Jimmie Johnson Reporter

Are Texas’ energy providers ready to handle cryptocurrency mining boom?

Aug 08, 2022

Jimmie Johnson Reporter

By Jimmie Johnson (Reporter), Ryan Tiedgen (Editor)

Several major crypto mining companies in Texas are powering down their facilities to provide energy companies relief. Triple-digit temperatures this summer have pushed the state’s energy grids to the brink.

ERCOT, the agency that manages electricity distribution for the majority of the state, is asking customers to conserve energy in any way they can.

While these measures have helped avoid massive blackouts, energy experts do not think they are sustainable long term, given the rapid growth of crypto mining facilities in the state.

“I don’t think the grid can handle it,” said Dr. Joshua Rhodes, a research associate at the Webber Energy Group at the University of Texas at Austin. “If you run them hard, flat out nonstop, that does increase the chance something will break. And so I’m worried about that going into August. We haven’t gotten to the hottest part of the summer yet, statistically.”

Fortunately for the grid, demand is spiking while cryptocurrency is experiencing a crypto winter. This happens when crypto markets experience a decline in prices and trading.

Crypto analysts say mining has declined due to rising inflation, crypto lender Celsius filing for bankruptcy, and stablecoin Terra going under. As a result, prices have fallen, making it incredibly difficult to mine and be profitable.

However, if the market rebounds, some analysts project miners may be less flexible to cut back on energy use.

The Texas BlockChain Council said new energy generation is on the horizon. In an email, the organization’s President Lee Bratcher said, “Texas-based energy generators are building new generation and are ready to meet the new demand of a growing state like Texas.”

“I don’t think it will grow as fast as some people think if they’re not considering the supply side of the equation,” Dr. Rhodes said.

ERCOT projects bitcoin miners will use up to 27 gigawatts of power by 2026. That is enough energy to power 22 of Doc’s Deloreans and more than 20 million homes.

“To provide that much energy would also require supply to increase extremely fast,” Dr. Rhodes said. “I just don’t know if we can get that much concrete and steel in the ground fast enough to supply that.”

To alleviate blackouts, lawmakers in Congress are working with the EPA and the Department of Energy to hold companies accountable. They are requesting that miners submit a report on energy usage and carbon emissions.

JIMMIE JOHNSON: RECORD-BREAKING SUMMER TEMPERATURES IN TEXAS ARE PUSHING THE STATE’S ENERGY GRID TO ITS BRINK.

ANCHOR: “Austin topping 100 degrees for 8 straight days. Dallas hitting 103 Saturday, tying a daily high from 1911.”

JOHNSON: TO AVOID BLACKOUTS, ERCOT, THE AGENCY THAT MANAGES ELECTRICITY FLOW TO THE MAJORITY OF TEXAS – IS URGING CUSTOMERS TO CUT BACK ON THEIR POWER.

ANSWERING THE CALL FOR CONSERVATION, SEVERAL MAJOR CRYPTO MINING COMPANIES. VOLUNTEERING TO POWER DOWN FACILITIES TO PROVIDE RELIEF.

IT’S AN INDUSTRY UNDER FIRE. CONCERNS OVER THE LEGITIMACY OF CRYPTO REMAIN AND AS MINING BECOMES MORE WIDESPREAD, SO DOES ENERGY CONSUMPTION.

SO, HOW MUCH IS CRYPTO MINING CONTRIBUTING TO THE TEXAS ENERGY CRUNCH? AND IS THE STATE READY FOR ITS RAPID GROWTH? LET’S GET THIS STRAIGHT.

DR. JOSHUA RHODES: ”I don’t think the grid can handle.”

JOHNSON: JOSHUA RHODES IS A RESEARCH ASSOCIATE AT THE WEBBER ENERGY GROUP AT THE UNIVERSITY OF TEXAS AT AUSTIN.

HE SAYS WITH THE CONSTANT BRUTAL HEAT THE STATE HAS BEEN EXPERIENCING- ENERGY PROVIDERS MAY BE PUSHED TO THE BREAKING POINT.

JOSHUA RHODES: “If you run them hard, flat, you know, flat out nonstop, that does increase the chances that something will break. And so I, we I’m worried about that going into August, we haven’t we haven’t gotten to the hottest part of the summer yet, statistically. And so you know, we’ve still got a while to go.”

JOHNSON: FORTUNATELY FOR THE GRID, DEMAND IS SPIKING WHILE CRYPTO IS IN A DEEP FREEZE. MINING HAS DECLINED DUE TO RISING INFLATION, CRYPTO LENDER CELSIUS RECENTLY FILED FOR BANKRUPTCY AND STABLECOIN TERRA WENT UNDER.

PRICES HAVE FALLEN AND ITS LESS PROFITABLE TO MINE.

BUT THE MARKET IS LIKELY TO PICK BACK UP AND MINERS MAY BE LESS FLEXIBLE TO SCALE BACK ENERGY USE.

THE INDUSTRY IS EXPECTED TO EXPLODE OVER THE NEXT FEW YEARS.
AND WHILE THE PRESIDENT OF THE TEXAS BLOCKCHAIN COUNCIL SAYS NEW ENERGY GENERATION IS ON THE HORIZON, DR. RHODES SAYS OTHERWISE.

RHODES: “I don’t think it will grow as fast as some people think, if they’re not considering the supply side of the equation.” >

JOHNSON: CURRENT PROJECTIONS SEE BITCOIN MINERS USING 27 GIGAWATTS BY 20-26.

ENOUGH ENERGY TO POWER 22 OF DOC’S DELOREANS AND MORE THAN 20 MILLION HOMES.

THE SUPPLY MAY SIMPLY NOT BE READY FOR THE DEMAND.

RHODES: “To provide that much energy would also require supply to increase extremely fast. I just don’t know if we can get that much concrete and steel in the ground fast enough to supply that.”

JOHNSON: TO PREPARE FOR THE WORST, LAWMAKERS ARE WORKING WITH THE E-P-A AND ENERGY DEPARTMENT. THEY WANT COMPANIES TO BE HELD ACCOUNTABLE, REQUIRING A REPORT ON ENERGY USAGE AND CARBON EMISSIONS.