The Houston Chronicle recently reported on the immense profits made by Bitcoin mining companies in Texas during the record-breaking heat of August. Rather than digging in rock formations, these miners use powerful computers to guess a sequence of letters and numbers in order to “mine” a crypto coin worth tens of thousands of dollars. The energy-intensive process of mining drives up electricity costs for Texans by $1.8 billion each year.
One such mining company, Riot, operates two facilities in Rockdale and Corsicana. They are able to make extra money through a demand response program, where ERCOT, the state’s grid manager, asks them to lower their usage during peak demand. Riot made $9.3 million in 2022 from this program, even though they were only asked to lower their usage for 3.5 hours total.
In August, a month with 29 days in triple digits, Riot was able to take advantage of the high electricity demand. They made $24 million by selling electricity they had already purchased back to the grid at peak times, as well as an additional $7.4 million from the demand response program. All in all, they made more money off of electricity than from mining actual Bitcoins.
The boom of cryptocurrency mining in Texas has become an energy sinkhole. Wood Mackenzie estimates that all of the Bitcoin mining operations in Texas use enough energy to power over 1.2 million homes. Many of these mines are owned and run by Chinese companies, raising concerns about cyber attacks against regional grids.
State lawmakers have yet to impose any regulations on crypto miners. A bill that would have capped their enrollment in demand response programs and prohibited digital currency mining facilities from receiving property tax breaks failed to get a floor vote in the House.
In the absence of legislation, it is up to ERCOT and the Public Utility Commission to develop stricter rules. ERCOT is already considering regulations that would require any new facility that uses an average peak of 75 megawatts to get its approval before connecting to the grid, as well as rules that regulate when large electricity users can turn power on and off. We urge ERCOT to swiftly approve these new rules and pass them on to the PUC for final approval.
Crypto miners should no longer be allowed to put our electric grid in jeopardy and benefit from it. Texas already has enough difficulties keeping our lights on and air conditioning running during extreme weather – we don’t need an influx of Bitcoin miners depleting our resources.