Texas a Bitcoin ‘hot spot’ even as heat waves affect crypto miners

Record-breaking heat waves are being documented around the world as extreme weather worsens due to climate change. States across America continue to see temperatures rise above 100 degrees Fahrenheit (38 degrees Celsius), while Britain recently saw temperatures reach 104 degrees Fahrenheit (40 degrees Celsius).

While hot climates may be unusual for many of these regions, Texas — a state known for its boiling summers — is experiencing warmer than normal temperatures. The Electric Reliability Council of Texas (ERCOT) recently stated that Texas’ power load demand has been hitting records consistently this month.

Unsurprisingly, Texas’ ongoing heat wave is having a major impact on crypto miners throughout the Lone Star State. As Cointelegraph recently reported, a number of miners in Texas had to shut down operations entirely earlier this month to accommodate Texas’ energy grid load.

Lee Bratcher, president of the Texas Blockchain Council, told Cointelegraph that there are currently about 10 industrial-scale crypto miners and 20 smaller miners in the region.

Earlier this month, ERCOT asked businesses and residents to voluntarily conserve electricity during the Texas heat wave. A spokesperson for Riot Blockchain told Cointelegraph that their Whinstone facility in Rockdale is now participating in ERCOT’s Four Coincident Peak program, noting that the facility will curtail all power to stabilize the grid during peak demand periods. “As part of Riot’s participation in the program, in June the company reduced energy consumption by a total of 8,648 megawatt hours,” the spokesperson said.

Peter Wall, CEO of Argo Blockchain – a crypto mining company that recently opened a data center in West Texas – also told Cointelegraph that the company limits mining operations when ERCOT issues a conservation notice. On July 19, 2022, he said that Agro had to undergo this, along with many other mining operators in the area.

As a result, Bitcoin (BTC) miners saw the biggest drop in computing power on July 21, 2022, since China banned crypto mining in May 2021. This came as a surprise to industry experts who would have expected Bitcoin hash rate difficulty to increase based on current trends . Frank Holmes, CEO of Hive Blockchain Technology – a publicly traded crypto mining company with operations in Canada and Europe – told Cointelegraph that Bitcoin’s hashrate difficulty was supposed to increase 3% every month based on financial models, but that this has not been the case due to a number of reasons. He said:

“When the price of Bitcoin dropped, many S9 miners went down, or the electricity increased and the miners had to stop operations. But more importantly, many machines that were supposed to be connected are now unusable, which has also caused the difficulty to decrease.”

Holmes noted that the decline in Bitcoin computing power has been beneficial to Hive since their facilities have not been affected by climate change or other factors. He added that new mining machines are delivered to Hive every month and that the slots are filled to accommodate growth. Still, Holmes shared that Hive continues to look for locations to establish its next mining facility in Texas, which will serve as the company’s first U.S. establishment.

Despite Texas’ extreme weather conditions on miners, Holmes explained that Hive’s method of using 100% green energy to mine both Bitcoin and Ether (ETH) will not disrupt the state’s power grid. Holmes elaborated that Hive’s future Texas facility will operate as a solar farm, which will not be subject to ERCOT’s regulations. “There are various places in Texas that have the infrastructure that we need for this. There are also credits to ensure that we build a solar farm.”

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While Holmes is confident that Hive will soon be operating in Texas, he explained that the company has big ambitions for the facility, noting that it would require 300 megawatts of power. Given this, Holmes explained that Hive is wary of setting up in Texas too quickly, noting that a large-scale mining operation is risky in terms of timely delivery. “We don’t want to scare communities or disappoint our shareholders,” he said.

Issac Holyoak, head of communications at CleanSpark – a sustainable Bitcoin mining and technology company – also told Cointelegraph that the firm plans to open a mining facility in West Texas. While the bulk of CleanSpark’s miners are located in Georgia, Holyoak explained that the company has a co-location agreement in West Texas with energy company Lancium. He said:

“Lancium does controlled load response, so they build large data centers that can power up or down based on the power supply curve. If a lot of energy is required due to a hot afternoon, they can switch off to compensate. Alternatively, if there is low demand for energy, they can turn on and mine Bitcoin.”

According to Holyoak, CleanSpark and Lancium’s Texas-based mining facility will launch in December of this year. Like Hive, Holyoak noted that CleanSpark has benefited from miners in Texas shutting down since there is less network competition. But he believes it is beneficial for the company to have operations in Texas because of the abundance of renewable energy in the region, along with the welcoming nature of counties looking to bring in additional business from mining.

“It’s a very unique market and it has renewable resources that are extremely important for sustainable miners,” he said. With locations in Georgia and a few in upstate New York, Holyoak added that it’s important for CleanSpark and other miners to diversify their locations, noting that climate change and other extreme weather events can happen anywhere.

Will sustainable mining help Texas miners?

Although Texas-based miners are affected by intense heat, Holmes believes many of them are handling the situation well by shutting down when necessary. But as more sustainable miners enter the state, already established operators may want to rethink their mining techniques.

For example, Holmes explained, Hive educates governments in the regions where they are based to help them understand their long-term environmental, social and governance goals. He said:

“In Quebec, we have a 40,000-square-foot building with 30 megawatts of electricity, and we send the heat generated from our ASIC miners to heat 200 square feet of the building. The energy is recycled and is intended to accommodate the unique building structures of New Brunswick.”

When this is the case, Holmes noted that having a long-term sustainable vision when it comes to mining can be very beneficial. He added that Hive’s location in Sweden has software that ensures the company’s mining operations are down between 7am-9am and 5pm-7pm, five days a week. “These are sensitive times of high demand. We have a strategic relationship with the region to ensure our operations stop when needed,” said Holmes. He went on to share that Hive mines around 9.8 BTC and 100 ETH per day.

Taking a different approach, CleanSpark uses immersion cooling to mine Bitcoin. Matthew Schultz, executive chairman of CleanSpark, told Cointelegraph that the company is among the first large-scale data centers of its kind in North America to purchase immersion cooling infrastructure for its Norcross mining facility. He explained:

“Immersion cooling is a technique we use for Bitcoin mining. The mining machines are prepared by removing the fans and immersed in tanks of biodegradable mineral oil. This increases mining efficiency by an estimated 20%. The oil is recycled through the plant and reused as it runs through a heat exchanger that keeps the temperature around 125 degrees F.”

Holyoak added that most fan-based mining operations are kept cool by using ambient air, so warmer climates will affect the performance of the machines, but immersion cooling can help mitigate this factor.

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He noted that immersion cooling will not be affected by excessive heat. However, heat waves can increase energy prices which in turn can make it uneconomical to run machinery. According to Holyoak, this is likely the case with Riot, as the company last year announced the use of immersion cooling at its Whinstone facility.

All things considered, industry experts believe that using clean energy sources will help miners win against climate change. Elliot David, carbon management specialist at Sustainable Bitcoin Protocol – a company that verifies sustainable Bitcoin mining practices – told Cointelegraph that based on recent events, every mining company will need to think about climate resilience, whether they are based in a warm climate like Texas or a cold climate like Norway:

“Using clean energy sources is also an important solution because, although intermittent, energy systems are all really exercises in balance. The web must meet demand with supply, and flexible loads like Bitcoin make these balancing acts much easier.”