City of Richardson worker Kaleb Love breaks ice on a frozen fountain Tuesday, Feb. 16, 2021, in Richardson, Texas. As snow shut down air travel and grocery stores, temperatures dropped into the single digits. (AP Photo/LM Otero)
At first glance, you may think the photo above is of Canada, Minnesota, or some other ice-cold region, but it was captured in Texas during the storm of 2021. These unwarranted weather conditions were due to the rolling blackouts induced by the Power Grid failure.
The Power Grid Has Failed Texas Greatly
The U.S. Power Grid powers and regulates all energy in America. The grid controls the flow of electricity between power plants, businesses, and homes. As the demand for electricity increases, the grid operators must constantly keep up. Failing to meet the demand results in outages and the risk of blackouts.
Texas runs a bit differently. The Lonestar State actually has its own power grid to avoid dealing with – you guessed it – the feds. The Texas grid, also known as ERCOT, is run by an agency named the Electric Reliability Council of Texas. ERCOT doesn’t cover the whole state of Texas. In fact, El Paso is on another grid, as is the upper Panhandle and a chunk of East Texas.
The Texas Power Grid vs. The 2021 Texas Snow Storm
If you remember, Texas had significant power outages and uncharted arctic temperatures in February 2021. This disaster revealed the weaknesses in the electricity system that is mainly designed for consistent and predictable weather conditions (which many experts believe to no longer exist).
The winter storm’s plunging temperatures caused Texans to turn up their heat; thus, spiking the electricity demand immensely. The energy imbalance caused prices to skyrocket from roughly $20 per megawatt to $9,000 per megawatt in the deregulated wholesale power market, and the state was NOT prepared for what was to come. Due to the extreme volatility, Texas had to induce rolling blackouts across multiple regions. (A rolling blackout is an intentionally engineered electrical power shutdown in which electricity delivery is stopped for non-overlapping periods over different parts of the distribution region).
Grid operators ensured that rolling blackouts were the last resort when the power demand overwhelmed the supply and threatened a broader collapse of the system. The rolling blackouts caused Texas neighborhoods to go an unfairly long period of time without power. This meant no heat, frozen pipes, impassable roads, and a lost sense of security. Not to mention, there were (at least) 700 deaths related to this incredible failure.
In Houston, a utility structure was encased in ice on Feb. 15, 2021. Gov. Greg Abbott on Tuesday declared the reform of the Electric Reliability Council of Texas an emergency item for the 2021 legislative session.
Credit: May-Ying Lam for The Texas Tribune
How Bitcoin Mining Might Fix the Texas Power Grid Issue
Last fall, Texas Governor Greg Abbott gathered dozens of cryptocurrency deal makers in Austin where they discussed an idea that seemed a bit contradictory. “Electricity-hungry” Bitcoin miners could shore up the state’s power grid, a top priority after the deep freeze that triggered blackouts that left hundreds dead.
Crypto enthusiasts believe the fix to this problem is to add another electricity consumer into the mix — a buyer who will take as much power as they’re given, whatever the time of day, and are just as willing to power down with a few seconds’ notice. These flexible buyers are bitcoin miners. Even Ted Cruz agrees.
“If you have a moment where you have a power shortage or a power crisis, whether it’s a freeze or some other natural disaster where power generation capacity goes down, that creates the capacity to instantaneously shift that energy to put it back on the grid,” Cruz said of the ability of bitcoin miners to shut down their operations within seconds. This is a feature that is hugely beneficial during times when energy needs to be shifted back to the grid to meet demand.
But, Not Everyone is on the Same Page
“Miners are a strain on the grid, not a help,” said Ben Hertz-Shargel of Wood Mackenzie, a provider of commercial intelligence for the world’s natural resources sector. Hertz-Shargel is concerned that bitcoin mining would only raise peak demand, ultimately adding stress to the system.
February 2021 vs. Present Day
- As a major winter storm descends on Texas, crypto miners are powering down operations to help ease the burden on the state’s already beleaguered power grid.
- The chief concern is that we might see a repeat of February 2021, when a deep freeze devastated large swaths of the state, leaving 10 million Texans without electricity. Hundreds of people died amid the multiday outage.
- Riot Blockchain has already shut down 99% of its operations at its Texas mine.
“As the storm has progressed, we have continued to decrease our power consumption by 98%-99%. So currently, we are only using 1%-2% of power,” said Trystine Payfer, Riot’s director of communications. Payer told CNBC Riot will continue to manage its power usage as needed until there is “no extreme stress on the ERCOT grid.”
Several other crypto miners across Texas have followed suit, involuntarily curtailing energy consumption in the run-up to the arctic blast.
A tweet from the CEO of Rhodium Enterprises.
Will Texas Become the Center of the Cryptocurrency Industry?
Texas politicians and entrepreneurs are hoping to become the epicenter of cryptocurrency. They hope for a synergetic experience since both the power grid and cryptocurrency networks are decentralized. China, the long-time leader of bitcoin mining, has recently cracked down on its efforts due to the government’s concern about crypto’s impact on climate change. Texas plans on taking China’s spot.
“North America’s largest bitcoin mine — owned and operated by Whinstone U.S. — sits just down the road from the old aluminum plant, about 60 miles northeast of Austin. The facility, which has added about 145 jobs, hasn’t filled the void created by Alcoa. But Whinstone U.S., which Riot Blockchain owns, is fast working to become a staple of the community: It helped rebuild the local dog shelter. It installed lights at the high school softball and football fields. It bought the town’s 32-foot-tall Christmas tree. Rockdale Mayor John King noted the company funds live streaming for the high school sports events and donate fireworks for graduation.” And more expansion plans are to come.
Can Bitcoin strengthen the grid’s resilience by balancing the supply and demand of energy? Let us know what you think in the comments.
