As more miners connect to the Texas grid, not all that glitters may be digital gold.
Cryptocurrency mining companies are moving to Texas because of its business-friendly regulations and cheap electricity. But the rise in energy use with the mining migration is raising questions about whether the ERCOT grid can handle the bitcoin boom.
When China began to backtrack on its mining industry as part of its broader crackdown on the cryptoactive industry, Texas was busy taking its own slice of the pie.
In March of this year, Argo Blockchain completed the acquisition of 320 acres of land in Texas to launch Bitcoin mining operations.
In April, Riot Blockchain purchased another huge Bitcoin mining site in Texas for $650 million. Its football field-sized warehouses are home to the largest bitcoin mining plant in North America.
A month later, which China’s mining ban really began to affect, Chinese mining company BIT Mining Limited announced a $25 million investment in a cryptoactive mining data center in Texas.
And the bitcoin mining race doesn’t end there.
“We get a few calls a week and it lasts about three months,” said John King, mayor of nearby Rockdale.
John King said his small town has been getting calls from companies in China after a recent ban on mining in that country.
“they are very serious” said Mayor John King.
“They have between $30 and $100 million they can spend to become operational.”
Texas unrolled the welcome mat for the miners of Governor Greg Abbott himself, who tweeted, “Texas is becoming a mecca for bitcoin miners…”
But in the face of all this hospitality, Texas is on the alert because as more miners arrive, the risk to electrical capacity increases.
“They are energy hogs for sure.”
Said Michelle Michot Foss, researcher at the Center for Energy Studies at Rice University’s Baker Institute.
“I don’t think in Texas we actually did a terrible job in terms of anticipating growth, I think we lost that in understanding the system’s sensitivity to breakdowns.”
Said researcher Michelle Michot Foss.
“And when you have a much larger load increase at the same time, then the chance for outages is there.”
Is ERCOT able to join Bitcoin mining?
“ERCOT is monitoring mining developments and assessing potential impacts on the network.”
Said an ERCOT spokesperson.
“It’s fair to say that these mining loads can have impacts like any large load.”
Senator Cruz, speaking at the Texas Blockchain Summit in October, said Bitcoin could tap the state’s abundant energy resources, adding fuel to mining immigration.
“50% of the natural gas in this country that is flared is being flared in the Permian right now in West Texas. I think it’s a huge opportunity for Bitcoin, because that’s the energy that’s being wasted,” said the senator.
According to the University of Cambridge, 61% of Bitcoin’s mining network is powered by non-renewable sources – or carbon intensive energy sources (such as natural gas).
By the current numbers, that would mean Bitcoin mining emits the same amount of greenhouse gases as more than 59 billion pounds of burned coal.