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Texas Bitcoin Miner Earned Millions More From Power Credits Than From Actually Selling Bitcoin

rows of wires connected to computer units and fans sit on warehouse shelves.  A lone man stands at the end of these machines.

Bitcoin mining machines at the Whinstone Bitcoin mining facility in Rockdale, Texas, owned and operated by Riot Blockchain.
Photo: MARC FELIX/AFP /AFP (Getty Images)

At least one big bitcoin miner in Texas that wasn’t mining a lot of bitcoin this season record heat made millions of dollars in profit, more than they would have if they continued to operate without any shutdowns. This is thanks to the power purchase agreements signed with the local network, allowing them to sell the electricity they bought earlier back to the supplier for a pretty penny.

Riot Blockchain itself announcement it had earned approximately $9.5 million in energy credits from multiple shutdowns of its mining rigs. It was even more than the amount the company earned selling bitcoin that month. The company’s page said it sold 275 bitcoins, with net proceeds equaling just $5.6 million. This is compared to Last year when the company said it produced 444 bitcoins, worth around $16 million just before the price of BTC really spiked towards the end of 2021.

This net profit proved that even despite the downturn in the crypto market and disruptions in mining operations, these companies are still on track to continue their incredibly power-intensive operations. Digiconomist bitcoin energy chart shows that kilowatt hours per year peaked in early June, but then fell throughout June/July. This line is starting to rise again, and even in its depleted state, it is still well above the bitcoin power consumption in the United States in March 2021.

Riot Blockchain included this handy chart to show that they made a net profit from their power purchase agreement with ERCOT.

Riot Blockchain included this handy chart to show that they made a net profit from their power purchase agreement with ERCOT.
Chart: Riot Blockchain

The Texas Electrical Reliability Council – AKA ERCOT – had asked companies to switch off regularly in order to save electricity throughout the month of July. Riot and its huge 750 megawatt bitcoin mining facility in Rockdale, Texas, reduced power multiple times during peak times. Of course, many of the dozens of large-scale bitcoin mining operations have also cut off activity over the past month so as not toemphasize the grid often overloadedbut Riot remains the biggest token miner in the Lone Star State.

The amount of bitcoins produced in the last month was 318, which is 28% less than the same month last year. Although companies publicly agreed to shutdowns to preserve the grid, they also avoided raising electricity prices during peak loads.

ERCOT provides power purchase agreements which are usually appointed for one year, but Lee Bratcher, the president of the Texas Blockchain Council, told Gizmodo in a phone interview that only a handful of the biggest bitcoin miners actually have these PPAs. Those who do, like Riot, can take advantage of the need to reduce power, while other miners just have to fend for themselves.

The Texas Blockchain Council Networks and Promotes the number crypto-mining operations in the state. Bratcher called these PPAs a “good deal” for ERCOT, as it can regain the power needed for the rest of its network during peak hours.

At the same time, the massive appeal of these mining operations should only increase. The Texas Grid System said crypto miners in Texas will put six gigawatts of demand on the grid by next year. Congressional Democrats have warned the seven largest mining rigs in the United States draw power equivalent to that of all the residences in the city of Houston. These crypto miners are only expected to get bigger over time.

Bratcher said most mining operations in Texas voluntarily shut down operations once the local power price on ERCOT’s network exceeded $180 or more per megawatt hour, which would essentially result in a negative net cost to mine their bitcoin. The shutdown essentially reduced costs and revenue to zero, but the lost opportunity cost for many of these companies was in the hundreds of thousands, if not millions, depending on the fluctuating price of crypto against the overall energy cost.

So will this happen again? After Overall, the National Oceanic and Atmospheric Administration expects more above average heat in August. Texas is one of the most likely places where temperatures could exceed historical averages, including triple-digit heat. In the statement, Riot CEO Jason Les said his company “has always and proactively sought large-scale, low-cost access to power under its fixed-rate power contracts. long-term”.

Bratcher said most of these deals will essentially allow companies like Riot to continue reselling unused electricity if demand for electricity increases to a point where it makes sense to shut down. So even if we get even more extreme heat (which climatologists have said is more and more likely) which will not necessarily prevent crypto miners from panning for digital gold.

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