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Texas’ Fragile Grid Isn’t Ready For Crypto Mining Explosive Growth

While power-hungry Bitcoin mining companies volunteered this week to cut power in Texas to ease network stress from a scorching heat wave, the industry could cause even more trouble in the future if it continues its explosive expansion into the global economy. state continues.

Higher electricity bills and even more carbon dioxide emissions could be on the way for Texans, despite the crypto mining industry’s claims it could boost the growth of affordable renewable energy. The problem is the huge demand for electricity from the Bitcoin network, which is rising faster than the grid can reasonably keep up with.

Texas’ energy system is already bracing for the Bitcoin mining industry to continue growing at breakneck speed. The number of electric-load crypto miners is expected to be added to the Texas grid over time only the next four years represent almost a third of the grid’s current maximum capacity. Crypto mining will increase grid demand by as much as 27 gigawatts by 2026, a spokesman for the Electric Reliability Council of Texas (ERCOT) said The edge in an email. ERCOT is the main grid operator in the state and is responsible for managing the power supply. The spokesperson, who responded to ERCOT’s email with media relations, declined to give their name.

Let’s see why 27 gigawatts is such a big deal. The first thing to know is that a single megawatt (MW) can power about 200 homes during times of high demand in Texas. A gigawatt is a thousand megawatts.

On July 12, during the heat wave, the state hit a record. More than 78 gigawatts electricity was needed to meet peak demand, ERCOT said. The power grid in Texas can currently hold up to approx 92 gigawatts of electricity – and that’s only if every source of power generation works perfectly, which usually isn’t the case. That leaves limited breathing room for most of the state during periods of high demand.

All of that brings us back to the Texas crypto boom. “There is over 27 gigawatts of crypto load working on interconnections over the next four years,” said the unnamed ERCOT spokesperson.

That’s an “astronomically impossible” load to add to the network in that short amount of time, according to Joshua Rhodes, a research associate at the University of Texas at Austin. “We can’t possibly do 27 gigawatts of crypto” [in four years] … that would overload the system too soon,” Rhodes says. “We barely have the power plants to cover today,” he says The edge

In a very short time, Texas has become a major player in the global Bitcoin mining industry. China banned the practice in 2021, and almost immediately the US took its place as the largest hub in the world for crypto mining. Many miners settled in Texas, initially tempted by low energy prices and lax regulations. The state is now home to about a quarter of the Bitcoin mining that some believe takes place in the US estimates

Large-scale crypto mining essentially looks like giant data centers filled with specialized computers that “mine” Bitcoin. The machines usually run around the clock, solving arithmetic math problems in exchange for new tokens. Those issues become more complex over time, require more computing power, and make it a deliberately energy-inefficient process.

Realistically, many of the proposed crypto mining projects looking to connect to the network between now and 2026 are unlikely to materialize, experts say The edge† That is the case for new projects in other industries, they say, so they expect the same for crypto mining. In addition, Bitcoin miners have to contend with the “crypto winterThat has battered the industry and caused the price of the cryptocurrency to plummet this year.

Rhodes thinks 5 gigawatts is probably a more viable number in terms of how much energy crypto mining could provide for the state over the next four years. And even 5 GW is a lot to accommodate. “We should significantly speed up the process of building transmission lines,” Rhodes says. It would also be necessary to build more power plants or wind and solar farms to provide the extra energy.

Unfortunately, the cost of building out all this infrastructure is often passed on to consumers – especially if it’s done on a large scale under a rushed timeline, as crypto mining might require. Rising energy prices are already the as a result of crypto mining activities in other states. For example, in New York State, another major crypto mining hub, electricity bills have risen by about $8 a month for individual customers and $12 a month for small businesses, according to one analysis last year by researchers at the University of California, Berkeley and the University of Chicago.

“Large amounts of new demand are never good for your electric bill,” said Eric Hittinger, an associate professor at the Rochester Institute of Technology with a background in power systems policy. “The more crypto mining enters the state, the higher residents can expect electricity prices to get.”

In the short term, residents will be able to compete with crypto companies for a limited supply of electricity and higher rates when increased demand drives prices up. In the long term, the spike in new electricity demand for crypto mining could lead to the massive deployment of new power sources. Bringing more power sources online to meet demand could eventually bring prices down, but initially there are high upfront costs.

