A bitcoin mining facility in Rockdale. A federal judge granted a temporary restraining order pausing a Department of Energy effort to collect electricity consumption data from cryptocurrency miners.
Bitcoin mining machines in a warehouse at the Whinstone US Bitcoin mining facility in Rockdale in 2021.
A NASA satellite image shows the city of Houston, Texas, on March 12, 2014. Seven of the largest Bitcoin mining companies in the United States are set up to use nearly as much electricity as the homes in Houston, according to data disclosed in July 2022 as part of an investigation by congressional Democrats who say miners should be required to report their energy use.
Power lines for the new bitcoin mining warehouses under construction at the Whinstone US Bitcoin mining facility in Rockdale in 2021.
The Bitdeer bitcoin mine in Rockdale. Bitdeer was paid an unknown amount by ERCOT in August for reducing electricity use as the grid came under strain from high demand and high heat.
Cryptocurrency miners like to say they are making the Texas electric grid more reliable, but when federal and state officials ask for data to test that claim, the companies go really quiet, really quick.
The industry’s actions speak far louder than its words.
The Department of Energy recently sent a mandatory questionnaire to crypto miners, which operate warehouses full of computer servers to generate cryptocurrencies such as bitcoin. The equipment creates enormous amounts of heat and requires energy-intensive cooling.
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A single bitcoin transaction uses as much power as the average U.S. household does in 37 days, according to the Bitcoin Energy Consumption Index. Every year, the industry requires as much electrical energy as Ukraine, a nation of 43 million people.
The industry’s annual carbon footprint is comparable to Romania’s while producing a digital token used by 4.2% of the global population in 2023, one analytics firm reported. Most serious economists consider unregulated cryptocurrencies as dangerous Ponzi schemes, and regulators have their sights set on the top names.
The Energy Department worries about a massive queue of crypto mining operations planning to place enormous demand on the nation’s already creaky grid. So, regulators asked miners to share hard numbers to help understand what’s coming.
The industry responded with a lawsuit, my colleague Claire Hao reported, forcing the agency to withdraw the request and submit it again after taking public comment. A key plaintiff was Riot Platforms, the most power-intensive mine in the country located at an old aluminum smelter in Rockdale, northeast of Austin.
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Since China outlawed crypto mining in 2021 because the government thinks it’s economically destabilizing, companies have relocated to Texas because of our low electricity prices and high proportion of renewable energy.
In January, Texas had 8,500 megawatts of crypto demand on the grid, with another 30,764 megawatts planned by 2027, Electric Reliability Council of Texas data shows. Together, that’s enough electricity for more than 7.8 million homes at peak demand.
Regular readers will remember Riot from past columns on how the industry creates a problem and then demands payment to solve it. During extreme temperatures, the state-controlled ERCOT pays Riot to shut down, which sometimes pays better than mining bitcoin.
Texas Blockchain Council President Lee Bratcher, whose group participated in the lawsuit, argues this is how crypto aids the grid. The companies create demand for more generation facilities under normal conditions and then shut down when demand spikes and wholesale electricity prices rise.
The economics, though, are unclear. Some analysts say crypto raises electricity prices during normal periods, costing consumers $1.8 billion. When I recently wrote about this study, dozens of crypto trolls spent three days attacking me on Twitter, now known as X. (As always, I will block anyone who relies on profanity or ad hominem attacks.)
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For all their platitudes about trying to make the grid more reliable, they are allergic to scrutiny. The industry’s lawsuit against the DOE's Energy Information Administration is only one example.
ERCOT is a nonprofit agency responsible for balancing electricity supply and demand. Failing to keep that balance triggers blackouts, either when demand spikes or collapses unexpectedly. ERCOT experts say they have documented cases where crypto mines destabilized the grid by dropping off without warning. They also asked for data to understand better what happened.
“There have been a couple of events which we believe are primarily bitcoin mining load that is tripping off,” Jeff Billo, ERCOT’s operations planning director, told a December meeting of the Large Flexible Load Task Force. “All of those events where we have tried to reach out to the entities, we have not been successful in getting information back from them.”
ERCOT engineers hoped the group could agree on procedures to coordinate these large loads ramping up or down off the grid. But Bratcher and other representatives at the public meetings rejected the proposal and called on ERCOT to gather more information.
“We have to have more information,” Bratcher told the task force. “It is concerning that a new and growing load type — be it bitcoin mining, be it green hydrogen, be it AI compute, any sort of flexible load — would be ostracized.”
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The crypto industry engages in extraordinary doublespeak, claiming transparency as a core value but then filing a lawsuit to stop the Energy Department from collecting information and ignoring ERCOT’s attempts to gather data.
More alarming, though, the task force was expected to finalize a recommendation to ERCOT’s board at its next meeting. However, the group has canceled four scheduled meetings so far this year.
For now, Texas electricity customers are relying on crypto miners not to make any sudden moves and keep the grid stable.
Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonhchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.
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