Texas is going through a tremendous heat wave in July 2022. The temperature has gone beyond 100℉. As a result, the energy grid in the state is under great pressure. It may find it difficult to meet the demands of crypto miners. Therefore, several of them have begun to shut down operations. To start your trading journey, you can visit this App.
Texas’ Electricity Issues
ERCOT expands into the Electric Reliability Council of Texas. The group is aware that Texas depends heavily on wind power. However, it was producing significantly less electricity. The output was lower than 8% of the total capacity. Earlier, it used to be much higher. It had sufficed to meet the highest of demands.
Texas also resorts to solar power for generating electricity. With the temperature so high, it should suffice to store sufficient electricity. However, the heat has led to heavy usage of air conditioners and other methods of ‘cooling off. This is leading to an imbalance between demand and supply.
ERCOT has requested Texas residents to conserve electricity as much as possible. Businesses have been requested to do the same.
As per ERCOT’s prediction, the demand for electricity could touch 79,615 MW (megawatts). This would be a record in ‘electricity’ history! Thanks to enhanced production, energy expenses had lessened. However, they are bound to rise again.
Crypto Miners Cooperate with ERCOT
Texas is the Lone Star State. It has been attracting crypto mining firms for quite some time. It is because there is reduced regulatory oversight. It is also because of the reduced energy expenses.
For instance, Riot Blockchain had been planning to move from New York to Texas. The company was going to set up the balance of its S19 miner fleet there. This was in June 2022. The company also instructed its Whinstone Facility at Rockdale, to lessen the use of energy. The Facility would now consume 8,648 MWh less.
Similarly, White Rock Management from Switzerland had planned to branch out to the USA. It had declared that the starting point of its operations would be Texas.
Core Scientific, another crypto miner, wished to offer relief to Texas citizens. Therefore, it ensured that all the ASIC servers in Texas were powered down.
Argo Blockchain has a Helios Facility in Dickens County. Peter Wall, CEO of Argo Blockchain, declared that his firm would reduce operations in Texas, too.
Mining companies have been keen to comply with ERCOT’s conservation alert. Therefore, they are shutting down operations, or scaling them down.
Have crypto mining firms faced such a situation before?
Yes, they have. It has been during Texas winters. Power grids must shut down during extremely harsh weather. Sometimes, residents go without power for days.
Allegations Against Compass Mining
Compass Mining is a hosting and hardware organization for Bitcoin (BTC). One of its hosting facilities is based in Maine. The owner of this organization is Dynamics Mining.
Dynamics Mining has claimed that Compass Mining has not paid its dues. Therefore, it was terminating the hosting agreement with Compass Mining. The date for termination of the agreement, was June 14, 2022.
Dynamics Mining placed the facts in a letter on Twitter. According to the letter, Compass Mining is behind by six payments. They have delayed payments. Furthermore, there are three additional bills. They relate to non-payment of hosting fees and utility bills.
Dynamics Mining did not stop with just one tweet. The company came up with a follow-up letter on Twitter. Compass Mining had only paid $665,000 towards power consumption. The actual total was $1.2 million. Compass Mining denies this allegation. It claims that it must repay a mere $250k towards three months of consumption of power.
The allegations fly back and forth! However, the tweets have disappeared from Twitter. The companies have decided to resolve the matter in court, privately, instead.
Cryptocurrency miners confront several challenges. The Texas heat is not the only one. For instance, Bitcoin scores high on the popularity chart. However, it is facing a price slide. In turn, this is increasing the energy costs for mining it.
Several experienced ASIC miners found their profits approaching the negative zone when Bitcoin went below $20k. Even newer mining rigs are past or nearing their shutdown thresholds.