One way Bitcoin miners can make money: Selling electricity back to Texas

Beats screwing around actually crafting these unloved tokens

A Bitcoin mining outfit said it made $9.5 million in credits selling electricity back to the power grid of Texas at a premium when energy demand rose to record levels during a heatwave last month.

Riot Blockchain, headquartered in Colorado, operates one of the largest crypto-crafting facilities in America. Located in Rockdale, Texas, the 750 MW site is home to tens of thousands of Antminer S19 ASIC-powered systems that sit in what look like sinks filled with a heat-absorbing fluid to keep the hardware cool as it constantly runs software to mine Bitcoins.

Last month, like other large-scale miners in the state, the biz decided to power down some part of its mining machinery as energy usage and prices in Texas soared.

Demand for electricity in the Lone Star State rose as people turned up their air-con and other equipment amid a scorching heatwave that drove temperatures beyond 37 degrees Celsius (100 degrees Fahrenheit). This strained the state's electrical grid, which is operated by the Electric Reliability Council of Texas (ERCOT).

"As energy demand in ERCOT reached all-time highs this past month, the company voluntarily curtailed its energy consumption in order to ensure that more power would be available in Texas," Riot Blockchain CEO Jason Les said on Wednesday.

The company disclosed it cut back a total of 11,717 megawatt-hours, an amount Riot said could power 13,121 average homes for a month (that works out if you use Uncle Sam's average figure of 893 kWh per US home per month. There are more than 11 million homes in Texas, mind you.)

And here's the canny part: seeing as it was doing less work, Riot resold the electricity it had previously purchased for its mining rigs back to ERCOT at a premium price during July's scorching temperatures. The biz said it was reimbursed in power credits.

"By providing power back into the ERCOT grid during periods of peak demand, the company estimates that power credits and other benefits from curtailment activities totaled an estimated $9.5 million, significantly outweighing the reduction in [Bitcoin] mined," Les said.

That $9.5m is equivalent to 439 Bitcoin in July prices. For comparison, it produced 443 Bitcoin July 2021. Riot also still mined 318 coins last month from its remaining capacity. Bear in mind, BTC was worth more a year ago.

So, in July 2021, it mined about $15.5 million in Bitcoin. And in July 2022, it mined about $7 million in BTC, and recorded $9.5m in benefits from scaling back its output. Last month comes to about the same or a little more than a year ago. Maybe that was as planned: selling back enough power to offset the fall in Bitcoin's value.

Now that the price of Bitcoin has crashed from November's high of $64,000 apiece to $22,800 today, it would seem to make sense to reduce mining output, and ergo electricity usage, and sell that power back at a price higher than what it was bought at, if possible. The crypto-market as a whole went into free fall from late last year amid economic uncertainty, rising inflation, and other macroeconomic factors.

Riot is participating in the 4 Coincident Peak program, an effort led by ERCOT to stabilize energy consumption over the four summer months, Bloomberg reported. The crypto-biz agreed to turn down its Whinstone mining facility in Rockdale to give the state's mostly independent electrical grid a bit of a break during that period.

The outfit is meanwhile building a gigawatt facility in Navarro County, Texas, due to begin operating in 2023. ®

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