Feb 1, 2023
Texas Bitcoin Miners Face Damage, Higher Power Costs From Ice Storms
(Bloomberg) -- Bitcoin miners in Texas are suffering from yet another storm as they scale back operations due to spiking electricity costs while facing damages on their machines from the extreme weather.
A winter storm dumping ice across parts of the state left more than a quarter million power consumers in the dark on Wednesday, boosting energy prices over the last few days. That has led some Bitcoin miners to switch off their machines and send electricity back to the local power grid. Last year, they took similar measures during the historic heat wave in Texas and a winter storm across North America.
Besides soaring energy power costs induced by the storm, some miners are also suffering from damages on their machines as their sites are not well-equipped for the weather.
“The duration of curtailments is about six hours a day, starting from Monday,” Can Zhao, chief marketing officer at crypto-mining company JDK Capital, which has a site with 20-megawatt capacity based near Dallas. “We are seeing 25% loss in computing power compared to a normal day for the site.”
The short-term effects from the curtailment do not affect the company’s long-term prospects, Zhao said.
The vast majority of Bitcoin miners in Texas suspended their operations last year when a climate change-induced heat wave pushed the state’s power grid to its limit. Some of the largest miners in the states, including Riot Platforms Inc., made a profit by selling power back to the grid at that time.
Bitcoin miners use specialized computers to validate data and process transactions on the Bitcoin blockchain in exchange for rewards in the form of the cryptocurrency.
Those operations tend to be energy-intensive, making electricity the biggest operating cost for the mining companies. Bitcoin miners in Texas have curtailed their operations since the storm sent electricity prices soaring, said Lee Bratcher, president of Texas Blockchain Council.
Some of the miners are suffering from even more losses brought by the storm besides the curtailment.
“The miners with mobile containers, many of which were not designed to be weather-proof for the winter storms, are being impacted and some damages have occurred to their miners.”
Riot, which is one of the largest Bitcoin mining companies in Texas, did not respond to requests for comment about the ice storm’s impact on its operations.
©2023 Bloomberg L.P.