Texas heat wave and energy shortage limit bitcoin mining

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Bitcoin miners in the Lone Star State closed this week due to a devastating heatwave that puts a strain on the electricity grid. The Texas grid operator on Monday urged residents and businesses to conserve energy as extremely hot weather pushed electricity demand across Texas to record highs.

Bitcoin mining companies in the state responded by shutting down their machines, which would otherwise have consumed more than 1,000 megawatts of electricity, according to the Texas Blockchain Council. This freed up about 1% of the total network capacity.

They’re shutting down for a variety of reasons, but mostly because being a good internet user is the right thing to do, Lee Bratcher, president of the Texas Blockchain Council, said in an email to The Verge. There are also financial reasons, Bratcher said, as Texas electricity prices skyrocket during a power shortage.

It is the right thing

Bitcoin miners flocked to Texas last year after China banned the practice, with the United States becoming the largest mining hub in the world. According to Bloomberg, these cryptocurrency miners are expected to increase Texas electricity demand by up to 6 gigawatts by the middle of next year.

Cryptocurrency mining companies have essentially created their own data centers filled with specialized hardware that mines bitcoins trying to solve increasingly complex puzzles. This energy-intensive process is performed to validate new transactions on the blockchain and allows miners to earn new tokens.

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As a result, the Bitcoin network consumes more electricity per year than the Belgian country. However, power consumption is estimated to have dropped in the past month after Bitcoin’s price dropped. The low value of cryptocurrency combined with high energy prices makes operating mining machines less profitable. In Texas, a large publicly traded miner plans to close between 8:00 and 22:00 for several days this week, Bratcher said.

Shutting down, especially during these peak times, also helps the Texas power grid avoid possible outages. Warm temperatures typically put more strain on power grids as people blow up air conditioners and Texas is seeing triple-digit heat this week. Texas’s sweltering heat dome also deprived it of much of its wind power, which typically generates about a quarter of its electricity. The Texas power grid is also particularly vulnerable because it doesn’t connect to power grids in other regions. Other states can usually share power with each other in an emergency.

Its power grid is not yet above the mountain

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The state has so far avoided major outages after the Electric Reliability Council of Texas (ERCOT) on Monday urged Texans to voluntarily reduce energy use. In February 2021, a deadly cold spell caused massive disruptions across the state. The sweltering temperatures are expected to continue throughout the week in Texas, so the power grid isn’t out of danger yet.

This isn’t the first time bitcoin miners in the state have responded to a high-temperature power outage, and it probably won’t be the last. Riot Blockchain, a bitcoin mining company, reduced its power consumption by 8,648 megawatt hours in June, Riot marketing coordinator Alexis Brock said in an email to The Verge. This is important because Riot operates a facility in Rockdale, Texas which he claims is the largest bitcoin mining facility in North America. The company plans to further reduce the installation this summer if necessary when peak electricity demand threatens grid stability.

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