Texas Crypto Miners Voluntarily Shut Down to Keep Homes Powered During Freeze

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Chad Harris received an urgent phone call during the epic Texas winter storm last February, something he expected as the operator of the largest bitcoin mining and hosting facility in North America .

“You have to get rid of your power now; we need it,” Harris said, recalling the conversation with his local transmission company in central Texas. As CEO of Rockdale-based Whinstone, which later became a subsidiary of Riot Blockchain, he had a ready-made answer.

“I told them we already did it two days ago,” he said.

This storm left at least 4.5 million electricity consumers in Texas without power.

This time around, there has been a year of dialogue between the mining companies, the governor’s office and the state grid operator, the Electric Reliability Council of Texas. The miners met with Governor Greg Abbott in October and said they would shut down if another winter storm hits.

Earlier this week, Riot Blockchain sent a letter to Abbott with its voluntary shutdown plan and shut down 99% of its operations at 7 p.m. Wednesday.

“Last year, the miners died out during [the] winter storm, but then there were fewer bitcoin miners and fewer megawatts to take offline,” said Lee Bratcher, president of the Texas Blockchain Council, an association representing the blockchain industry. “It still impacted thousands and thousands of homes. But this year there are more and more larger mining operations that can repel electricity and they have been proactive.

After the 2021 storm, ERCOT reached out to mining companies – lured to Texas by falling energy costs – for help as they are heavy consumers of electricity. ERCOT realized that miners could help balance supply and demand during extreme weather conditions by shutting down operations and selling unused electricity back to the grid as part of an emergency response program.

So far, ERCOT has not needed to require miners to hold. But many like Riot did so voluntarily, according to ERCOT.

Shutting down quickly is easy for miners because they can shut down and power up operations in seconds, said Trent Stout, blockchain energy services manager at Priority Power Management.

“Miners are very unique energy customers because they can respond so quickly without too much cost, which makes them better suited than other large electricity users,” Stout said.

The minimum power consumption to participate in the emergency program is 100 kilowatts, which is equivalent to one tenth of a megawatt. But to justify the cost of the equipment needed just to participate, Stout estimated that miners would use at least five megawatts.

Skeptics might think that miners are only closing for the financial incentive. But the likelihood of them making more money selling electricity back to the grid compared to bitcoin mining is very low, Harris said.

Last year’s storm pushed electricity prices up to $9,000 per megawatt hour. Riot then made more money shutting down than it did with its bitcoin mining operations, Harris said. This money is not immediately available because it is considered a credit. Riot is still waiting for the credits it earned last year to become available, which should happen next month, he said.

“It was a catastrophic event of epic proportions that no one anticipated,” he said.

Between June and September, Riot stopped 72 times during periods of extreme heat for up to four straight hours as the Texans ramped up their air conditioning units, Harris said.

With this year’s storm not expected to last that long, Harris said he doesn’t expect Riot to benefit financially. Based on the current Bitcoin price, the price of electricity would need to be close to $1,000 per megawatt-hour before miners working with ERCOT can earn by shutting down, he said.

On Thursday afternoon, the electricity price was around $62 per megawatt hour.

“We don’t benefit from it, but the community does,” Harris said.

Frisco’s Ishaan Thakur and Aanya Thakur rose to prominence last year after starting Ethereum mining company Flifer Technologies in their parents’ garage when they were 14 and 10 years old, respectively. They monitored the ERCOT network and were ready to suspend mining operations at any time to ensure households had power, Ishaan said.

Flifer’s breakeven price for reducing crypto mining operations is around $500 per megawatt hour.

“Given that current electricity prices are well below this threshold, we continue to operate at this time,” he said.

Compute North, a Minnesota-based data center founded in 2017 with mining facilities in Big Spring, is also part of ERCOT’s demand response program.

“Based on the location of our Texas facility and market conditions, ERCOT has not yet requested a discount,” said Peter Liska, director of energy at Compute North. “However, we continue to monitor the situation closely and have the capability to extinguish our load within 10 minutes.”

Friday noon, the ERCOT network had an operating reserve of more than 7,000 megawatts. About 15,000 customers were without power on Friday, according to Poweroutage.us.

“This weather event did not trigger excessive electricity prices as ERCOT was proactive in ensuring the grid was stable with the support of bitcoin facilities, weatherproof generators and planning,” Harris said. .

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