Opens with a disingenuous "$86M owed, which will be paid for by Texas consumers" no, it already has been paid for by consumers when they bought the energy from them because they needed it. I'm trying to figure out if these people truly don't know how any of this works because they're uninterested or if they deliberately pretend like they don't because the truth is not condusive to the narrative they want to build.
Who is this they you speak of? Texas is a beautiful state, with a psychotic energy system, and a government that doesn’t represent the will of their people.
You've never been to Texas if you think it's beautiful lol. Its pretty in some places, particularly the desert and hills, but most of Texas is flat, muggy, hot, the forests are overgrown, pig farms and grain fields. Even the ocean is brown. California is beautiful. Texas is mid at best. But it has other things going for it.
The energy system in Texas is one of it's strengths, the government does represent the will of the majority and is probably the main thing the state has going for it, that and energy resources. People don't move there because it's beautiful, they move there because it is governed and run pretty sensibly.
As for texas being a beautiful state, I have no citations, just good memories from my many visits. I will grant you that there are a growing number of oil extraction / fracking hellscape in the state.
An article only talking about what voters may disagree with the government on? Why not address the other issues that keep getting these people reelected? They're winning on some platform. The article says mask and vaccine mandates, and only mentions that the people disagreed on the mask mandates. What about the vaccine mandates? Why leave the polling on that one out?
And a biased article that only cites critics. The Texas grid has had one catastrophic failure in living memory. It also has some of the cheapest electricity anywhere in the country, even the world.
This is known as a Virtual Power Plant.[0] In the case of this cryptocurrency company, they are selling the electricity that they "would" be consuming if it wasn't being bought back from them. If they hadn't "sold" it back to the grid, it wouldn't have been available to be used by other customers.
What an absurd name for basically a big resistor generating heat you are paid to disconnect from the grid when it’s about to go up in flames. They need batteries not sudoku solver bots. Talk about doublespeak in this case, wow.
> If there is no buyer for excess solar/wind electricity, then it must curtail and earn less income.
Solar and wind have the lowest marginal costs of production, which means they'll win out on the wholesale power markets. Furthermore, Texas is a state with increasing population growth and increasing energy needs (hotter planet means more A/C, after all), and has regularly been setting all-time highs on daily energy consumption. So there'll always be a buyer for the excess electricity.
Look, this is Texas. It's not about base load energy production. This is a system that--several times this past year--is running at demand around 100% of supply capacity. That shouldn't happen; it's just bad industrial engineering.
The cryptocurrency mines aren't adding base load here. It's adding more load on a system that's already taxed to its limits, and justifying it as a good thing because "oh, we can get paid to turn it off if there's too much demand." People should be yelling at ERCOT for being an incompetent regulator that's letting the grid get away with too little supply (and that's what this article is sort of doing, except its anger is directed towards cryptocurrency mines, not ERCOT, so it's somewhat misplaced).
And, for what it's worth, cryptocurrency is kind of bad at base load. It's not using any reactive power.
A constant stream of demand that does not fluctuate and can be turned off at a moment's notice without any dire consequences, that's bad at base load? How so?
These heat waves and extreme cold events are purportedly unprecedented, due to climate change. Should we be surprised when electricity infrastructure designed for normal times gets strained? I've been in countries with rolling power outages, I wouldn't call the Texas grid badly engineered. Considering it's a standalone grid I'd say it's got to be fantastically engineered to have the uptime that it has, I don't think the UK even has such a resilient system.
> I don't think the UK even has such a resilient system.
Tell that to someone from the UK, and they're likely to laugh in your face. The UK has never faced rolling power outages; Texas faced that just two years ago (although ERCOT appears to have had some issues with the "rolling" part). Furthermore, I don't think the UK has ever had to go voluntary load-shedding measures; Texas had to do that several times this past month, and last summer, etc.
It's hard to say that the extreme cold event was uprecedented when the exact same thing happened in Texas but a decade prior, complete with learnings that would have prevented the breakdown of the grid (i.e., rolling blackouts) had they been implemented. And the extreme heat wave has been impacting, well, more or less the entire world, and most of the power systems haven't even had to suggest that customers use less power. This is stuff that is eminently predictable, and in most of the world, electricity capacity is planned under the basis of extreme demand scenarios, not normal demand scenarios. If Texas's grid is designed merely for normal demand, then that is a surprise that should have Texans up in arms about the incompetence of their electricity regulator.
