Texas Plans to Become the Bitcoin Capital, Vulnerable Power Grid and All
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BK The Great
Veteran
The better hope this winter isn't like last years. The can't handle a inch of snow.
Renegade47
Superstar
if that same shyt happens again im moving out west. im not dealing with that shyt for the rest of my life
BaileyPark31
Love, Peace, Health, and Wealth
What could go wrong!!
kingdizzy01
ATXBBOY
what a time to be alive
BK The Great
Veteran
Always be prepared, the governments don't care about the people. But places like Cali also now getting Snow as well. The Climate is changing.
Cloutius Maximus
with the aid of the Funk...
can someone explain bitcoin mining to me like i'm a 7th grader?
i get that bitcoin takes up a lot of electricty, but why? what is all that energy used for?
isn't there a finite amount of bitcoin? is the energy used to create more or dig up whats already there?
do the other coins (like shiba inu) also require lots of energy to mine them?
i get that bitcoin takes up a lot of electricty, but why? what is all that energy used for?
isn't there a finite amount of bitcoin? is the energy used to create more or dig up whats already there?
do the other coins (like shiba inu) also require lots of energy to mine them?
Texas miner earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demand
www.theregister.com
Texas cryptomining outfit earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demand
Brandon VigliaroloThu 7 Sep 2023 // 17:30 UTC
Bitcoin mining outfit Riot Platforms earned $31.7 million from Texas power authorities last month for curtailing operations – far more than the value of the Bitcoin it mined in the same period.
In a press release yesterday, Riot said it produced 333 Bitcoin at its mining operations in Rockdale, Texas, which would have been worth just shy of $9 million on August 31. All the cash earned from those energy credits, on the other hand, equates to around 1,136 Bitcoin, Riot CEO Jason Les said in the company's monthly update.
"August was a landmark month for Riot in showcasing the benefits of our unique power strategy," Les said. "Riot achieved a new monthly record for Power and Demand Response Credits … which surpassed the total amount of all Credits received in 2022.
"These credits significantly lower Riot's cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry," Les said.
The Electric Reliability Council of Texas (ERCOT) operates a demand response program that allows big energy consumers, like Riot, to earn power credits for using less of it for operations and selling power back to the grid, as well as additional credit for being enrolled in its demand response programs.
As we reported in August of last year, the company earned $9.5 million in credits during a July 2022 heatwave as well – still far less than it earned in Texas's hottest August on record this year.
Energy prices have been generally up, and aren't coming down, but you know what has deflated? The price of a Bitcoin. Sure, the price of 1 BTC has been up from the depths it plumbed late last year, but hovering in the mid-$20k range all year is nothing like the heady late-2021 highs of near $70k per coin.
The combination of inflated electricity costs and a drop in the value of Bitcoin means mining simply isn't as profitable as it was in 2021, the year Riot's revenue soared as demand for, and the value of, Bitcoins rose.
Fast forward just a year and things began looking different. Losses followed as Bitcoin prices plummeted and trade volume started to shrink – a problem that has only continued in the crypto world.
Analysts see Bitcoin miners struggling, and JPMorgan Chase said recently that the market cap of the largest Bitcoin mining firms in the US dropped by 21 percent in August. Surprise, surprise – Riot, with a 39 percent drop in market cap over the month, was the worst hit. While Riot's stock is up this year, like Bitcoin its value has dropped precipitously since 2021, when the mining firm peaked at $71.33 a share. Today it's worth just $11.10.
But if ERCOT is going to pay the market mWh rate for not mining, it can't be that bad of a business model.
Neither ERCOT nor Riot responded to questions for this story. ®
Why the fukk are bitcoin miners getting credits?Texas miner earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demandTexas cryptomining outfit earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demand
Brandon Vigliarolo
Thu 7 Sep 2023 // 17:30 UTC
Bitcoin mining outfit Riot Platforms earned $31.7 million from Texas power authorities last month for curtailing operations – far more than the value of the Bitcoin it mined in the same period.
