- Riot Blockchain earned a remarkable $31.7 million in energy credits from ERCOT in August after powering down its machines
- ERCOT’s role has proved a lifeline for Bitcoin miners during troubled times
- Texas-based Bitcoin miners restrict their activities during times of high demand in order to free up electricity
Riot Blockchain, the prominent US-based Bitcoin mining company, announced on Wednesday that it had earned a staggering $31.7 million in energy credits from the Electric Reliability Council of Texas (ERCOT) in August. These credits were obtained through Riot’s voluntary reduction of energy consumption during a scorching heatwave and dwarfed the $8.9 million it made from actual Bitcoin mining. During such times, Bitcoin miners turn off their machines to free up electricity for residents and businesses but are allowed compensation from the scheme.
ERCOT is a Lifeline for Bitcoin Miners
ERCOT was founded in 1970, with Bitcoin miners seeing it as one of the core attractions of operating in Texas following China’s Bitcoin mining ban in 2021. The downturn of the crypto market since 2021 has massively affected the income of Bitcoin miners and seen a huge shift in their earnings; Riot’s revenue skyrocketed by nearly 8,000% in 2021 but 2022’s market collapse resulted in a net loss of over $500 million for the year.
Energy costs have also impacted sector profitability, prompting companies to diversify income sources. ERCOT, with its “demand response” programs, compensates Bitcoin miners for reducing energy consumption during peak periods, maintaining grid stability.
In announcing the bumper compensation payout, Riot CEO Jason Les emphasized the significance of these credits in reducing the company’s Bitcoin mining costs and establishing Riot as one of the industry’s lowest-cost producers.
Riot’s recent energy credits include $24.2 million from selling energy back to ERCOT and $7.4 million in demand response credits. Riot has consistently scaled down operations at its Rockdale mine to support the state’s grid during high-demand periods.
Deal Benefits Everyone
ERCOT’s partnership with Bitcoin miners has benefits for both parties, with miners helping stabilize the grid during supply surpluses and receiving compensation for reducing power consumption during peak periods. Texas has embraced the Bitcoin mining industry through such incentives, despite legislative attempts to restrict these benefits in 2023.
Bitcoin miners typically weigh the compensation offered by grid operators against potential losses from halting mining operations. The practice is viewed as mutually beneficial, ensuring grid stability and offering miners an economic incentive.
Unlike other US regions connected to interconnected grids, Texas relies heavily on ERCOT, an independent and deregulated energy network. This uniqueness highlights the importance of controllable load resources like Bitcoin miners as a form of insurance for grid stability in Texas’ energy landscape.