Crypto-controversy: Advocates raise alarm about effects of crypto mining on state grid, ratepayers
AUSTIN, Texas - Barbecue, oil and gas, country music. Now, cryptocurrency can be added to the list of things Texas is known for.
"We believe about 40 percent of Bitcoin mining is in the United States now, and a very large percentage of that is in Texas," said Mandy Deroche, deputy managing attorney for Earthjustice’s Clean Energy Program.
But it’s not something to spark Texas pride, according to environmental law organization Earthjustice.
"This explosive growth in unprecedented energy consumption strains energy grids, raises electricity prices for everyone else, and increases greenhouse gas emissions, local air pollution, local water pollution, and an immense amount of noise pollution," said Deroche.
Advocates who spoke during a press conference on Friday painted crypto mining as an industry with no return on investment.
"This isn't an industry that's creating anything of value in Texas. It's not a chip manufacturer or a steel mill. All the crypto industry does is consume energy to make money," said Adrian Shelley, Texas director of Public Citizen. "So we're asking state lawmakers to do two things. First, pay Texans for when we do our part to conserve energy. Second, stop the crypto industry from holding our grid hostage."
The largest crypto mining facility in the U.S. is in Rockdale, Texas.
Reports of its owner, Riot Platforms, Inc. receiving over $30 million in energy credits from ERCOT for going offline during the August heatwave has only heightened pushback.
"These demand response programs were meant to stabilize our grid, not be used to subsidize industry," said Jen Powis, managing attorney for Earthjustice. "Without strong regulation, without someone watching these industries and putting the consumers Texans first, this is what happens."
In a statement shared with FOX 7, a company spokesperson called the headlines "sensational and inaccurate."
"We participate in energy markets just like other industrial companies. Taxpayers are not writing Bitcoin miners checks to turn off. Mostly, miners pre-purchase electricity for their business operations," said Alexis Brock, corporate communications manager for Riot Platforms, Inc. "They can either use that energy to power computers to mine bitcoin, or they can pause those operations and sell power to their retail energy company for future credits on their bill, so the provider can re-deploy that electricity for air conditioning people’s homes. It is an important, market-driven public good."
According to a press release earlier this month, the company noted it received about $7 million through ERCOT’s ancillary services program.
According to the release, the program is "a competitive bidding process in which certain large customers in ERCOT’s market bid for the grid operator to pay them a fee that is similar to an insurance premium, which then affords ERCOT the right to control the customer’s electrical load to ensure grid stability."
"Think how excited an airline would be if somebody showed up and said, ‘I will buy every empty seat on the plane…And if somebody else wants the seat, great, they can have it,’" said Adam Swick, chief growth officer for Marathon Digital Holdings, one of the biggest mining companies in the U.S. with miners in Texas. "When it comes to Bitcoin miners working with the grid, they're kind of sitting there saying, ‘Give me all the spare electricity. I will promise to buy this (amount) from the solar plant. And if lots of people turn on their air conditioners tomorrow and that solar plant energy is needed by the greater grid, I'll give it back.’"
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It’s not a drain on the grid, according to Swick, but a unique tool for balancing the grid.
"Batteries are still in their infancy, and so we can't really store power. So when an electron is produced, it has to be consumed right then. And so you have to balance it at all times," said Swick. "What Bitcoin mining has kind of allowed is instead of balancing on the supply side, you can balance on the demand side."
Additionally, crypto mining facilities can go offline almost immediately. Nuclear plants or large manufacturing facilities can take hours or even days.
"In theory, more tools at ERCOT's disposal means it should hopefully mean more price efficiency and ultimately driving down costs to balance the grid," said Swick.
On the flip side of the coin, Jackie Sawicky, founder of Texas Coalition Against Cryptomining, blames mining facilities for the strain on the grid in the first place.
"If Bitcoin miners weren't putting such a massive burden on the grid, would we have had 21 record-breaking high-demand days last month?"