Texas Bitcoin Miners Shutting Down to Help Power Grid Survive Winter Storm

Cryptocurrency miners in Texas are temporarily shutting down to serve a grid that’s predicted to be strained under Winter Storm Landon. 

As the weather event careens through Texas, legislators are grappling with the best way to prevent another Winter Storm Uri. Last year’s freeze left more than 4-million people without power in subfreezing temperatures and an estimated 700 people died as a result, according to BuzzFeed News, leaving residents with ongoing fears about a repeat. Texas Governor Greg Abbott (R) warned of possible outages in a press conference on Tuesday; these are becoming a reality as the storm migrates eastward.

“​​No one can guarantee that there won't be a ‘load shed event,’” Abbott said, referring to the possibility of rolling blackouts as ERCOT grapples with strain on its grid. “But what we will work and strive to achieve, and what we're prepared to achieve, is that the power is gonna stay on across the entire state.” 

“For a short period of time, a particular neighborhood may be without power, but know that your local power company that you have contracted with is working to make sure that that power will be restored quickly,” he continued.   

By Thursday morning, outage aggregator poweroutage.us had spotted nearly 50,000 outages across Texas, as Dallas Fort Worth International Airport grounded flights and a “bitter cold” settled into North Texas.

To help deal with the strain, Bitcoin mines, which proliferated across the energy-rich state after China cracked down on the industry last year, are offering themselves up as part of the response to these conditions. 

Lee Bratcher, president of the Texas Blockchain Council—an industry association that represents crypto and blockchain companies—told Motherboard in an email that “all of the industrial scale Bitcoin miners” in the state are in this program and have already shut down, which should push “a significant amount of power back into the grid.”

The Texas Blockchain Council told Gov. Abbott in a letter that operators are prepared to temporarily shut down operations  in order to offer the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, more capacity to serve Texans’ essential needs, like energy to heat homes, keep grocery stores running, and power hospitals.

“As Texans, we want you to know that we are actively monitoring the coming cold front, as we do on any seasonal weather event,” Texas Blockchain Council vice president Reed Clay said in the letter, shared with crypto news outlet Cointelegraph. “We are taking proactive action to shut down operations, reduce loads and create additional capacity in response to ERCOT needs if needed.” 

Shutdowns began as early as Tuesday, when Riot Blockchain, one of the biggest publicly traded crypto mining companies in America, said that it had begun shutting down 99 percent of operations at one of its data centers in Rockdale. 

Other companies are following suit:  Nathan Nichols, CEO of Bitcoin mining company Rhodium Enterprises, announced in a tweet on Wednesday that the company had already begun curtailing load in response to the storm. 

“We are proud to help stabilize the grid and help our fellow Texans stay warm,” he wrote. 

ERCOT serves the majority of the state of Texas on a grid that is separate from the rest of the country. It operates a deregulated market in which utility companies bid for service by offering the lowest rate, a system that proponents argue keeps residents’ bills low—but that means the state is on its own to prevent grid strain and, without the ability to tap into other grids’ power, large storms can pose an existential threat. Winter storms, in particular, often see consumers turning their heat up to a degree that the grid might not have the capacity to meet.

When demand on the grid is higher than what it has capacity to offer, ERCOT goes into load shed: Instructing utilities to perform controlled outages in order to prevent all-out collapse. But this is a last resort, and one that crypto miners hope to prevent from happening by shutting down to offer their energy use back to the grid. As part of the grid operator’s emergency response service programs, the mines get paid when they volunteer to do this. 

“The miners are able to sell their power back into the grid to cover some of their losses for turning off,” Bratcher said. “Depending on the price of Bitcoin and the price of power, they may even make more from selling their power back than they would from mining during a demand spike.” 

This fulfills a long-held vision shared by miners, crypto advocates, and Sen. Ted Cruz: That the state’s Wild West crypto endeavors can solve long standing issues with the grid, despite skepticism from environmentalists who see mining as a consumptive use of energy rather than a generator, and believe this argument does little to solve the root cause of Texas’s grid problems. 

“Because of the ability to Bitcoin mining to turn on or off instantaneously, if you have a moment where you have a power shortage or a power crisis, whether it’s a freeze or some other natural disaster where power generation capacity goes down, that creates the capacity to instantaneously shift that energy to put it back on the grid,” Cruz told an audience at a Bitcoin conference in October. 

Bratcher is confident that Landon offers an opportunity for the crypto industry to exemplify this potential. It’s unclear how long these mines will stay off, but he remains firm that their doing so will benefit the grid. 

“The extra generation capacity that was developed as a result of the demand for power that the miners create will add to ERCOT's resilience and stability,” Bratcher said.