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Is bitcoin mining running the state of Texas into the ground?
Texas Could Wind Up on the Wrong Side
Texas declared itself open for bitcoin mining about two years ago. During that time, the nation of China said the practice would be declared illegal, meaning those taking part in crypto mining within its borders had to find a new place to set up shop, and the Lone Star State seemed like a good area given it had vast open land and cheap electricity.
However, according to a new report by the Electric Reliability Council of Texas (ERCOT), things are beginning to move in a negative direction. The document states:
Prospective crypto mining businesses have requested to put approximately 33,000 more megawatts in the ERCOT interconnection queue over the next few years (enough to power the whole state of Florida)… A single bitcoin transaction used nearly 1,452 kilowatt-hours (kWh) of electricity, equal to the power consumption of an average U.S. household for nearly 50 days.
A separate news outlet says:
Their massive energy consumption combined with their ability to shut off almost instantly allows some companies to save money and make money by deftly pulling the levers of U.S. power markets… In practice, they rarely are asked to shut down. Several of the companies are being paid through these agreements [most] of the time they operate. Most years, they are asked to turn off for only a few hours, at which point they are paid even more.
Not long ago, it was reported that Texas paid a specific bitcoin mining company to shut down its systems during a time of heavy winter storms. Overall, that company made millions of dollars doing nothing over the course of several weeks. ERCOT says it’s not looking to discriminate against the types of companies looking to set up in Texas, nor does it have problems with firms looking to offer specific kinds of services. It said:
We want to be able to serve any business that wants to do business in Texas, and that includes crypto miners.
Ed Hirs – a University of Houston energy economist – believes that a lot of these excessive electricity practices seen in the mining industry in Texas are going to fall onto the shoulders of everyday citizens. He mentioned in an interview:
Ironically, when people are paying the most for their power, or losing it altogether, the miners are making money selling energy back to Texans at rates 100 times what they paid.
Ordinary Citizens Bearing the Burden?
A study performed by research firm Wood Mackenzie seconds this, stating:
Increased demand has caused electric bills for power customers to rise nearly five percent, or $1.8 billion per year. In West Texas, where several bitcoin mines have settled, bills have increased by nearly nine percent.