Texas is now too hot for bitcoin mining

What's happening:

  • Cryptocurrency prices have crashed;
  • Mining is less profitable;
  • There's a heatwave;
  • Electricity prices go up with demand;

So of course they stopped running the mines when it became unprofitable to do so.

But the credulous stenographers of the tech press would have you believe that the Libertarian grifters behind these climate-incinerating Ponzi schemes are doing this out of the goodness of their shriveled, reptilian hearts.

Journalistic malpractice from The Verge:

Texas' grid operator asked residents and businesses to conserve energy on Monday with "extreme hot weather driving record power demand across Texas." Bitcoin mining companies in the state responded by turning off their machines that otherwise would have used over 1,000 megawatts of electricity, according to the Texas Blockchain Council. That freed up about 1 percent of the grid's total capacity.

"They are shutting down for several reasons but primarily because it is the right thing to do to be a good 'grid citizen,'" said Lee Bratcher, president of the Texas Blockchain Council.

Journalistic malpractice from Gizmodo:

The lone star state's electricity system kindly asked big energy users to kindly hop off the grid for when the power usage inevitably spikes. One of those big energy users is, of course, the crypto miners. Major bitcoin mining operations have acquiesced to turning off their power-hungry systems so as not to tax Texas. [...]

Yet, even these kindly gestures bely an even more critical future for Texans.

The cryptocurrency industry would seem unrealistic and ham-handed if it was a villain on Captain Planet: they manufacture only POLLUTION, nothing else, and they turn that into money.

But yeah, they're just "good citizens" out there "doing the right thing", "voluntarily".

Bitcoin miners have flocked to Texas over the past year after China banned the practice, and the US subsequently became the biggest hub for mining globally. Those crypto miners are expected to inflate electricity demand in Texas by up to 6 gigawatts by the middle of next year.

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11 Responses:

  1. CSL3 says:

    Sounds on-brand for the "no income tax" state that woo'd Musk Oil away from SF (and nothing of value was lost).

  2. Chris says:

    I just love it how every time Bitcoin's pollution is mentioned some asshole says "Bitcoin will actually cause a transition to clean energy" and points their crinkly finger toward a story of someone buying a MW of solar to power their bitcoin mining. As though we won't be in a deficit of clean energy for at least the next 50 years. As though those solar panels wouldn't otherwise have been used to eliminate some dirty energy production.

  3. tfb says:

    I think the 'transition to clean energy' thing is correct.  After climate change-induced catastrophes made worse and sooner by crypto mining have killed all but a few hundred million humans (none of them in Texas) the remaining people will probably keep warm mostly by burning wood, which is reasonably clean (ignore the particulates: there won't be enough people for that to be a problem, and they will die of other things too young anyway).

    So it's a good thing, you see.

  4. dwallach says:

    Commercial electricity contracts in Texas are a very different animal from normal consumer contracts. My understanding is limited, but I do know that there's an industrial tier where you agree to get turned off first in return for some kind of discount, which would make sense for miners.

    There's also a complicated futures market, where commercial users can buy their electricity, in 15 minute increments, a year in advance. Miners have relatively predictable usage, so they'd probably have fancy options contracts which would be more profitable to sell to somebody else than to use themselves.

    Whatever the case, it's all about the money.

    • Scott says:

      That is correct.  Depending on whether it's a stage 1, 2, or 3 level power emergency, commercial entities can get paid by the state as much as $9,000 per Mwh to shut down their consumption.

  5. bakabaka says:

    You are the first hop in the societal Bitcoin adoption negotiation becoming a unique unintelligible language made of the English the negotiators used to speak, jwz -- whatever that's worth.

  6. Scott says:

    I don't know that the economic angle to this fully tracks as presented.  
    Based on current bitcoin payouts, a Mwh will yield around 2.5 bitcoins.  At the current bitcoin market rate of $20,000 per, that's still $50,000 per Mwh in production.  Granted it's not the $112,000 per when bitcoin was at $45,000 or more.  However it's still income, and it's still more than Texas would pay them to conserve said Mwh.

    Regardless I have no idea what their angle is as it sure as hell isn't altruism.

    • If I understand the situation correctly, actually selling your bitcoins for real USD (instead of say, pretend USD like Tether) is not necessarily as easy as it sounds - there's not really all that much USD chasing bitcoin.

  7. Jay Ray says:

    The isolation of Texas' grid makes this doubly stupid. If renewables were generating unwanted excess power, that would be an easy sale to a neighboring state were we hooked into the national grid. As it is, we're beholden to a band of crypto-bros who haven't produced anything more palatable than a wet fart in their entire lives, yet believe themselves to be the second coming of Jesus Christ for slowing down their mining just enough to take the stress off the grid. It is also entirely voluntary - if an operation decided they could afford the price spike, they just power through and stress the grid more than it already is.

    As it is, they slow down and get on Twitter to congratulate themselves on their "service to the grid."

    I absolutely need to get out of this goddamn state.

  8. MattyJ says:

    This is like meth dealers putting 1% less fentanyl in their product. You know, to be good citizens.

  9. His specialty was electricity use, and he made a good thing out of not using any. ERCOT paid him well for every watt of electricity he did not use. The more electricity he did not use, the more money ERCOT gave him, and he spent every penny he didn't earn on new mining rigs to increase the amount of electricity he did not use. Major Major's father worked without rest at not using electricity . On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make certain that the chores would not be done. He invested in mining rigs wisely and soon was not using more electricity than any other man in the county. Neighbours sought him out for advice on all subjects, for he had made much money and was therefore wise. "As ye sow, so shall ye reap, he counselled one and all, and everyone said Amen."


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