Riot Platforms, the crypto mining company, recently scored a cool $31.7 million in energy credits from ERCOT, the Texas power grid operator. How did they do it? By simply reducing their energy usage during a scorching heatwave in August.
Basically, the biggest power supplier in the state, responsible for about 90% of the state’s electricity usage, actually gave money to a crypto company to stop mining Bitcoin.
It’s like a really weird situation. Texas has been on the verge of blackouts this week. ERCOT just issued their first emergency declaration since 2021 because of crazy hot weather and people needing AC to stay alive.
Meanwhile, Riot only ended up mining 333 Bitcoin, which is worth approximately $8.9 million by the end of August. This has mostly been advantageous for the company.
Texas lawmakers have passed two bills that encourage the mining industry to reduce their operations by offering them financial incentives greater than the value of the cryptocurrency they could have mined. This is in response to power surges, fluctuating energy prices, and blackouts in the state.
Riot considers its strategy of earning energy credits through shutting down operations a great achievement, as these credits greatly reduce the cost of mining Bitcoin and contribute to Riot becoming one of the most cost-efficient producers in the industry.
Riot’s operations have significantly declined compared to their previous state. Although the company experienced tremendous success in 2021 with a significant increase in revenue, the crypto crash in 2022 had a detrimental impact, resulting in a loss of half a billion dollars for the company. The company has been doing poorly recently, with a loss of $27.7 million in the previous quarter.
In essence, it is uncertain if crypto mining in Texas is the most effective method to maintain power grid stability. The benefits for the local population are unclear beyond generating jobs at best — especially when the practice has been shown to be incredibly harmful to the environment.
Reference – Futurism, National Geographic, CNBC, Riot Platforms Newsroom, Money Control