Texas saw triple-digit temperatures over the course of the weekend, setting new records for high temperatures which had existed for over a century.
Power outages in Texas likely to affect BTC miners
In response to the state’s power operator’s July 11 warning that power outages were “likely” to occur, people and businesses were urged to minimize their energy use. According to a June 12 Fortune article, Bitcoin miners flocked to the state in 2021 in response to the threat.
As of July 11, almost all industrial-level Bitcoin mining companies in Texas, according to Lee Bratcher, Texas Blockchain Association head, have stopped down their equipment. As a consequence, the power system may now transfer 1,000 megawatts of energy. Bratcher estimates that it corresponds to 1% of Texas’ total grid capacity.
Bitcoin miners in Texas had already shut down their activities during emergencies, for instance, when a winter storm slammed the state in February. The stoppage of Bitcoin mining activities, which used a lot of energy, reduced demand and increased the amount of electricity provided for heating.
At the time, the CEO of the mining firm Rhodium, Nathan Nichols, tweeted, “We are proud to help stabilize the grid and help our fellow Texans stay warm.”
However, this time, financial incentives are the driving force behind the decision; miners are not shutting off their rigs out of a sense of benevolence.
Shutting operations is advantageous for miners.
Electric Reliability Council of Texas (ERCOT), a power system operator, negotiates “demand response” contracts that compensate businesses, including Bitcoin miners, to scale back operations at times of high demand in order to supply the system with more electricity. These agreements were put in place to lessen the grid’s burden during periods of peak demand.
It makes perfect sense for miners to accept the compensation from ERCOT instead of continuing to mine cryptocurrencies during periods of limited energy supply, as they can easily turn their operations on or off.
Only when the cost of the power necessary to mine bitcoins is less than the worth of the bitcoins mined is the mining operation profitable.