In a press release yesterday, Riot said it produced 333 Bitcoin at its mining operations in Rockdale, Texas, which would have been worth just shy of $9 million on August 31. All the cash earned from those energy credits, on the other hand, equates to around 1,136 Bitcoin, Riot CEO Jason Les said in the company's monthly update.
"August was a landmark month for Riot in showcasing the benefits of our unique power strategy," Les said. "Riot achieved a new monthly record for Power and Demand Response Credits … which surpassed the total amount of all Credits received in 2022.
"These credits significantly lower Riot's cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry," Les said.
The Electric Reliability Council of Texas (ERCOT) operates a demand response program that allows big energy consumers, like Riot, to earn power credits for using less of it for operations and selling power back to the grid, as well as additional credit for being enrolled in its demand response programs.
As we reported in August of last year, the company earned $9.5 million in credits during a July 2022 heatwave as well – still far less than it earned in Texas's hottest August on record this year.
Energy prices have been generally up, and aren't coming down, but you know what has deflated? The price of a Bitcoin. Sure, the price of 1 BTC has been up from the depths it plumbed late last year, but hovering in the mid-$20k range all year is nothing like the heady late-2021 highs of near $70k per coin.
The combination of inflated electricity costs and a drop in the value of Bitcoin means mining simply isn't as profitable as it was in 2021, the year Riot's revenue soared as demand for, and the value of, Bitcoins rose.
Fast forward just a year and things began looking different. Losses followed as Bitcoin prices plummeted and trade volume started to shrink – a problem that has only continued in the crypto world.
Analysts see Bitcoin miners struggling, and JPMorgan Chase said recently that the market cap of the largest Bitcoin mining firms in the US dropped by 21 percent in August. Surprise, surprise – Riot, with a 39 percent drop in market cap over the month, was the worst hit. While Riot's stock is up this year, like Bitcoin its value has dropped precipitously since 2021, when the mining firm peaked at $71.33 a share. Today it's worth just $11.10.
But if ERCOT is going to pay the market mWh rate for not mining, it can't be that bad of a business model.
Neither ERCOT nor Riot responded to questions for this story. ®
Batsute
The Lion Choker
Texas miner earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demandTexas cryptomining outfit earns more from idling rigs than digging Bitcoin
It's not a broken business model if the subsidies make up for cratering market and flagging demand
Brandon Vigliarolo
Thu 7 Sep 2023 // 17:30 UTC
Bitcoin mining outfit Riot Platforms earned $31.7 million from Texas power authorities last month for curtailing operations – far more than the value of the Bitcoin it mined in the same period.
In a press release yesterday, Riot said it produced 333 Bitcoin at its mining operations in Rockdale, Texas, which would have been worth just shy of $9 million on August 31. All the cash earned from those energy credits, on the other hand, equates to around 1,136 Bitcoin, Riot CEO Jason Les said in the company's monthly update.
"August was a landmark month for Riot in showcasing the benefits of our unique power strategy," Les said. "Riot achieved a new monthly record for Power and Demand Response Credits … which surpassed the total amount of all Credits received in 2022.
"These credits significantly lower Riot's cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry," Les said.
The Electric Reliability Council of Texas (ERCOT) operates a demand response program that allows big energy consumers, like Riot, to earn power credits for using less of it for operations and selling power back to the grid, as well as additional credit for being enrolled in its demand response programs.
As we reported in August of last year, the company earned $9.5 million in credits during a July 2022 heatwave as well – still far less than it earned in Texas's hottest August on record this year.
Energy prices have been generally up, and aren't coming down, but you know what has deflated? The price of a Bitcoin. Sure, the price of 1 BTC has been up from the depths it plumbed late last year, but hovering in the mid-$20k range all year is nothing like the heady late-2021 highs of near $70k per coin.
The combination of inflated electricity costs and a drop in the value of Bitcoin means mining simply isn't as profitable as it was in 2021, the year Riot's revenue soared as demand for, and the value of, Bitcoins rose.
Fast forward just a year and things began looking different. Losses followed as Bitcoin prices plummeted and trade volume started to shrink – a problem that has only continued in the crypto world.