Those costs could cover the construction of solar and wind farms, which electricity grids need more of to give the world a chance to control climate change. That green option is why many crypto mining companies in the US say it is a good thing that their appetite for energy can stimulate the development of energy resources. Industry proponents say crypto mining is the perfect consumer for solar and wind energy, which – depending on the weather – can generate too much electricity for the grid at any time. Instead of having utilities ask solar and wind farms to curtail their power generation because the grids don’t have enough storage space yet, crypto mining can gobble up everything so that the renewable energy isn’t lost.

The increasing demand for energy is generally a driver for investment in new energy generation. But it would have to happen under very specific circumstances for cryptominers to actually generate enough renewable energy growth to have a positive impact on the environment. Otherwise, according to Rhodes, pollution would continue to increase with electricity consumption.

It’s basic math. If crypto mining consumes about 5 gigawatts of electricity in Texas, but only boosts about 2 gigawatts of clean energy, the industry will still be responsible for the extra pollution caused by that extra 3 gigawatts.

To bring enough clean energy online to actually reduce carbon dioxide emissions in Texas, crypto mining data centers would have to be willing to shut down about 15 percent of the year — when wind and solar generation is low. That is according to an analysis Rhodes completed last year for the crypto mining company Lancium in his role as a managing partner for the consultancy Ideasmiths.

“That’s a pretty big caveat, in terms of” [crypto miners] must be willing to be flexible,” says Rhodes. Many mining companies do pride themselves on being “flexible” customers, who can quickly increase or decrease their energy usage, but turning off 15 percent of the year is a big question that goes way beyond what we’ve seen in the industry so far.


An employee installs a new row of Bitcoin mining machines at the Whinstone US Bitcoin mining facility in Rockdale, Texas on October 9, 2021.
Photo by MARK FELIX/AFP via Getty Images

This week, Bitcoin mining companies have shown some flexibility by deciding to shut down their machines after the state grid operator began asking Texans to save energy on Monday. The relentless heat wave puts the power grid to the test as residents crank up their air conditioning to cope with the triple-digit heat. Crypto mining companies have been voluntarily shut down, collectively freeing up 1 gigawatt of electricity or about 1 percent of the grid’s total capacity.

Being this “flexible” is crucial to avoid power outages when peak demand threatens to overwhelm the grid. Texas’s electrical grid is particularly vulnerable to outages because it doesn’t connect to other states so they can share energy, which other states do so they can fill for each other if there’s a shortage somewhere. The Texas grid is also notoriously fragile. Last year a brutal cold spell wreaked havoc on the grid, causing massive, deadly blackouts.

While Bitcoin mining companies have voluntarily curbed their power consumption this week to reduce the strain on the grid, there were also financial motives behind the move. Spot electricity prices rise when demand peaks, making it less profitable to run their machines. Under those circumstances, according to Hittinger, mining companies could potentially make more money selling the unused electricity than mining (if they have secured the electricity through long-term contracts with energy suppliers).

“So it’s not really charity, the way some people might frame it,” Hittinger says. Nor is it a new service for the net. Historically, other industries — from chemical processing to manufacturing — have played a similar role in stabilizing the grid by shutting down when needed. That crypto firms have curtailed mining in Texas this week is a sign that the industry is able to provide the same service, Hittinger says. if there are the right economic incentives.

“Just to support the residents of Texas, that will always be our priority,” said Alexis Brock, marketing coordinator at Bitcoin mining company Riot Blockchain, when asked if the company planned to continue to conserve energy during times of peak demand. in the future. Riot does what it is claims is the largest Bitcoin mining facility in North America in Rockdale, Texas, and has been completely shut down for at least 10 hours a day for several days over the past week.

That hasn’t allayed Jackie Sawicky’s concerns about another massive cryptocurrency, Riot plans to build in Navarro County, Texas, where she lives. “We do NOT want this huge burden on our already fragile infrastructure,” reads a petition Sawicky began to halt construction. Once completed, the new facility is expected to have the capacity to use 1 gigawatt of electricity.

“They’re talking about stabilizing the net,” Sawicky tells The edge† “And it pisses me off that they can claim something like that when they put an incredible burden on the grid.”

Shreya has been with australiabusinessblog.com for 3 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider australiabusinessblog.com, Shreya seeks to understand an audience before creating memorable, persuasive copy.

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