fb tracking

Crypto Miners Adding Load on the Grid and Collecting Taxpayer Dollars While Doing It

By José Medina

Summer was not even a week old when Texas set another demand record on its electricity grid.

The new record, set on June 27, came amid a brutal heat wave that pushed temperatures dangerously high for much of the month and continued into July. It was the 12th time the record has fallen in roughly a year (11 records were set in the summer of 2022).

The record has been broken several times more since then.

While Texans placed demand on the grid for routine things like running their air conditioners, one particular industry was likely gobbling up enormous amounts of electricity to produce nothing.

That industry is crypto mining, which usually means Bitcoin.

While crypto miners, nor any other single industry, can be blamed for Texas setting demand records, it’s on days when we’re setting records or when ERCOT issues conservation calls that should prompt you to ask: Why, again, did Texas give an open invitation to this energy-hungry industry and has refused to place any meaningful controls on its energy usage?

The amount of energy crypto miners use will blow your mind.

A few months ago, while a bill to place some controls on crypto miners was pending at the Texas Legislature, the New York Times published an in-depth investigation into the crypto industry in Texas and what it has meant for taxpayers and their energy bills.

Here is just some of what the Times discovered following its analysis of public and confidential documents:

  • According to the Times, the Riot Platforms facility in Rockdale, west of Austin, is the “most power-intensive” Bitcoin operation in the country. The Times estimates the facility consumes “about the same amount of electricity as the nearest 300,000 homes.”
  • A Bitdeer facility neighbors Riot. The two facilities consume as much power as all the households “within a 40-mile radius.”
  • A one-megawatt Bitcoin mine gobbles up as much energy in a single day as the average home in two years.

All that energy usage has impacted your monthly bill. According to the Times:

  • Ten large-scale Bitcoin mining operations in Texas have accounted for ratepayers’ electric bills rising by 5% annually.
  • The cost to Texas ratepayers of higher bills from Bitcoin mines is estimated to total $1.8 billion annually.
  • Five large-scale crypto miners participating in the state’s demand response program received $60 million. In other words, taxpayers are paying miners to remove the demand they added to the grid.
  • Winter Storm Uri in February 2021 was particularly profitable for one company. ERCOT told the Bitdeer facility near Austin to shut down for four days, during which Bitdeer received $18 million in taxpayer dollars.

Crypto miners have also received an estimated $170 million from the state for simply enrolling in the demand response program, which pays the miners more when ERCOT, which manages the state’s electric grid, asks them to shut down to reduce strain on the grid. The energy-hungry industry can essentially profit from a situation it helps create.

In short, the industry is profiting from your tax dollars while raising the cost to power your home and adding strain to the vulnerable Texas grid. And that doesn’t account for the damage to the climate of using electricity generated from burning fossil fuels, which the grid still depends on.

Some legislative solutions have been proposed, but state lawmakers must do more. That bill mentioned above? It would cap the industry’s demand response participation and make it ineligible for certain tax breaks. It also would have required miners to register with the state, making it possible to better manage the grid load.

The bill, by Republican State Sen. Lois Kolkhorst, was passed by the Senate but went nowhere in the House.

Texas is a growing state where electricity demand will continue to increase. Lawmakers can talk about securing the grid by building more power plants all they want, but that’s an expensive years-long process that–depending on the fuel used–will contribute to air pollution and climate change. A faster, cheaper solution is to reduce the demand. Lawmakers can start with investments in energy efficiency programs and closer scrutiny of crypto miners.

The cheapest megawatt of electricity is the one you don’t use. Crypto miners use lots and lots of megawatts that everyone else could use, especially on hot days when supply struggles to keep up with demand.

Energy experts anticipate more records will fall this summer. When that happens, a crypto miner somewhere in Texas will be hogging all the megawatts or getting paid by taxpayers to sit around and do nothing.