Bitcoin miners are again in the hot seat, with recent revelations from The Economist causing a stir. Environmental activists have long criticized the industry for its energy consumption, and now, new claims have reignited the debate.
It’s important to explore what this could mean for crypto’s future. Join us as we dive in.
Bitcoin Miners Holding Texas Electricity Hostage?
The controversy centers around the Electric Reliability Council of Texas (ERCOT), responsible for managing the state’s power flow. It’s been reported that ERCOT pays Bitcoin miners not to operate their computers on days of high electricity demand. Last August, Riot Platforms made four times more money by simply curtailing their mining operations.
As per media report, this controversial practice has sparked public outrage, with American journalist Robert Evans stating that “the primary profit from industrial Bitcoin mining in Texas is being bribed by the state not to destroy the grid.”
Calls for Change
Critics are calling for reforms in how Bitcoin miners are charged for electricity. Ed Zitron, CEO of media and PR firm EZPR, expressed his frustration on social media, saying,
“This should not be how this works! Bitcoin miners should pay more for their electricity and be fined if they use too much, not be paid NOT to mine Bitcoin!”
The sentiment is echoed by others, with Noah Smith, a former Bloomberg Opinion columnist, predicting a strong backlash against the miners in Texas.
Is It Extortion?
Some commentators have gone as far as accusing Bitcoin miners of holding the Texas power grid hostage. Military technology journalist Kelsey D. Atherton suggested that the government should seize their property and cut them off the grid instead of paying miners not to work. Economist Nathan Tankus even likened this questionable “business model” to Enron, saying,
“Crypto has reinvented a more legally permissible version of Enron’s ghost orders which they were paid to cancel.”
A Different Perspective
However, not everyone agrees with the backlash. A well-known Bitcoin advocate, Pierre Rochard took to X to defend the practice. He pointed out that ERCOT’s Ancillary Services pay load resources, like Bitcoin miners, to stay on in reserve, just as they pay generator resources, like peaker plants, to stay off in reserve. This flips the narrative, suggesting that Bitcoin miners play a role in balancing the grid, rather than threatening it.
As the debate rages on, the future of Bitcoin mining in Texas and its impact on the state’s power grid remains uncertain. One thing is clear: the conversation is far from over.