Analysts see Bitcoin miners struggling, and JPMorgan Chase said recently that the market cap of the largest Bitcoin mining firms in the US dropped by 21 percent in August. Surprise, surprise – Riot, with a 39 percent drop in market cap over the month, was the worst hit. While Riot's stock is up this year, like Bitcoin its value has dropped precipitously since 2021, when the mining firm peaked at $71.33 a share. Today it's worth just $11.10.
But if ERCOT is going to pay the market mWh rate for not mining, it can't be that bad of a business model.
Neither ERCOT nor Riot responded to questions for this story. ®
I want out of this sorry ass state.
Everyday I get texts begging me to not use electricity.
Texas leaders worry that Bitcoin mines threaten to crash the state power grid
Granbury residents are raising alarms over noise from a local Bitcoin mine, while state lawmakers warn that the energy-hungry facilities risk “crashing” the electrical grid.
Texas leaders worry that Bitcoin mines threaten to crash the state power grid
Granbury residents are raising alarms over noise from a local Bitcoin mine, while state lawmakers warn that the energy-hungry facilities risk “crashing” the electrical grid.
By Keaton Peters, Inside Climate Newson Wed, Jul 10, 2024 at 5:24 pm
Inside Climate News / Keaton Peters
Cheryl Shadden stands outside her home in Granbury with a view of Constellation Energy's Wolf Hollow II power plant in the background.
This story is published in partnership with Inside Climate News, a nonprofit, independent news organization that covers climate, energy and the environment. Sign up for the ICN newsletter here.
GRANBURY — Cheryl Shadden cannot sleep. The 61-year-old nurse, who works at hospitals giving patients anesthesia, says she is kept up at night by the nonstop mechanical whir of fans spinning to cool tens of thousands of computers.
Shadden lives in Granbury, about 40 miles southwest of Fort Worth, with her seven dogs, six horses, six cats and a parrot. In 2022, after 23 years in the area, Shadden got a new neighbor: a 300-megawatt Bitcoin facility, referred to as a “mine,” where computers run around the clock to help maintain a global network of transactions in the cryptocurrency.
“Nobody in their right mind would live here,” Shadden said. “My windows rattle. The sound goes through my walls. My ears ring, 24/7.”
Since the facility opened, Shadden said her animals are restless, and some of her dogs have pulled out their own fur. In late June, Shadden went to a doctor to get her hearing examined, and tests found she had suffered permanent hearing loss. She believes her animals’ behavior and her hearing loss were caused by the noise from the Bitcoin mine.
Noise pollution is not the only reason that Bitcoin mining may be keeping Texans up at night. The mine owned and operated by Marathon Digital is part of a growing tide of cryptocurrency mining facilities opening across the country, but especially in Texas, where taxes are low, land is plentiful and mining companies can take advantage of the state’s deregulated energy market. As electricity demand rises, ordinary Texans can end up paying the price on their monthly utility bills.
Bitcoin is the largest and best known cryptocurrency, first devised in 2008 as an electronic payment system that cuts out middlemen like banks and credit card companies, with all transactions managed by a decentralized network of Bitcoin users. A Bitcoin, currently worth about $58,000, can be purchased with dollars at a Bitcoin exchange, like Coinbase. To buy something with Bitcoin, a buyer sends the currency from a digital wallet to the seller’s digital wallet.
But it’s not that simple. A computer algorithm assigns each transaction a unique random identifying code, which must be guessed in order to validate the transaction. Bitcoin “mining” comes when companies operate powerful computers day and night running endless series of random numbers before hitting upon, or guessing, the correct code. Every time a Bitcoin miner’s computer successfully guesses a transaction code, the miner receives 3.125 newly minted Bitcoins (worth about $181,250 at the current price), which is the fee for helping maintain the network and keep it secure.
The system is designed so that it takes an average of 10 minutes for a Bitcoin miner somewhere in the world to guess a code and verify a transaction. But as Bitcoin miners add computing power to verify more transactions, the system’s algorithm makes the process harder by generating longer codes, creating what has been called an energy arms race, requiring larger and larger amounts of electricity to run the computers.
