The consulting firm calculated that crypto mining operations currently require at least 1,787 megawatts of electricity to serve their consumption needs, which equates to 2.2 percent of ERCOT’s overall base-load.
Crypto mining operations in Texas have increased wholesale power prices by $5 per megawatt-hour during low demand days, according to new research.
That equates to about $1.8 billion annually — or an increase of 4.7 percent, according to the findings. Released recently by the Scotland-based Wood Mackenzie energy consulting firm, the research largely reaffirms a separate analysis conducted earlier by The New York Times.
“These figures are conservative, accounting only for mining during ‘blue sky’ hours when prices are under $15 a megawatt-hour,” the Wood Mackenzie report noted. “Bitcoin mining is likely to have stronger impacts on the grid over time as the number of larger and more power-hungry mining facilities is likely to grow.”
The Wood Mackenzie consultants explained that intense energy consumption by crypto miners has forced ERCOT to lean more heavily on comparatively expensive-to-operate generators to maintain grid reliability. As a result, wholesale energy prices during non-shortage hours have increased to levels higher than otherwise would be expected.
The consulting firm calculated that crypto mining operations currently require at least 1,787 megawatts of electricity to serve their consumption needs, which equates to 2.2 percent of ERCOT’s overall base-load. Many experts expect that that share will increase dramatically in the coming months and years – especially if Bitcoin prices increase.
Some state political leaders, including Gov. Greg Abbott and U.S. Sen. Ted Cruz, have joined with industry officials in touting what they term crypto mining’s reliability advantages. They note, for instance, that crypto operators possess a nearly unique ability to rapidly ramp-up or ramp-down power consumption in response to grid conditions. They also say that the influx of crypto mining in Texas will encourage more generation construction, and that mining operations narrow the peaks and valleys in wholesale energy prices.
“Bitcoin miners do increase prices overnight and in times of low demand because they soak up low-cost power when consumers don’t need it,” Lee Bratcher, president of the Texas Blockchain Council, recently told Chris Tomlinson, a Houston Chronicle business columnist. “Bitcoin miners do not increase prices during times of high demand because, as the data shows, they turn off before prices hit their breakeven, which is around $100 per megawatt-hour right now.”
But as Tomlinson notes, crypto operators appear to be launching mining operations faster than generation companies can build plants to serve them. As a result, “the higher demand during temperate periods raises prices for everyone by keeping older and more polluting power plants operating,” Tomlinson wrote in an October 13 column.
Miners also drive up costs by entering into programs that can bring them multimillion-dollar payments in exchange for shutting down operations. As an example, Riot Platforms, a bitcoin miner in Rockdale, took in $31.7 million in August for curtailing demand. That equates to more than three-and-half times the $8.6 million it made from producing Bitcoin that month.
The Texas Legislature earlier this year considered Senate Bill 1751 that would have limited the participation of crypto miners in paid demand response programs. The bill passed the Senate but eventually failed in the House.
ERCOT currently has a rule under consideration that would create new interconnection requirements for crypto mining operators and other companies that require large amounts of electricity. However, the proposal faces push back from some large industrial users.