Well when I say regular or normal, I don't mean an 80° sunny day, I mean one standard deviation from the mean. They take extremes into account, you can't take unprecedented extremes into account, by definition. It gets hot, and it gets cold, and the grid is fine. If the entire state of Nevada had a giant ice storm that covered nearly the whole state, I highly doubt that their grid integrated with the rest of their region would be able to handle it. Shit, California can't even do it on a good day.
Have you been to other parts of the world? Outside of Europe and the US, and a few recently well developed countries in southeast Asia, rolling blackouts are par for the course. I've spent 6 straight days without electricity before in a developing country, without any extreme weather event. Grids are hard to manage.
A grid needs a base load to function properly. Energy producers can't just scale up or down production whenever demand changes. When people talk about "solar and wind can't supply the entire grid we need batteries to store it" this is what they're talking about. Some amount of electricity must constantly be produced to keep the grid functioning. Nobody buys this energy and the cost of it is rolled into the energy people do buy.
So what if someone out there needed a lot of energy all the time? Well, you can sell that constantly produced energy to them, and whatever they pay for it customers don't have to pay for it. You can decrease prices, waste less energy (from a producer perspective; if you think bitcoin mining is a waste of energy it is wasted either way, but to the producer it is sold) and everyone wins.
But, in times of peak load, when that energy is used and needed, you need the newfound customer of it to be able to not need it on short notice. So you need a customer who isn't going to freeze to death without it. This is where bitcoin mining comes in. They negotiate a deal for the base load energy, buy it, then, when the grid needs them to shut down, sell it back. This is all done at pre negotiated rates and the energy is sold as an option, which in this case means on the condition that they have to sell it back if the producer or grid maintainer or state or whoever needs to use it.
I understand how it works. They need a different mix of generation capacity, grid interconnections and storage. Ideally, they'd have adaptive load like EV chargers that slow or stop charging in response to grid asks. This is just an abject planning failure incentivized by crypto waste, and most importantly what it isn't is a "virtual power plant." If the actual power plants turned off, would the virtual power plant be able to supply electricity?
> Energy producers can't just scale up or down production whenever demand changes.
They can with storage, and with power plants that have variable generation capacity - so not nuclear, but gas peaker plants, etc.
This site is pretty generic template agitprop. Industry and activist groups make things like this all of the time to frame certain issues they don't like in the worst possible light.
You can find this sort of stuff in lots of industries that have cash flows at risk that are trying to manufacture outrage in the voting public to create activists who will attempt to influence legislative priorities.
The actual positive is that Texas is the largest producer of wind and solar, by a pretty large margin. The problem is that it creates an excess of energy production from morning to mid afternoon. Having flexible users, like crypto miners, buy that energy offsets the occasional energy crunch where they are paid, with energy credits, to cut usage.
This works in theory, but the problem is, these miners are not actually a flexible user in practice. Every minute they’re not mining, they’re losing money in the sunk cost of (depreciating) hardware. For example, in Q2 2023, Riot (the biggest miner in Texas) recognized 66mm of depreciation on only 50mm in revenue.
Crypto mining can scale up and down extremely easily. They are a good fit for hydro, wind, solar, and nuclear where not using the energy means it’s simply wasted (at least until serious grid scale battery exists).
If you want to judge payers of electricity you should also look at video games. It is pure entertainment with no societal value beyond that. If that doesn’t bother you, maybe don’t judge what people want to electricity for if they buy it on the open market.
> They are a good fit for hydro, wind, and solar, and nuclear where not using the energy means it’s simply wasted
This is a persistent myth in crypto circles, but it doesn’t match up with the financials of any company I’ve seen. Instead what happens is that once you’ve paid to build up mining capacity, particularly for mining rigs, any downtime is extremely costly.
Miners are always racing against the clock of increasing hashrate and the next halving.
What I mean is, if the price of electricity skyrockets temporarily, it’s very easy to stop mining. They are extraordinarily sensitive to prices given there is a direct relationship to electricity and mining pool payouts.
That’s true, but being a damper when prices skyrocket is different from being a damper on the predictable 24-hour output fluctuations of wind or solar.
This is why judging the usage of electricity is a fool’s errand. The market has a price, and if I want to use it to heat my pool and power my air conditioners that’s my choice. The government should not prevent me from heating if a coat is sufficient, nor cooling if being naked is sufficient, if I’m willing to pay. If that argument makes sense, then using it to play video games, train LLMs, or mine crypto is simply a choice the market makes.
There are externalities of power consumption for which regulation (in the case of a single monopoly power grid, as is the case here) makes sense.
