The Electric Reliability Council of Texas paid a Colorado-based cryptocurrency mining company more than $31 million to reduce its energy usage during the August heat wave.
Jason Les, CEO of Riot Platforms, Inc., called August a “landmark month” for the company in a press release, pointing to the money ERCOT paid it.
“Riot achieved a new monthly record for Power and Demand Response Credits, totaling $31.7 million in August, which surpassed the total amount of all Credits received in 2022,” said Les.
“Based on the average Bitcoin price in August, Power and Demand Response credits received equated to approximately 1,136 Bitcoin. 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.”
The press release noted that Riot reduced its energy usage by over 95% during peak periods of demand last month, “forgoing revenue from its Bitcoin mining operations to instead provide energy resources to ERCOT.”
Of the $31.7 million paid to Riot, $24.2 million came in the form of power curtailment credits, while the remaining $7.4 million came from ERCOT’s “demand response” program.
The “demand response” program pays companies that use a lot of energy to reduce their usage during times of peak demand, such as the heat wave that battered Dallas throughout August.
Similarly, ERCOT keeps prices in check by paying cryptocurrency mining companies to use more energy when there is an excess, according to CNBC.
Fred Thiel, CEO of Marathon Digital Holdings, told CNBC that it is not a common occurrence and that many companies only reduce usage at ERCOT’s request for about 5-10 hours each month.
Brandon Arvanaghi, a Bitcoin mining engineer, said the system is a “win-win” for both sides.
“All you have to do is pay the miners slightly more than what they would have made mining for [B]itcoin that hour,” Arvanaghi said, as reported by CNBC.
ERCOT has come under scrutiny for its alleged inability to maintain the energy grid during times of extreme weather. Texas Public Radio reported that eight separate calls for voluntary energy conservation were issued by the grid operator during the August heat wave that shattered multiple records.
Still, some Texas officials noted that wind and solar energy sources were dramatically underperforming last month, which may have led to lower reserves and the consequent conservation notices, as reported by The Dallas Express.
Critics have also called out ERCOT for grid failures during the 2021 ice storm that left thousands of people without power for days.
Despite the criticism, ERCOT was recently granted immunity by the Texas Supreme Court from lawsuits related to the ice storm, as previously reported by The Dallas Express.
