Texas Bitcoin Miners Asked to Stop Operations

Bitcoin (BTC) miners in the US state of Texas suspended operations after the region was hit by extreme heat that sent temperatures hitting records for more than a century.

On Monday (11/07/2022), the electricity manager of the Electric Reliability Council of Texas (ERCOT) issued a warning that power outages would occur frequently so that industries and consumers were asked to save electricity consumption.According to Finbold, Lee Bratcher, head of the Texas Blockchain Association, said that almost all industrial-scale Bitcoin mining companies in Texas have stopped operations since July 11.

Bitcoin miners flock to Texas in 2021. After miners turn off equipment, a thousand megawatts of electrical power is returned to the grid for distribution.Bratcher said the capacity is equivalent to 1 percent of the total electricity capacity in Texas. At the time, Nathan Nichols, CEO of the Rhodium mining company, tweeted, “We are proud to help stabilize the power grid and keep Texans warm.”ERCOT handles agreements that pay companies, including Bitcoin miners, to reduce operations in periods of high electricity demand to free up energy for citizens.

The agreement was made to reduce the burden on the Texas power grid.Bitcoin miners reap the benefits of ceasing operations and receiving rewards from ERCOT rather than continuing to mine BTC during times of power shortage.Mining BTC is only profitable as long as the cost of energy used is less than the value of BTC earned. These calculations encourage miners to look for areas like Texas that have relatively cheap electricity prices.

However, the increasing demand for electricity due to the weather pushes up the price of electricity thereby reducing the profits from mining BTC.Voltus, an energy management services company, estimates that miners can earn 10 percent of their annual income if they shut down operations for the power grid.

As the value of BTC continues to decline today, miners have an incentive to turn off equipment and receive rewards from the ERCOT agreement.