Warren, Dems seek answers to crypto effect on Texas grid

Democrats led by Sen. Elizabeth Warren are investigating how the cryptocurrency mining industry affects the main grid in Texas, citing concerns about reliability and climate change.

In a Wednesday letter, Warren and six other Democratic lawmakers asked the Electric Reliability Council of Texas (ERCOT) for data on the power used by crypto mining, the associated carbon dioxide emissions and the impact on the electricity costs of Texans.

The letter also requested details of payments to cryptocurrency mining companies to reduce their energy use under programs that kick in for industrial customers when power supplies are tight. Critics have raised concerns that miners – especially those for the energy-intensive Bitcoin currency – were given heavy subsidies to limit usage this summer during heat waves, which also helped the crypto industry avoid higher electricity prices.

“Simplified, the Bitcoin miners make money from mining operations that produce heavy loads on the electrical grid: and during demand peaks when the profitability of continuing to mine decreases, they collect subsidies in the form of demand response payments when they shut down their mining operation and do nothing,” the Democratic lawmakers said in the letter.

The payments, Democrats added, “contribute to a larger problem of letting consumers, rather than electricity-demanding industries like cryptominers, bear the cost of maintaining the power grid.”

The letter was also signed by Sens. Sheldon Whitehouse (DR.I.) and Ed Markey (D-Mass.) as well as representatives Al Green (D-Texas), Katie Porter (D-Calif.), Jared Huffman (D-Calif.) and Rashida Tlaib (D- Mich.).

Texas has become a hub for cryptocurrency miners, fueling concerns about the power grid. Crypto mining requires large amounts of electricity and runs almost around the clock. That can sometimes force grid operators to start up natural gas or coal-fired power plants that would otherwise sit idle.

Industrial-scale crypto miners consume an estimated 2 gigawatts of power online in Texas already, according to an April presentation by the Texas Blockchain Council. There are 1000 megawatts in a gigawatt. One megawatt can power about 200 homes during peak demand, according to ERCOT, whose region accounts for about 90 percent of the state’s electricity load.

ERCOT estimates that an additional 27 GW of crypto operations could be added to the grid by 2026, an amount that represents about a third of the grid’s normal peak demand.

This summer, ERCOT’s peak demand broke several records amid triple-digit heat, with peak demand hitting 80 gigawatts for the first time ever. Supply sometimes applies to conservation calls for businesses and private users. In February 2021, a prolonged cold snap created a power crisis in Texas, where millions of customers lost power.

The crypto industry has highlighted its ability to be flexible and reduce demand. Lee Bratcher, president of the Texas Blockchain Council, said Washington Post that more than 95 percent of the state’s industrial-scale Bitcoin mines cut power consumption by more than 1,000 megawatts collectively for a number of hours during a heat wave in July.

The industry has also said it performs an online service by being able to increase demand and help match supply and demand. Some mines are located near wind farms in West Texas, where poor connectivity to populated cities means power can go unused.

Bratcher and ERCOT did not respond to requests for comment in time for publication.

Warren (D-Mass.) has been a leading critic of cryptocurrency, calling for more oversight of the industry’s economic and environmental impacts.

In a survey released over the summer, Warren and other Democrats found that seven major crypto miners who responded to data requests operated more than 1,045 megawatts of electrical generation capacity nationally, which Warren and her co-authors estimated was the equivalent of 830,000 homes.

The report also found that these miners planned to increase capacity by almost 230 percent in the coming years for an increase of around 2,400 MW.

“And all of this energy use results in significant amounts of carbon emissions and other negative effects on air quality,” the Democrats wrote in the latest letter.

Lawmakers in New York passed a bill in June that would impose a two-year moratorium on new air permits for fossil fuel plants that power cryptocurrency miners (Energy line15 June). Gov. Kathy Hochul (D) still has not signed the bill into law.

Officials in Texas have not signaled they will consider a similar moratorium or other restrictions, although the industry’s online effects are being closely watched.

Ben Hertz-Shargel, global head of grid edge at Wood Mackenzie, told E&E News that the data request from the Democrats could help policymakers get a better handle on the industry and could help support more regulations to reduce the most energy-intensive forms of mining. Bitcoin in particular, he said, relies on a verification process that uses a huge amount of electricity, while other crypto platforms such as Ethereum have moved to a cleaner process.

In an interview, Hertz-Shargel said the power grid faces a number of unique challenges, from extreme temperatures to wildfires and droughts to higher natural gas prices and inadequate grid components.

“Bitcoin mining represents a massive burden on the grid for regulators to control, and they are keen to prevent it from contributing to the energy security and climate challenges they already face,” he said.