Texas is now home to 10 of 34 large Bitcoin mines.
During cold spells or heat waves, Texans are commonly called on to conserve power. For example, in August 2023, the state’s grid operator issued eight conservation requests, asking the public to reduce electricity use to help prevent an emergency in which rolling blackouts could be required. Increasingly, Texas lawmakers are worried that energy-hungry mines will make it harder to keep the lights on across the state.
“They’re going to put our grid at risk because of the power they’re drawing,” said state Sen. José Menéndez, D-San Antonio, at a public hearing on June 12.
For more than six hours, senators on the Business and Commerce Committee pressed grid operators, public utility commissioners and representatives from industries, including manufacturing, oil and gas and cryptocurrency. Chief among legislators’ concerns was the massive growth in energy demand on the state’s main electrical grid, which is estimated to go from a peak demand of about 85,000 megawatts last year to 150,000 megawatts in 2030, according to estimates from the Electric Reliability Council of Texas.
Following the hearing, in a post on social media, Lt. Gov. Dan Patrick declared, “it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.”
Power plant loans
Currently, cryptocurrency mining — mostly for Bitcoin — can draw up to 2,600 megawatts of power from the grid operated by the Electric Reliability Council of Texas, ERCOT’s senior vice president, Woody Rickerson, told senators. That’s about the same amount of power used by the city of Austin, and another 2,600 megawatts of mining is already approved to connect to the grid. Even more Bitcoin mines are expected to come to Texas in the near future.
ERCOT estimates that as much as 43,600 megawatts of additional electricity demand will be added to the grid by 2027 from facilities classified as “Large Flexible Loads” requiring more than 75 megawatts. In a statement to Inside Climate News, ERCOT said, “currently, the crypto mining industry represents the largest share of large flexible loads seeking to interconnect to the ERCOT System.” Data centers for artificial intelligence and facilities for producing hydrogen from water through electrolysis also make up part of the large flexible loads.To meet the major growth in demand, driven in large part by Bitcoin mining, Texas is turning to natural gas power plants, with taxpayers providing the down payment. In 2023, the Texas Legislature passed a loan program, later approved by voters as ballot Proposition 7, to give low-interest loans to companies to build or expand power plants. At first, the Texas Energy Fund will have $10 billion to award, after receiving more than $39 billion in requests.
One of the companies applying for a loan is Constellation Energy, which owns the Wolf Hollow II power plant in Granbury. Constellation has an agreement with Marathon Digital, allowing Marathon to rent space next to the power plant for Bitcoin mining and purchase power directly from Wolf Hollow II.
Marathon has a capacity to use up to 300 megawatts of power, and Constellation wants to add additional turbines onto Wolf Hollow II capable of generating that much power.
In an application to the Texas Commission on Environmental Quality, Constellation said the power plant expansion would include eight turbines, and it applied for air permits to release more than 796,000 additional tons of carbon dioxide per year. Such massive greenhouse gas emissions have made cryptocurrency mining the focus of intense opposition by climate activists.
Bitcoin can 'game the system'
The deal between Marathon and Constellation, known as a power purchase agreement, is part of what makes Bitcoin mines major players in the Texas energy market — not simply consumers of power. In most agreements, crypto facilities lock in a relatively low rate to purchase electricity “behind the meter,” so the supply does not enter the ERCOT market. But Bitcoin mining companies can later decide to sell that power to the rest of the grid through the ERCOT market, rather than powering their computers.
For example, Riot Platforms operates two of the largest existing Bitcoin facilities in the world, both located in Texas. The New York Times reported last year that Riot Platforms’ operation in Rockdale was the most power-intensive Bitcoin mining operation in the country, using “about the same amount of electricity as the nearest 300,000 homes.”
One of the facilities has been able to pay as low as 2.5 cents per kilowatt-hour of electricity, while the average price across Texas in 2022 was more than 10 cents.
In August 2023, when energy prices were high amid scorching summer days, Riot Platforms made $24.2 million from reselling power purchased through their private agreements onto the wholesale energy market, almost tripling the $8.6 million the company made that month mining and selling Bitcoin.
