Shelley says it “doesn’t make sense” to pay miners to alleviate the pressure they themselves put on the network. Additionally, much of miners’ purchasing power drawn directly from the network is likely to decline when demand increases, as mining is no longer profitable under these conditions due to rising energy prices .
Hirs says there are millions of consumers already connected to the grid who would be happy to cut off their electricity in exchange for financial compensation, without adding extra pressure on the network or causing prices to rise. Under direction from the Public Utility Commission of Texas, the state’s utility regulator, ERCOT launched a pilot program earlier this month to study how everyday people can help ensure grid reliability – but Hirs says this should have happened years ago.
The flood of crypto miners arriving in Texas has also caught the attention of lawmakers. In a letter to ERCOT, a group of US politicians led by US Senator Elizabeth Warren (D-Massachusetts) expressed concerns that cryptocurrency mining “adds to the strain on the state’s power grid.” Shelley shares the same concern: “There is no way the grid can meet all of this demand,” he says.
In its response to the letter, ERCOT explained that it would not allow new mining facilities to come online if there is a risk of grid destabilization. But the operator also said its job was not to predict the impact of mining on the price of energy for consumers.
Doug Lewin, president of Stoic Energy, a Texas-based energy consulting firm, worries about another problem: What happens if miners decide not to turn off their machines? With the price of bitcoin at $17,000 per coin (down 63% this year), miners could profit from shutting it down. But if the price were to rise, a tipping point would be reached where continuing mining would become the most lucrative option.
Some mining companies, like Marathon, are contractually obligated to shut down when demand increases. But if others choose not to, they will compete with consumer demand and increase the risk of power outages, says Lewin, who argues that regulation is needed to mitigate this worst-case scenario.
Bratcher of the Texas Blockchain Council says he expects ERCOT to require all miners to sign agreements requiring them to shut down operations if energy reserves fall below 3 GW. But in the meantime, he says, the price of bitcoin would have to increase tenfold for the search for profit to collapse.
Despite Governor Abbott’s objections – and questionable logic – the message is clear: “Texas is open for crypto activity.“And despite the headwinds, Bratcher says the mining industry in Texas continues to grow and ERCOT intends to move forward with its plans to bring more facilities onto the grid. But as winter begins to bite, the Bitcoin battery experiment may soon undergo the ultimate stress test. Shelley says the “scary” scale of Abbott’s plans will have the opposite of the desired effect, increasing the risk that Texas will once again find itself in the dark.
