When members of Congress ask state officials: cryptocurrency mining in texashere are some questions and answers about the rapidly growing industry.
What exactly is cryptocurrency?
Bitcoin and other cryptocurrencies are sometimes referred to as “virtual currencies.” It can be used to conduct financial transactions without the need for banks, credit card companies or other intermediaries. They rely on a technology called blockchain. For Bitcoin, for example, miners are rewarded in cryptocurrency after solving complex computational problems to create and add new blocks. Companies are building massive computing facilities to solve these complex problems in order to earn Bitcoin.
Are any of these operations located in Texas?
Yes — take care.a Bloomberg article Since the beginning of the year, citing estimates by mining platform Luxor Technologies, Texas has more mining activity than any other state, up to 25% of the total in the United States. Easily available land, cheap electricity, and friendly regulators are cited as reasons why the state is so attractive to cryptocurrency miners.State authorities are taking action Welcome Take action and encourage further follow-up.Governor Greg Abbott tweeted in february “The Lone Star State is poised to become a global leader in blockchain and cryptocurrency.” The state already has about 10 large-scale facilities connected to the grid, with many more to come. is under construction.
It sounds like a lot more jobs and tax revenue, but what’s the problem?
Mining operations require large amounts of electricity to power all these computers. Massachusetts Democratic Senator Elizabeth Warren and other Democrats sent a letter last month to Pablo Vegas, the new CEO of the Texas Electric Reliability Council, pointing out concerns about cryptocurrency mining and its use of electricity. They say that large facilities already connected to the grid routinely use more than 2 gigawatts, or the amount he needs to power every home in the city of Houston, more than twice as much. I wrote that there is They also wrote that ERCOT’s long-term projections continue to rise, with over 27 GW of crypto load interconnected over the next four years. According to the letter, energy researchers say it’s an “astronomically impossible” amount to add in such a short amount of time.
Critics worry that imposing so much additional demand on the grid could threaten its reliability and make the grid more costly. other taxpayers in the systemRiot Blockchain, based in Castle Rock, Colorado, has run into local opposition over plans to build a massive mining facility in Corsicana. Climate activists have also expressed concern about the carbon emissions associated with the generation of electricity used to power mining facilities.
Will Congress do anything about this situation?
probably. In a letter last month, Warren and her colleagues suggested that ERCOT was irresponsible in encouraging cryptocurrency mining and considered the downsides associated with its operation. They requested detailed information from Grid’s operators about their cryptocurrency mining operations and interactions with Grid by last Monday.Elcott is expected to provide that response soon. Democrats may decide to hold hearings on the situation or introduce relevant legislation, but if Republicans, as expected, regain control, how such efforts will play out in the new Congress. Controversy over Texas’ power grid and its reliability has come under political scrutiny after a February 2021 storm that caused power outages across the state and killed hundreds. .
what is the industry saying?
Texas Blockchain Council Chairman Lee Bratcher said in an interview that cryptocurrency miners are well positioned to support the grid by providing flexible demand that can be easily reduced in times of emergency. In this way, mining operations can act as a “demand-side battery” and improve grid reliability. Bratcher also said mining operations can help the climate by supporting new renewable energy projects. In a statement this week about Warren’s letter, Bracher said maintaining a strong and healthy grid is important to the industry and that it has good working relationships with leaders in Texas.