Cash News
Crypto mining facilities must now register with the state and report their projected energy consumption for the next five years.
This is a positive step to ensure reliability in a state where crypto miners and data centers require vast amounts of power as they continue to set up shop in Texas.
This new rule, mandated by a 2023 bill authored by state Sen. Nathan Johnson, D-Dallas, is helpful, but the Legislature and state officials must remain vigilant to protect the grid from surging demands on power.
“This law will help ERCOT to have an insight into how much large, flexible load is out there,” Johnson told us. “It also allows for greater information flow between ERCOT and crypto.”
Texas officials are walking a tightrope. The light regulatory environment of the Lone Star State entices crypto miners to establish their operations here in the first place. Still, there is a delicate balance between energy production and consumption, and we need ground rules.
Crypto mining facilities that consume more than 75 megawatts of power are now required to register with the Public Utility Commission by Feb. 1 and report their projected energy consumption to the Electric Reliability Council of Texas. This way, the state can keep track of their energy demand and work closely with them. Cryptocurrency miners can reduce their power consumption quickly when demand on the grid is high.
The next level, explains Johnson, would be to allow crypto miners to operate a controllable load resource. This is a deal between the power consumer and ERCOT allowing power to be cut when the price reaches a certain point.
“We know we have large consumers. We can call them and tell them to stop buying power,” Johnson said.
There are still some legal obstacles to overcome before moving forward with this plan.
Crypto miners use specialized high-energy computers to validate transactions and to create cryptocurrency. In Texas, they can consume up to 2,300 megawatts a day. A single megawatt can power some 1,000 homes.
Energy demand in Texas is expected to nearly double in six years and much of this demand will come from large power consumers. Legislators are pondering the question of how much oversight is needed.
In June, Lt. Gov. Patrick’s Day warned about the need to set up guardrails for large energy consumers.
Right now, ERCOT can pay large power users who promise to reduce their consumption when needed. Crypto firms can also buy power ahead of time and sell it back to the state. Bitcoin miners have profited from these arrangements causing some controversy, but that is the nature of the current market.
But we don’t see this as a long-term solution. Over time, crypto power users need to demonstrate they can produce their own power, saving the market from the rush of their demands and compromising the grid.
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