For Bitcoin miners operating in heat-stricken North Texas, a new surprising business model has proven to be just as profitable; not mining Bitcoins at all. Recently, large Bitcoin mining companies have made millions from the state of Texas by selling back precious electricity usage as credit.
As covered by The Dallas Express, Texas has seen an influx of Bitcoin miners moving in to profit from an electricity program less regulated than other states.
One company, Riot Blockchain Inc, operates a facility in Texas running off of 750 megawatts of electricity. Another one-gigawatt plant is also in the works for Riot. With Bitcoin mining facilities using as much electricity as 100 million LED lightbulbs, such electricity has become a premium commodity during recent power grid crises.
Due to this, Riot Blockchain and others can sell previously purchased electricity to the state through a partnership known as the “4 Coincident Peak” program. By shutting off power during peak strain on the grid, Bitcoin miners are awarded credit by the Electricity Reliability Council of Texas (ERCOT.)
In July alone, Riot Blockchain profited $9.5 million by selling off electricity, or roughly 439 Bitcoin. However, the company only mined 318 Bitcoin during the month, making it more profitable to shut down operations and collect electricity credits.
Not everyone is thrilled with Bitcoin miners’ willingness to leverage the energy market. An investigation conducted by the Tech Transparency Project found that despite companies vowing to be responsible for energy usage, long-held contracts force ERCOT to be at the mercy of Bitcoin mining operations.
The project claims that this “sweetheart deal” allows miners to sell back electricity at huge markups, raising prices for ordinary consumers. Alexander Liegl, the cofounder of Layer1Technologies, has forthrightly stated the firm is “an energy arbitrage operation disguised as a bitcoin mining company.”
Hot temperatures are expected to continue, further straining the Texas power grid. With each coming month, energy demand has broken previous records and has caused rolling blackouts and skyrocketing consumer bills across the state.