Riot Blockchain, one of the largest Bitcoin miners in the world, temporarily turned off machines during the July heat wave in Texas. That way, more electricity became available for the air conditioners of residents of the state. In compensation, the miner was paid $9.8 million.
Riot was not the only miner in Texas to be paid out so-called power credits by the state. But it was the only one to disclose figures. The company mined 318 bitcoin in July 2022: 28% less than in a normal month. Still, the company will not be unhappy with the compensation in power credits. The roughly 100 Bitcoin it has been unable to mine are worth $2.3 million at the current Bitcoin price. The $9.8 million in compensation can therefore be called generous - of course, this also says something about how low the price of Bitcoin is now...
Miners as buffers
The situation in Texas is a great example of the buffering effect that miners can have in a power grid. They can scale up when there is an abundance of electricity and scale down when there is a shortage. In addition, miners, which in Texas mainly run on wind and solar energy, make investment in renewable energy profitable. Precisely because they also want to purchase electricity when other users, on very sunny and windy days, do not need the excess power generated. This is precisely when miners are interested: the fact that they always want to buy power makes investment in solar and wind farms - whose output is erratic - profitable. This is how miners subsidize sustainable energy.
The flexibility of miners is particularly important in the case of the Texas electricity grid. This is because it is a closed system, unable to import power from neighboring states. The heat wave in Texas led to a record high demand for energy. A similar situation already occurred during an extreme cold spell last winter.
Why Bitcoin miners, of all industries?
But do we really need Bitcoin miners for this? Can't other industries scale up and down as well? That is much more difficult. Bitcoin mining is an industry that is not critical. Temporarily shutting down the miners is not going to put a spoke in the wheels of another production process. Unlike, say, an aluminum smelter, which has a role in a production chain. In addition, turning Bitcoin mines on and off is (almost) literally a push of a button. Halting production is much more complex in other industries.