Texas Pays Riot Platforms $31M to Cut Bitcoin Mining During Climate Crisis

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Riot Platforms has received $31.7 million in energy credits for reducing mining operations amid a scorching heatwave in Texas. The move comes as regulators in the state highlight the importance of bitcoin mining in enhancing the resiliency of the energy grid.

Bitcoin mining company Riot Platforms has significantly reduced its operations amid a scorching heatwave in Texas. In August, the firm reduced its energy demand by 95%, mining only 333 bitcoins (BTC). In return, it received $31.7 million in energy credits.

The move was aimed at redirecting vital resources to the local electricity provider, the Electric Reliability Council of Texas (ERCOT), in the face of the climate crisis. ERCOT, the primary energy source for 90% of Texas’s needs, operates as a self-sufficient and deregulated network.

Riot Platforms is not the only company to scale back operations due to the extreme heatwaves in Texas. Marathon Digital Holdings, another Bitcoin mining firm, attributed temporary shutdowns to a 9% decline in bitcoin production in August 2023 compared to the previous month.

“The Company’s curtailment of operations meaningfully contributed to reducing overall power demand in ERCOT”, Jason Les, CEO of Riot Platforms, said in a press release. “This ensured that ordinary Texans did not experience any disruption in their electricity services.”

“August was a landmark month for Riot in showcasing the benefits of our unique power strategy,” Les added. “The effects of these credits significantly lower Riot’s cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry.”

Crypto mining companies experienced remarkable growth in 2021, fueled by soaring Bitcoin demand. However, they encountered challenges in the subsequent year following the crypto meltdown, even forcing some major Bitcoin mining companies to go out of business. 

Notably, bitcoin miners may face further difficulties as the hash rate, the computational power used for cryptocurrency mining, reaches new record highs in anticipation of the upcoming halving event next spring. The halving event, which occurs roughly every four years, reduces miners’ rewards by half.

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Texas Regulators Support Mining Operations

A number of prominent Texas regulators have voiced support for the bitcoin mining industry in the state. For one, Texas Governor Greg Abbott has embraced a “miner-friendly” approach, suggesting that attracting more miners to the state could help stabilize the state’s historically unstable grid by incentivizing the creation of additional power generation facilities.

Likewise, in a recent interview on Fox News Radio, Senator Ted Cruz said bitcoin mining enhances the resiliency of the energy grid. Citing the recent challenges faced by the Texas power grid due to inclement weather, Cruz explained that bitcoin mining operations can easily power down in times of crisis, effectively serving as emergency reservoirs of power. 

Texas is a hub for jobs, innovation, and freedom—making it the natural oasis for bitcoin mining,” he said in a recent tweet. “These operations can improve our grid resiliency since they can shut off during inclement weather and free up electricity to heat or cool homes.”

 

Back in May, Texas legislators also passed two bills, including SB 1929 and HB 591, that show support for miners. The bill SB 1929 requires miners whose energy capacity exceeds 75 megawatts (MW) to register with the Public Utilities Commission (PUC) of Texas as large loads operators, which then shares their data with the ERCOT.

Meanwhile, the HB 591 bill aims to introduce tax exemptions for companies that put to use otherwise wasted gas, including data centers. “These bills signal that Texas remains the jurisdiction of choice for bitcoin, blockchain, and digital assets,” said Lee Bratcher, president of the local industry group Texas Blockchain Council (TBC).

Some Texas Residents Voice Concern Regarding Mining Operations

Bitcoin mining is energy-intensive. The process involves solving complex mathematical problems to validate and secure transactions on the Bitcoin network. To carry out these calculations, miners use powerful computers that require significant electricity to function. 

According to data from the Cambridge Center for Alternative Finance, bitcoin consumes roughly 117 Terawatt Hours per year, or 0.55% of global electricity production. The data also shows that bitcoin mining consumes more energy than many countries, including the Netherlands, the Philippines, and others.

The heavy energy consumption associated with Bitcoin mining has also sparked controversy in Texas, leading to concerns about taxpayer-funded energy credits for miners. In Navarro County, Texas, residents took a stand against a local Bitcoin mining facility by initiating a petition last year. 

“This factory-that-produces-nothing will affect every single citizen of Navarro County and MUST BE STOPPED,” reads the petition, which has amassed nearly 1,200 signatures. “We do NOT want this enormous burden on our already fragile infrastructure.”

There are also environmental concerns associated with bitcoin mining. According to a September 2022 report from the White House, cryptocurrency activity in the United States is estimated to result in approximately 25 to 50 Mt CO2/y, which is 0.4% to 0.8% of total US greenhouse gas emissions.

The report noted that crypto mining operations can also cause local noise and water impacts, electronic waste, air and other pollution from any direct usage of fossil-fired electricity, and additional air, water, and waste impacts associated with all grid electricity usage.

“These local impacts can exacerbate environmental justice issues for neighboring communities, which are often already burdened with other pollutants, heat, traffic, or noise,” the White House said. 

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Ruholamin Haqshanas

Ruholamin Haqshanas is a cryptocurrency and financial journalist with over three years of experience in the field. He holds a Bachelor's degree in Mechatronics and has a strong interest in FinTech. He started as a freelance technology writer, but moved into cryptocurrency as he delved deeper into the industry in 2019. Ruholamin has been featured in several financial and crypto news outlets, including Cryptonews, Investing.com, 24/7 Wall St, The Tokenist, Business2Community, ZyCrypto, EthereumPrice.org, Milk Road to name a few. Ruholamin has also worked on major crypto and DeFi projects as a content producer, including Midas Investments, BullPerks/GamesPad and Equalizer Finance.