Large scale usage affects grid stability at specific occasional times. If it were just individual homes doing small scale mining across the grid, it would be different, but one can make a good argument that large scale crypto miner operations should be prioritized for unilateral load shedding in times of grid instability.
The power grid as currently designed and deployed in Texas is a shared resource and needs to be centrally managed to avoid tragedy of the commons situations.
If crypto miners don't like the shared rules for the shared resources, there's nothing stopping them from deploying their own wind, solar, and optionally storage.
Being connected to the public grid comes with benefits, and those benefits come with conditions of use, ideally set by consensus of everyone who benefits from and funds the grid.
I’m in agreement for that. But a total ban on crypto mining is absurd to me. It’s such a singling out of an industry, when so much IMO has no societal utility, that the only reason it could be banned is elite obsession.
Personally, the externalities of fossil fuel use likely necessitate approaching any unnecessary use of grid power at present as an imminent physical attack on all humankind.
Where the unnecessary line is drawn is up to individual opinion, but I think we should probably be banning nearly all large scale industrial consumption of power until the grid is net zero. It's not far off now, we just need to collectively decide that we are willing to spend for storage.
I also think we should immediately ban all personal IC engines (and HEAVILY tax all use of diesel (with regular automatic scheduled tax increases without limit), without which our civilization at present cannot function), but that is separate (but parallel) to grid disincentives.
Crypto mining 24/7 while the grid still uses petrochemicals for generation should probably be criminal today (as well as driving your F350 to Costco). I'm fine singling out any/all industry that is even remotely questionable so long as the grid is still dumping gigatons of CO2 into the atmosphere.
The prohibitionist's entire premise boils down to a lack of understanding for markets and the subjective theory of value. Your comment illustrates this well.
Some will value entertainment more than others. Teetotalers don't value alcohol and would ban it by citing social ills. Negative externalities are a magic hand-wave here, "The climate apocalypse is neigh! You must taboo the things I say!"
What looks like a crypto mine is in the upper left. Notice the new tent-like structures. some under construction, all the air-handling equipment, and the huge busbars of the power distribution system. Also notice the active parking lot.
The big plant at the lower right is a defunct Alcoa aluminum refining operation, sold in 2021. It looks like two of the long buildings that formerly housed aluminum electrolysis operations have been converted - they have what looks like air handling equipment outside and there is an active parking lot nearby.
The large substation to the northeast of the mining farm is left over from the Alcoa era. So heavy power was available at that site.
There are basically two places in earth that have a power market structured like Texas, Texas and the United Kingdom.
We have an extraordinary reliance on wind and solar, and broadly insufficient thermal generation to deal with generation falloff.
To be clear - I think wind and solar are great, and we should build more, but you also need a sizable amount of thermal generation (preferably nuclear) to provide for base load.
I also don't think thermal can be replaced readily with gas turbine, battery, pumped storage, or other forms of rapid spin up equipment.
Bitcoin (as what is effectively a big resistor) is useful as a artificial price support, to keep the market price at or above the marginal cost to generate power via a thermal plant. Essentially artificial static - but easy to shed - demand.
To explain further, bulk power buyers buy their power often directly from a nearby source and site their facilities near those points, but they purchase power at fixed rates. When market price at those interconnection points rises above the price they paid, they're can be forced to shut down and resell that power back into the market pool.
The losses from shutting dorm bitcoin are limited to production losses during the shutdown, and there is no loss of already made inventory, or other secondary losses like process startup and shutdown for a refinery, semiconductor fab, or other kinds of manufacturing which product a physical good.
I probably wouldn't have picked a market power system like Texas, but it's here, it's what we have, and these kinds of weird market incentives are needed to make it operate correctly (absent a rate of return pricing mechanism.
The 2019 power crisis, when the texas grid kinda almost went dark?
Our shortage was greater than the entire State of California's generation. It was greater than the spare capacity in any of the three neighboring interconnections.
Like I'm not opposed to us joining our neighboring interconnections, but the problem would still exist to some extent because of the ability to move power long distances - and this assumes you build more HVDC and AC interconnections. (There is currently HVDC interconnection).
Also, the problem would still remain, 4-6 hours a day, the cost of spot power at interconnection points would be lower than the marginal cost to operate a thermal plant.
Texas paid Bitcoin miner Riot $31.7M to shut down in August (cnbc.com): https://news.ycombinator.com/item?id=37418866
Texas just got closer to blackouts than it has since 2021. What happened? (kut.org): https://news.ycombinator.com/item?id=37419220
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