07 Aug 2022

A Texas bitcoin miner earned more turning off its machines than mining bitcoin in July

Texas' electricity demand soared to critical levels in July as a heatwave hit the state, and the grid operator paid flexible consumers to reduce their electricity usage. One of these was bitcoin miner Riot, earning $9.5 million by turning off its machines.
Source: Riot Blockchain (July production update)
Riot generated $9.5 million worth of power credits in July, significantly more than their bitcoin production this month of 318 BTC, worth $6.9 million at the average July BTC price of $21,634.Riot earned these power credits by turning off its machines as part of its participation in ERCOT's 4CP program. Electricity consumers who can curtail consumption during the highest-load 15-minute intervals in June, July, August, and September earn power credits that they can credit against power invoices the following year.In addition to the 4CP program, Riot participates in other demand response programs. Riot has a complex power strategy that lets them take advantage of the unique interruptibility of bitcoin mining as an electricity-consuming process. By adjusting its facility's electricity consumption based on grid conditions, Riot strengthens Texas' electric grid and is paid handsomely for providing these energy services.To earn these power credits, Riot curtailed 8,468 MWh in July. That means that they earned $1,122 per MWh of energy curtailed. If they had directed this energy to mining bitcoin instead, they would have earned only about $140 per MWh, making them heavily financially incentivized to curtail production.
Source: Riot Blockchain (July production update)
These power credits and other demand response payouts give Riot an industry-leading estimated electricity price of $29 per MWh. Other industrial electricity consumers can't achieve such low electricity rates, proving bitcoin miners' unmatched value to the grid.Why do bitcoin miners have the opportunity to provide these demand response services to the grid? Bitcoin mining is an energy-intensive and stable load that can be rapidly adjusted up or down with extreme precision at no extra cost. These factors make it the most flexible electricity-consuming process that exists.
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