“They can game the system in a few different ways for their profit,” said Mandy DeRoche, an attorney at the nonprofit Earthjustice, who has worked on cases involving crypto mines across the country.
Separately, Bitcoin companies can participate in demand response programs, in which the companies allow ERCOT operators to control the energy load of the facility and lower their usage to compensate for sudden outages or periods of high demand elsewhere on the grid. These situations arise most often during extreme weather. Companies get paid a premium by ERCOT for participating in demand response, and they get paid an additional fee each time their energy load is controlled through the program. Riot Platforms made $7.2 million from these programs in August 2023, according to a monthly earnings report.
“Texas has set up a system which allows crypto mining to be significantly advantaged,” said state Sen. Charles Schwertner (R-Georgetown), the chairman of the Business and Commerce Committee.
Those millions in profit don’t appear out of thin air, and consumer advocates are worried the burden falls on Texans such as Cheryl Shadden and her neighbors in Granbury. “The cost is passed directly on to ratepayers,” said Adrian Shelley, Texas director for the nonprofit Public Citizen. Bitcoin miners “are ideally positioned to manipulate the energy market in a way that will drive up prices for consumers.”
With three distinct ways to profit — energy-intensive computations to “mine” Bitcoin, selling power on the wholesale energy market or participating in demand response — each decision will impact the availability of energy for most of Texas. And which method miners choose is highly variable.
As DeRoche explains, “if the price of Bitcoin is fairly low, then there's more incentive to turn off [their computers] in peak demand or in extreme weather.”
This year, the price of Bitcoin has soared to record highs and remained steadily around $60,000 since March, about twice as high as in August 2023. With the price up, DeRoche said it will be harder to predict whether miners will power down when energy becomes scarce.
A phased plan for noise reduction
From the industry perspective, Bitcoin advocates say the flexibility of mining operations makes the grid stronger. “We need more price sensitive loads on the grid, not less,” said Lee Bratcher, president of the Texas Blockchain Council, in an email to Inside Climate News. “By locating in rural areas with too much power and not enough transmission capacity to get that power to major population centers,” Bratcher said the cryptocurrency mining industry is using power that would otherwise go to waste.
He added that many mines operate at full capacity during the night when demand is low and power down “during high power demand times like during hot afternoons in the summer or winter cold snaps.”
Bratcher, as well as representatives from Marathon Digital and Constellation Energy, declined to be interviewed. In an email, Jim Crawford, chief operating officer for Marathon, also said that the company incentivizes wind and solar power generation by signing power purchase agreements with renewable energy generators.
“Without these commitments, many renewable energy projects might never reach completion,” Crawford said. Despite being located directly alongside a natural gas plant in Granbury, Marathon’s other facilities in Texas are located near wind power, and Crawford said, “we are contributing to the displacement of fossil fuel generation.”
However, DeRoche, who wrote a report on the industry that includes a section titled “Breaking Through the Bitcoin Myths,” points out that power purchase agreements “are all confidential and proprietary,” making it difficult to fact-check Bitcoin miners’ claims about renewable energy. “Many of these claims don’t hold water,” she said.
As for the concerns over noise in the Granbury area, Crawford said that in March, Marathon released a phased plan to reduce noise, but he is “unable to comment on this matter at this time.”
The phased plan started in April. It includes shutting off fans whenever computers are not being used and beginning the transition to liquid cooling, in which computers are immersed in a non-conductive liquid solution that silently absorbs heat.
A spokesperson for Constellation said in an email that they “have heard the community’s feedback about reducing noise” and are working with Marathon to solve the problem.
A wall on the east side of the Bitcoin facility where it borders a small community of mobile homes was built to dampen the sound. But Shadden, who lives northwest of the mine, said the sound reverberates off the wall, and depending on atmospheric conditions, neighbors miles away hear the noise. Even with first steps taken by Marathon, she said the noise is as bad as ever.
Local law enforcement has cited Marathon more than 30 times for violating noise limits above 85 decibels. From the edge of Shadden’s property, her neighbor measured 87.9 on a decibel reader the same day that the Senate hearing took place. Neighbors have talked to local elected officials, but they say there hasn’t been any significant action resulting from those meetings.
