Riot Blockchain has earned more power credits than Bitcoin

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rows upon rows of cables attached to computer units and fans sit on the shelves in the warehouse.  A lonely man stands at the far end of these machines.

The bitcoin mining machines at the Whinstone Bitcoin mining facility in Rockdale, Texas, owned and operated by Riot Blockchain.
Photo: MARK FELIX / AFP / AFP (Getty Images)

At least one large bitcoin mining operation in Texas that wasn’t actually mining a lot of bitcoins this season record heat made millions of dollars in profits, more than they would have if they had continued mining without interruption. It is thanks to the power purchase agreements signed with the local grid, which allow them to sell their previously purchased electricity to the supplier for a tidy sum.

Riot Blockchain itself announced it had earned about $ 9.5 million in energy credits from multiple times it shut down its mining rigs. This was even more than the amount the company earned by selling bitcoin that month. The company’s page claimed to have sold 275 bitcoins, with net proceeds of just $ 5.6 million. This is compared to last year when the company claimed to have produced 444 bitcoins, worth around $ 16 million just before the price of BTC actually increased towards the end of 2021.

This net profit proved that despite the cryptocurrency market downturn and mining disruptions, these companies are still on track to continue with their incredibly power-hungry operations. Digiconomist bitcoin energy chart shows that kilowatt hours per year peaked in early June, but then declined throughout June / July. That line is starting to rise again and even at its depleted state it is still far above the U.S. bitcoin energy consumption in March 2021.

Riot Blockchain has included this handy chart to show that they have made a net profit thanks to their energy purchase agreement with ERCOT.

Riot Blockchain has included this handy chart to show that they have made a net profit thanks to their energy purchase agreement with ERCOT.
Graphic: Riot blockchain

The Texas Electric Reliability Council, AKA ERCOT, had he asked businesses turn off regularly to save electricity throughout the month of July. Riot and its massive 750-megawatt bitcoin mining facility in Rockdale, Texas have reduced power multiple times during peak demand periods. Of course, many of the dozens of large-scale bitcoin mining operations too cut the activity in the last month so as not to exceedunderline the often overloaded grillbut Riot remains the largest coin miner in the Lone Star state.

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The amount of bitcoin produced in the last month was 318, 28% less than in the same month last year. Although the companies publicly accepted the arrests in order to preserve the grid, they also avoided raising electricity prices during peak loads.

ERCOT provides energy purchase contracts which are usually defined for a year, but Lee Bratcher, the president of the Texas Blockchain Council, told Gizmodo in a phone interview that only a handful of the largest bitcoin miners actually have these PPAs. Those who do, like Riot, can take advantage of the need to reduce power, while other miners simply have to make do.

The Texas Blockchain Council networks and promotes the many cryptocurrency mining operations in the state. Bratcher called these PPAs “a good deal” for ERCOT, as it can regain the power needed for the rest of its network during peak hours.

At the same time, the massive levy of these mining operations is expected to increase. The Texas grid system has said that Texas cryptocurrency miners will net six gigawatts of demand within the next year. Democrats in Congress have put on guard the seven largest mining platforms in the United States draw energy equivalent to all residential homes in the city of Houston. These cryptocurrency miners are expected to get bigger and bigger over time.

Bratcher said most Texas mining operations voluntarily stopped operations once local operations had been price of power on ERCOT’s grid has surpassed $ 180 or more per megawatt hour, which would basically result in a negative net cost to mine their bitcoins. The shutdown essentially eliminated costs and revenues, but the lost opportunity cost for many of these companies was hundreds of thousands or even millions, depending on the fluctuating price of cryptocurrencies relative to the overall cost of energy.

So will it happen again? After everything, the National Oceanic and Atmospheric Administration expects more warm above average in August. Texas is one of the most likely places for temperatures to rise above historical averages, including triple-digit heat. In the statement, Riot CEO Jason Les said his company “has consistently and proactively pursued access to low-cost, large-scale energy as part of its long-term fixed-rate power contracts. “.

Bratcher said most of these deals will essentially allow companies like Riot to continue selling unused energy if energy demand increases to a point that makes closing reasonable. So even if we get even more extreme heat (as climate scientists said it is more and more likely) which won’t necessarily stop cryptocurrency miners from looking for digital gold.

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