to shut down, they’d do it, and likely even with temperature spikes they’d still be up 90% of the time. He further called their attachment to the grid “a symbiotic relationship.”

Depending on the efficacy of these miners for their extremely power hungry operations seems like a lot to hope for, considering they were already willing to brave the heat of Texas summers just for the opportunity to settle down in a loosely-regulated environment. There’s less and less places that are willing to accept these operations as well. New York is close to issuing a partial moratorium, and China has effectively declared them illegal.

Bitcoin mining in particular has long been incredibly energy-hungry operations, and the small but “energy rich” country of Kazakhstan had already faced issues when it struggled to simultaneously cope with the power demands of crypto miners and warm their homes during a cold winter.

Meanwhile, the crypto market remains in bear status pretty much across the board. So yes, these crypto mining operations have reason to play ball with ERCOT in order to save one of the few remaining bastions of crypto mining, but time will tell how long both can keep up this tag-team energy juggling routine before the strains on the energy grid cause the state to suffer another brutal blackout.

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