Whinstone CEO Chad Harris takes CNBC on a tour of the largest bitcoin mine in North America.
As a major winter storm descends on Texas, crypto miners are powering down operations to help ease the burden on the state’s already beleaguered power grid.
The chief concern is that we might see a repeat of last February, when a deep freeze devastated large swaths of the state, leaving 10 million Texans without electricity and resulted in a multi-system meltdown that “was within minutes of a much more serious and potentially complete blackout.” Hundreds of people died amid the multi-day outage.
Riot Blockchain, one of the biggest publicly traded crypto mining companies in America, began shutting down power to its Rockdale mine on Tuesday, a process which occurs in phases.
“As the storm has progressed, we have continued to decrease our power consumption by 98%-99%. So currently, we are only using 1%-2% of power,” said Trystine Payfer, Riot’s director of communications. Payfer told CNBC Riot will continue to manage its power usage as needed until there is “no extreme stress on the ERCOT grid.”
Riot’s stock closed nearly 7% lower on Wednesday, and it is down over 31% year-to-date.
Several other crypto miners across Texas have followed suit in voluntarily curtailing energy consumption in the run-up to the arctic blast.
The CEO of Rhodium Enterprises, a fully integrated bitcoin miner using liquid-cooled infrastructure, tweete that Texas-based bitcoin miners were curtailing their load starting Wednesday, in order to “help provide excess power reserves” for the storm.
“We are proud to help stabilize the grid and help our fellow Texans stay warm,” wrote Rhodium CEO Nathan Nichols.
Other crypto miners said they will respond in real-time to the needs of the grid.
The grid is called ERCOT, short for the Electric Reliability Council of Texas, the organization tasked with operating it. To run smoothly, ERCOT requires a perfect balance between supply and demand. Having too much power and not enough buyers is just as bad as everyone wanting to fire up their air conditioning units on the same day in July.
For years, ERCOT has struggled with fluctuating energy prices and sporadic service, which is why it strikes deals with flexible energy buyers, like crypto miners. Through established “demand response” programs, ERCOT will actually pay major industrial users to cut power.
“They’re expecting the same kind of grid load as you would have at peak summertime, so they’ll likely curtail miners at some point on Friday or Saturday,” explained Fred Thiel, CEO of Marathon Digital, another major player in the U.S. mining industry.
Bitcoin miners specifically, and demand response more generally, are a powerful tool in the toolbox for grid management, according to Lee Bratcher, president of the Texas Blockchain Council.
Marathon’s Thiel tells CNBC that miners have been coordinating with ERCOT since last week to get ahead of any potential problems with the grid.
“Everybody wants to…
Read More: Winter storm descends on Texas, bitcoin miners shut off to protect