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It's summer time and nobody is feeling it more than Bitcoin miners, specifically those in the US. Already known for the heat output caused by masses of GPU's, each mining rig has a dedicated fan there to draw heat away from expensive components. On top of that, every big mining operation has some additional method to cool it down.
In areas with cheap power, air conditioning is often the second line of defense. Others add huge industrial fans to work with the hundreds of smaller ones. But the cheapest solution for the heat comes from miners in Siberia, where temperatures are often below zero and opening the windows is all it takes to cool down a warehouse full of mining rigs.
But for those who aren't willing to relocate to freezing remote corners of the earth to mine Bitcoin, there's the state of Texas in the US. Many mining operations from other US states have relocated there, and it has become the top destination for miners leaving China following their ban on it last year.
When Texas Gets Hit With a Heat-Wave, Miners Go Offline - By Choice...
In a deal with the Electric Reliability Council of Texas (ERCOT), the companies setting up in the state have agreed to power down when energy usage spikes on hot days due to residents and businesses turning up their air conditioning.
There isn't a hard choice to make here - if the miners didn't pause their activity for a few hours, the state would begin to experience blackouts as the grid becomes overwhelmed - so the miners end up offline either way. But working with the electricity providers to do this voluntary means the mining staff can at least wait it out in a nice air conditioned building.
We knew this much a couple months ago, when we covered the agreement for miners to power down - but that was just half the story.
Just Because They Aren't Mining, Doesn't mean they aren't earning...
Yes you read that correctly.
That agreement with the Electric Reliability Council of Texas includes a special arrangement: every time a mining company is asked to shut down to save power, it will be structured the same as if these mining companies were producing and selling energy back to the grid.
Miners buy power contracts in advance at standard rates, but any time they are shutting down and 'selling' power back, they're selling it at higher peak-usage prices. Some estimate that earnings from powering down could come to 10% a miner’s yearly income.
Surprised and impressed at the deal miners were able to get from the state, I spoke with someone I met at an industry conference in 2019 who moved his mining business to Texas in 2021. Is there something we're missing here? Or is the deal really that good?
He explained, "LOL yeah, the deal really is that good. I'm not blowing smoke when I say TX is where it's at if you're on the mining end of the industry. If I had to come up with something negative, it would be how I can't help but wonder how long we can count on the state for this extra support. Everyone in crypto faces the risk of people electing tech-illiterate boomers who don't understand crypto thinking they need to re-write the rules for it. They'll say, 'These guys should be paying more, not making a profit' and we'll say 'goodbye' and relocate to Florida, which is currently the second best place to mine bitcoin."
So WHY would Texas give Miners such a good deal?
The miners, as well as politicians who support incentivizing them to come to their state, point out that this is speeding up the expansion of wind, solar, and other renewable power capabilities - moving the state away from coal faster than they originally thought was possible.
Those who invest in and build renewable energy resources can just go ahead and build, knowing the energy they produce will be immediately sold, thanks to the miners.
An industry having a steady demand for energy is only beneficial if they can stop that demand when needed to share with the state - and crypto uniquely has this ability. Unlike a factory or oil refinery, crypto miners can cut their electricity usage in seconds, bringing instant relief to an overloaded grid.
A former operations manager for the state grid, Carrie Bivens says "a very special kind of demand; it can curtail very quickly."
In large part because of Texas's energy policies, the US holds the #1 position of all countries when it comes to Bitcoin mining, with approximately 38% of it occurring there. All other nations come in at 20% or under.
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Author: Justin Derbek
New York News Desk
Breaking Crypto News
