Texas Bitcoin Miners Face Damage and Higher Energy Costs from Ice Storms

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(Bloomberg) — Bitcoin miners in Texas are suffering another storm as they scale back operations due to soaring electricity costs while dealing with damage to their machines from extreme weather conditions.

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A winter storm that dumped ice in parts of the state left more than a quarter of a million power consumers in the dark Wednesday, sending energy prices soaring in the past few days. This has led some Bitcoin miners to turn off their machines and send electricity back to the local power grid. Last year, they took similar action during the historic heat wave in Texas and a winter storm in North America.

In addition to the storm-induced spike in energy costs, some miners are also suffering damage to their machinery because their sites are not well equipped for inclement weather.

The duration of outages is about six hours a day, starting Monday, Can Zhao, chief marketing officer of crypto mining firm JDK Capital, which has a 20-megawatt capacity site based near Dallas. We see a loss of computing power of 25% compared to a normal day for the site.

The short-term effects of the reduction do not affect the company’s long-term prospects, Zhao said.

The vast majority of Bitcoin miners in Texas suspended operations last year when a climate change-induced heat wave pushed the state’s power grid to its limit. Some of the largest miners in the United States, including Riot Platforms Inc., made a profit by selling power back to the grid around this time.

Bitcoin miners use specialized computers to validate data and process transactions on the Bitcoin blockchain in exchange for rewards in the form of cryptocurrency.

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These operations tend to be energy-intensive, making electricity the biggest operating cost for mining companies. Bitcoin miners in Texas have scaled back operations since the storm sent electricity prices soaring, said Lee Bratcher, president of the Texas Blockchain Council.

Some of the miners suffer even more losses from the storm on top of the reduction.

Miners with mobile containers, many of which were not designed to withstand the weather during winter storms, are being affected and some damage has been done to their miners.

Riot, which is one of the largest Bitcoin mining companies in Texas, did not respond to requests for comment on the impact of the ice storms on its operations.

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