Lawmakers claim that ERCOT’s support for cryptocurrencies is irresponsible as miners are paid to offset the power burden from the grid at the expense of Texans. A group of U.S. lawmakers led by Sen. Elizabeth Warren asked the Texas Electricity Reliability Board (ERCOT) to provide operational and financial information about bitcoin miners in Texas.
Texas is home to about 30 encrypted mining companies that consume about 9% of the world’s mining power. By the end of 2023, the emission rate is expected to rise by up to 20%.
In a letter addressed to Pablo Vegas, CEO of ERCOT, lawmakers claimed that “cheap labor and non-intervention regulation” led to the influx of cryptocurrency miners into Texas, making the state an “unregulated safe haven.”
Lawmakers said that support for the ERCOT policy for miners had increased their demand for grid power, affecting the population’s electricity bills.
“Due to the impacts of cryptocurrency mining on climate, network and price payers, ERCOT’s support for this industry is irresponsible and deeply concerning.”
Lawmakers warned that growing demand for power by miners could expose the grid to another collapse, similar to the February 2021 blackout that left 246 people dead.
The “demand response” of ERCOT makes miners richer
The ERCOT demand response program is designed to pay energy consumers to voluntarily reduce their use during periods of high energy demand.
Earlier in June, miners in the state collectively provided up to 1,000 megawatts of power. However, lawmakers argued that economic incentives were driving their decisions.
Texas’ largest miner, Riot Blockchain, reportedly made about $9.5 million by participating in the ERCOT program, which was $5.6 million higher than they made from the sale of Bitcoin in July 2022.
According to the legislators:
“Bitcoin miners earn money from mining that produces significant pressure on the electric grid: during peak demand when the profitability of continuing mining falls, they then collect subsidies in the form of demand response payments when they stop mining operating and do nothing.”
Lawmakers added that it was unfair to pay crypto-miners to eliminate the energy burden they added to the grid at the expense of price payers.
Lawmakers asked ERCOT to provide details about the financial allocations to miners, the effects of energy cost on families and local businesses, and the amount of carbon emissions from miners’ operations.