“You certainly get the impression that there's people that see this is just a great, you know, money opportunity for the county, right? And the health issues they haven't gotten too concerned about,” said Granbury resident John Highsmith.
Neighbors are also taking aim at the power plant, and have complained to Constellation, arguing that it is putting the community at risk by renting to the Bitcoin mine. Separately, they are preparing for a hearing with the state environmental regulator in the fall to challenge the company’s plans to increase air pollution by expanding the power plant. Hood County residents, including one of the county commissioners, have also been pressuring the county not to renew Constellation Energy’s tax abatement.
“This community has had enough,” Shadden said.
This article originally appeared in the Texas Tribune.
The deal between Marathon and Constellation, known as a power purchase agreement, is part of what makes Bitcoin mines major players in the Texas energy market — not simply consumers of power. In most agreements, crypto facilities lock in a relatively low rate to purchase electricity “behind the meter,” so the supply does not enter the ERCOT market. But Bitcoin mining companies can later decide to sell that power to the rest of the grid through the ERCOT market, rather than powering their computers.
For example, Riot Platforms operates two of the largest existing Bitcoin facilities in the world, both located in Texas. The New York Times reported last year that Riot Platforms’ operation in Rockdale was the most power-intensive Bitcoin mining operation in the country, using “about the same amount of electricity as the nearest 300,000 homes.”
One of the facilities has been able to pay as low as 2.5 cents per kilowatt-hour of electricity, while the average price across Texas in 2022 was more than 10 cents.
In August 2023, when energy prices were high amid scorching summer days, Riot Platforms made $24.2 million from reselling power purchased through their private agreements onto the wholesale energy market, almost tripling the $8.6 million the company made that month mining and selling Bitcoin.
“They can game the system in a few different ways for their profit,” said Mandy DeRoche, an attorney at the nonprofit Earthjustice, who has worked on cases involving crypto mines across the country.
Separately, Bitcoin companies can participate in demand response programs, in which the companies allow ERCOT operators to control the energy load of the facility and lower their usage to compensate for sudden outages or periods of high demand elsewhere on the grid. These situations arise most often during extreme weather. Companies get paid a premium by ERCOT for participating in demand response, and they get paid an additional fee each time their energy load is controlled through the program. Riot Platforms made $7.2 million from these programs in August 2023, according to a monthly earnings report.
“Texas has set up a system which allows crypto mining to be significantly advantaged,” said state Sen. Charles Schwertner (R-Georgetown), the chairman of the Business and Commerce Committee.
Those millions in profit don’t appear out of thin air, and consumer advocates are worried the burden falls on Texans such as Cheryl Shadden and her neighbors in Granbury. “The cost is passed directly on to ratepayers,” said Adrian Shelley, Texas director for the nonprofit Public Citizen. Bitcoin miners “are ideally positioned to manipulate the energy market in a way that will drive up prices for consumers.”
With three distinct ways to profit — energy-intensive computations to “mine” Bitcoin, selling power on the wholesale energy market or participating in demand response — each decision will impact the availability of energy for most of Texas. And which method miners choose is highly variable.
As DeRoche explains, “if the price of Bitcoin is fairly low, then there's more incentive to turn off [their computers] in peak demand or in extreme weather.”
This year, the price of Bitcoin has soared to record highs and remained steadily around $60,000 since March, about twice as high as in August 2023. With the price up, DeRoche said it will be harder to predict whether miners will power down when energy becomes scarce.
A phased plan for noise reduction
From the industry perspective, Bitcoin advocates say the flexibility of mining operations makes the grid stronger. “We need more price sensitive loads on the grid, not less,” said Lee Bratcher, president of the Texas Blockchain Council, in an email to Inside Climate News. “By locating in rural areas with too much power and not enough transmission capacity to get that power to major population centers,” Bratcher said the cryptocurrency mining industry is using power that would otherwise go to waste.
He added that many mines operate at full capacity during the night when demand is low and power down “during high power demand times like during hot afternoons in the summer or winter cold snaps.”
