The Electric Reliability Council of Texas (ERCOT) said this week that it’s still working on a response to inquiries from members of Congress about whether its approach to crypto mining is putting undue pressure on the state’s power grid, ripping off ratepayers and contributing to climate-damaging pollution.
Sen. Elizabeth Warren, D-Mass., raised the concerns and requested detailed information about ERCOT’s handling of crypto mining in an Oct. 12 letter signed by two other Senate Democrats and several House Democrats, including Rep. Al Green of Houston.
Warren asked ERCOT’s new CEO Pablo Vegas to provide answers no later than Monday.
“ERCOT is still working on a response and will publish when ready,” according to a statement late Monday from the state’s main electric grid operator. “No further updates at this time.”
A September report from the White House Office of Science and Technology Policy cited estimates that overall global electricity usage for crypto assets runs more than the total annual usage of many individual countries, such as Argentina.
Warren and the other lawmakers who signed the letter highlighted those figures and indications the amount of electricity consumed by crypto mining operations is likely to grow.
“All of this energy use is resulting in substantial amounts of carbon emissions and other adverse air quality impacts,” the lawmakers wrote. They suggested mining operations have been lured to Texas by relatively cheap electricity rates and lax regulations.
“Given the impacts of cryptomining on the climate, the grid and to ratepayers, ERCOT’s support for this industry is irresponsible and highly concerning,” they wrote.
They warned about the threat of disruptions from extreme weather, pointing to both the recent summer heat waves and the February 2021 winter storm.
The lawmakers also raised concerns about “demand response” programs in which large energy-consuming operations are rewarded for curtailing their usage when demand is particularly high.
“In simple terms, the Bitcoin miners make money from mining that produces major strains on the electric grid: and during peak demand when the profitability of continuing to mine decreases, they then collect subsidies in the form of demand response payments when they shut off their mining operations and do nothing,” Warren and her colleagues wrote.
According to the White House report, high temperatures on July 11 resulted in high electricity demand and prompted ERCOT to declare a grid emergency event. Bitcoin miners responded by curtailing their power usage.
“In all of July 2022, a single publicly traded Bitcoin miner who operates a facility in Texas earned $9.5 million from the demand response program from the Texas grid, which was more than the value of the 318 bitcoins the facility produced in the same month,” according to the report.
Warren’s letter posed a series of questions to ERCOT soliciting information such as how much electricity is being used for cryptomining in the state and how many tons of carbon dioxide emissions have resulted from that usage.
The letter asked about expectations for future expansion of cryptomining in the state, as well as any plans ERCOT has in place to handle the increase and protect consumers from higher costs.
The letter writers also want to know details about any curtailment agreements ERCOT has with the mining companies and whether it has any estimates or models regarding how mining activities affect local families and businesses.
In a press conference shortly after the lawmakers sent the letter, Vegas said he was looking forward to responding and referred to “some perspectives that were implied in that letter that were not accurate.”
In particular, Vegas pushed back on the idea that Texas provides any special subsidy to cryptominers. He said the miners can take advantage of certain programs the same as any other large energy consumers, from steel refiners to car manufacturers.
“They have the same right to do that as anybody else,” he said. “They don’t get any special subsidy for doing so . . . And so we look forward to answering the questions and explaining how we serve these types of businesses here.”
In an interview, Texas Blockchain Council President Lee Bratcher made similar points and said miners are simply well-positioned to use such programs because of the nature of their operations — and that’s a good thing.
He characterized miners as heroes rather than villains when it comes to both reinforcing grid reliability and tackling climate change.
Bratcher noted grid management is difficult in part because demand can fluctuate greatly based on the time of day. Cryptomining can help because it represents flexible demand that can be curtailed immediately when necessary, functioning as a “demand-side battery,” he said.
Renewable energy developers also are fans of cryptomining because it can help make the budget work on renewable projects, he said.
Crypto operations result in efficient use of energy that would likely otherwise go to waste, he said.
“Mining does consume a lot of power but it consumes the kind of power that we want it to consume,” he said. “They are not going to come to Houston, Texas, where power supply is low and demand is high. They are going to go to West Texas or Central Texas where there is excess supply and not a lot of people to use it.”
In a statement this week, Bratcher said the strength and health of the state’s grid is important to the industry and it has a good working relationship with ERCOT.
“With her home state facing high energy prices and low inventories of essential fuels like diesel and heating oil heading into winter, we advise Sen. Warren to focus her efforts closer to home,” Bratcher said.
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