Senator Warren leads investigation into the impact of Bitcoin on the Texas power grid, and the use of ERCOT to respond to demand 'subsidies'

Senator Warren leads investigation into the impact of Bitcoin on the Texas power grid, and the use of ERCOT to respond to demand ‘subsidies’

Diving Brief:

  • Seven lawmakers led by Senator Elizabeth Warren of Massachusetts have asked the Texas Electricity Reliability Board for data on bitcoin miners’ energy consumption, including the impact encryption The sector may be struggling with energy costs for families and local businesses.
  • especially, Warren on October 12 The letter seeks information about Bitcoin miners participating in ERCOT demand response programs that pay large consumers to reduce energy consumption during times of network stress. According to the lawmakers, these “subsidies” to miners “are contributing to the exacerbation of the climate crisis.”
  • Texas could host up to 20% of crypto computing power worldwide by the end of next year, according to some estimates. Miners say their energy use can help maintain the network’s reliability because it a Flexible loading works like a demand side battery.

Diving Insight:

Despite the rapid decline in bitcoin prices this year, ERCOT officials say interest in connecting to the Texas network has continued to rise.

As of August, there were 33 gigawatts of crypto mining loads wanting to connect to the network, according to ERCOT. The network operator said that figure had nearly doubled since April, when it was just 17 gigawatts. Bitcoin finished April trading north of $37,000 and closed in August at around $20,000.

While there are tens of gigawatts of encryption payload interested in connecting to ERCOTthe network operator indicated in an email that there are currently only “an estimated few hundred megawatts currently in operation”.

The number is growing. “Texas Bitcoin miners are bringing hundreds of direct jobs and thousands of indirect jobs to rural communities across the state as well as paying tens of millions of dollars in state and local taxes,” In response to Warren’s letter.

The group said miners in Texas cut more than 50,000 megawatts in July in response to recording demand for power and heat on the grid.

Texas Blockchain Board Chairman Lee Bratcher said in a statement that bitcoin mining “absorbs excess energy during times of low demand and pauses on hot summer days when Texans use more energy.”

Providing services back to the electrical grid can generate up to 10% of the mine’s revenue. ERCOT emphasized that miners “are responding during grid events by rapidly reducing their electricity use,” including by helping provide additional power during winter storm Yuri.

But Warren and other lawmakers say that requiring taxpayers to fund demand response payments for crypto miners is unfair, and that incentives to reduce energy demand “contribute to the larger issue of making consumers, rather than industries with high demand for electricity like crypto companies, bear the Costs of maintenance of the electricity network.

According to the letter, demand response payments could reach $170 million annually in the coming years. “These subsidies to crypto companies are also contributing to the exacerbation of the climate crisis,” the lawmakers said.

The letter asked ERCOT to provide data on:

  • Electricity consumption in the Texas crypto industry in 2022, including the number of tons of carbon dioxide emissions it produces;
  • which crypto companies have signed power-cutting agreements with ERCOT;
  • How much are miners paid per hour to reduce their energy consumption;
  • And the average cost of electricity to consumers at times when money is being paid to cut costs for crypto miners.

“Climate change that cryptomining contributes to will further exacerbate extreme weather, creating a feedback loop in which energy demand frequently exceeds supply, causing more stress on electrical grids and potentially leading to more payments to crypto companies themselves,” the lawmakers said. . ERCOT.

ERCOT officials say they have received Warren’s letter and will have a response in the coming weeks.

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