Bratcher, as well as representatives from Marathon Digital and Constellation Energy, declined to be interviewed. In an email, Jim Crawford, chief operating officer for Marathon, also said that the company incentivizes wind and solar power generation by signing power purchase agreements with renewable energy generators.
“Without these commitments, many renewable energy projects might never reach completion,” Crawford said. Despite being located directly alongside a natural gas plant in Granbury, Marathon’s other facilities in Texas are located near wind power, and Crawford said, “we are contributing to the displacement of fossil fuel generation.”
However, DeRoche, who wrote a report on the industry that includes a section titled “Breaking Through the Bitcoin Myths,” points out that power purchase agreements “are all confidential and proprietary,” making it difficult to fact-check Bitcoin miners’ claims about renewable energy. “Many of these claims don’t hold water,” she said.
As for the concerns over noise in the Granbury area, Crawford said that in March, Marathon released a phased plan to reduce noise, but he is “unable to comment on this matter at this time.”
The phased plan started in April. It includes shutting off fans whenever computers are not being used and beginning the transition to liquid cooling, in which computers are immersed in a non-conductive liquid solution that silently absorbs heat.
A spokesperson for Constellation said in an email that they “have heard the community’s feedback about reducing noise” and are working with Marathon to solve the problem.
A wall on the east side of the Bitcoin facility where it borders a small community of mobile homes was built to dampen the sound. But Shadden, who lives northwest of the mine, said the sound reverberates off the wall, and depending on atmospheric conditions, neighbors miles away hear the noise. Even with first steps taken by Marathon, she said the noise is as bad as ever.
Local law enforcement has cited Marathon more than 30 times for violating noise limits above 85 decibels. From the edge of Shadden’s property, her neighbor measured 87.9 on a decibel reader the same day that the Senate hearing took place. Neighbors have talked to local elected officials, but they say there hasn’t been any significant action resulting from those meetings.
“You certainly get the impression that there's people that see this is just a great, you know, money opportunity for the county, right? And the health issues they haven't gotten too concerned about,” said Granbury resident John Highsmith.
Neighbors are also taking aim at the power plant, and have complained to Constellation, arguing that it is putting the community at risk by renting to the Bitcoin mine. Separately, they are preparing for a hearing with the state environmental regulator in the fall to challenge the company’s plans to increase air pollution by expanding the power plant. Hood County residents, including one of the county commissioners, have also been pressuring the county not to renew Constellation Energy’s tax abatement.
“This community has had enough,” Shadden said.
This article originally appeared in the Texas Tribune.
Why Texas Republicans are souring on crypto
Playing the state’s energy market has become more profitable than mining bitcoin
Why Texas Republicans are souring on crypto
Playing the state’s energy market has become more profitable than mining bitcoin
Aug 27th 2024|ROCKDALE, TEXAS
Cryptocurrency is now campaign talk, thanks to Donald Trump. Last month, in their party platform, Republicans announced plans to bring an end to the “unAmerican crypto crackdown” and pledged to “defend the right to mine Bitcoin”. At a bitcoin conference in Nashville days later, the biggest such get-together in the world, Mr Trump vowed to make America the “crypto capital of the planet”.
Unlike most campaign promises this one ought to be easy to keep—because it is already true. After China banned bitcoin in 2021, crypto-miners went looking for refuge. In Texas they found everything they needed: cheap power, an abundance of land, low taxes and a libertarian ethos that matched their own. Three years on, America is home to more bitcoin mining than anywhere else, and Texas has more than most other states combined. But soon the Lone Star State could drive them out.
An hour’s drive north of Austin, Riot Platforms has converted the site of an abandoned aluminium-smelting plant into the world’s biggest bitcoin mine. Seven steel buildings house 100,000 “miners”, computers the size of a toaster that compete in a mathematical race to guess codes that award their owners bitcoin. Row upon row of miners are submerged in tanks of nonconductive oil to cool them. Dead crickets float on the surface, caught between tentacles of wires that feed energy to the machines.
