Why are Bitcoin miners shutting down in Texas?

Bitcoin (CRYPTO: BTC) miners are mothballing their specialised rigs in Texas as energy demand in the Lone Star state surges to records amid a scorching heatwave.

Texas is home to some of the biggest global crypto miners, including Argo Blockchain, Riot Blockchain, and Core Scientific.

The United States attracted a flood of new Bitcoin miners following China’s crackdown on crypto mining in early 2021.

Miners run massive series of computers to verify transactions on the blockchain, earning tokens in return. And the energy consumption is jaw dropping. The University of Cambridge estimates that in 2020 Bitcoin used as much energy as all of the Netherlands, a nation of 17 million people.

Crypto miners flock to Texas

Texas has become a particularly attractive location for the miners due to its relatively low electricity prices and limited regulations of the industry. And, as Bloomberg reports, the Electric Reliability Council of Texas (ERCOT) forecasts that crypto mining activity will continue to grow.

Miners are expected to increase their electricity demand by as much as six gigawatts by this time next year. That’s equivalent to the energy use of every home in Houston, a city of more than two million people.

Why are Bitcoin miners shuttering their rigs?

The shutdown in Texas will only last for the duration of the current, heat wave fuelled, energy shortages.

In an agreement with the state, miners need to shut down their equipment during times of scarce capacity.

Lee Bratcher, president of Texas Blockchain Association explained (quoted by Bloomberg):

There are over 1,000 megawatts worth of Bitcoin mining load that responded to ERCOTs conservation request by turning off their machines to conserve energy for the grid This represents nearly all industrial scale Bitcoin mining load in Texas and allows for over 1% of total grid capacity to be pushed back onto the grid for retail and commercial use.

Core Scientific has around 15% of its own Bitcoin machines operating out of Texas, with the rest spread across five other US states.

CEO Mike Levitt commented:

Currently, 100% of the machines located in Texas have been powered off to provide support for the ERCOT grid. In troubled situations including the current Texas heat event, we have been curtailing power and will continue to curtail power as needed.

Bitcoin miners across the world have come under pressure as the token – along with most every crypto – has collapsed in 2022.

Bitcoin is down 4% overnight, currently trading for US$19,955. The token reached all time highs of US$68,790 on 10 November last year.

The post Why are Bitcoin miners shutting down in Texas? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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