Pierre Rochard, head of research at Riot, says it costs roughly $30,000 of electricity to mine one bitcoin and last year Riot mined nearly 7,000 (implying an annual cost of some $200m). And Riot is just getting going. The company is building a second plant in Corsicana, south of Dallas, that will be double the size.
The ambitious plan belies a new growing-pain for the industry. This summer Texas’s lawmakers—some of the most conservative in the nation—started to show signs of turning against crypto. At a committee hearing in June the Electric Reliability Council of Texas (ERCOT), the grid operator, warned that demand for energy could nearly double before 2030. An influx of people moving to Texas, harsher winter storms and hotter summers are already straining the grid and causing blackouts in cities, as Hurricane Beryl did in Houston last month. But an onslaught of new data centres, including ones for bitcoin mining and artificial intelligence, are expected to account for half the surge.
In response to ERCOT’s caution Dan Patrick, the lieutenant-governor, criticised the mining industry for not creating enough jobs relative to the amount of energy it sucks. “It can’t be the Wild Wild West of data centres and crypto miners crashing our grid and turning the lights off,” he wrote on X. State senators wondered out loud how they could get miners to leave. “[There are] too many pigs at the table who just run out of food,” said Donna Campbell, a Republican who represents seven counties in the hill country. “If they don’t come with their own trough full of food, can we just say no?”
Just saying no to crypto would be an ideological swerve for Texas. When running for governor in 2014 Greg Abbott took campaign donations in bitcoin before it was cool. He has since fervently embraced miners. After Uri, the winter storm in 2021 that left 4.5m Texans without power and killed nearly 300 people, he looked to crypto as a tool to make the grid more robust. Bringing more large loads onto the grid would incentivise power stations to produce more electricity and keep the cost of energy low, he reckoned. That year Mr Patrick created a working group to “develop a master plan for the expansion of the blockchain industry in Texas”.
The art of the deal
Around that time many crypto miners, including Riot, signed contracts with energy suppliers that locked them into fixed rates for up to a decade. Several years on, that decision looks clever. Unlike steel factories or paper mills, bitcoin miners can temporarily shut down without harming supply chains (because, although they say bitcoin is “not just magic internet beans”, there is no product that needs to get to market). That allows them to take advantage of two emergency schemes.
On the hottest and coldest days, when demand for electricity peaks and the price soars, the bitcoin miners either sell power back to providers at a profit or stop mining for a fee, paid by ERCOT. Doing so has become more lucrative than mining itself. In August 2023 Riot collected $32m from curtailing mining and just $8.6m from selling bitcoin.
The Tech Transparency Project, a non-profit organisation based in Washington, DC, accuses miners of acting as an energy-arbitrage business in disguise, holding Texas “hostage” and wasting taxpayer dollars. Their ties to China make them more dubious. But the industry is adamant that it is a stellar corporate citizen and critical to the grid’s health. By acting as “dimmer switches”, mines offer ERCOT flexibility at a price that no one else can match, says Lee Bratcher of the Texas Blockchain Council, an advocacy group. Riot reckons the industry is being unfairly targeted and that replacing mines with batteries would cost the state even more.
Yet a business that benefits financially from the state’s crisis and has lobbied against power-market reforms may no longer be the governor’s first choice to stabilise a grid facing mounting pressure. These days, assuring anxious Texans that their lights will stay on when the weather gets bad is a top priority, says Brian Korgel, the head of the Energy Institute of the University of Texas at Austin. If Texans blame bitcoin miners, rightfully or not, their leaders will too, he predicts.
Last year a bill to restrict the miners from taking part in the “demand-response” scheme passed in the Texas Senate but stalled in the House. Crypto insiders expect lawmakers to bring more such “bad bills” come January. Meanwhile Brian Morgenstern, Riot’s head of public policy, says his team is “wearing out the leather on our shoes going office to office” to persuade politicians to let them stay. He believes that Mr Trump will bring a “sea change” if elected. After all, Mr Abbott is reportedly pining for a cabinet position, and Mr Patrick, the governor’s second-in-command, is a known Trump yes-man. It is surely not in their interests to chase out Mr Trump’s new favourite industry.