The Electric Reliability Council of Texas (ERCOT), the state’s power grid operator, paid bitcoin miner Riot Platforms $31.7 million in energy credits in August 2023. Riot earned the credits by voluntarily curtailing its energy consumption during a record-breaking heat wave in the state.
ERCOT has a demand response program that pays consumers to reduce their energy usage during times of high demand. This helps to prevent power outages and keep the grid stable. Bitcoin miners are particularly well-suited to participate in demand response programs because they can quickly and easily turn their machines on and off.
Riot said that it generated the credits by reducing its energy consumption by about 10% during the heat wave. The company said that it was able to do this without impacting its bitcoin mining operations.
The $31.7 million payment is the largest that ERCOT has ever made to a single customer under its demand response program. It is also a significant source of revenue for Riot, which has been struggling financially in recent months due to the decline in the price of bitcoin.
The payment to Riot highlights the growing importance of bitcoin miners in the energy market. Bitcoin miners are now a major source of demand for electricity, and they are also playing an increasingly important role in helping to keep the grid stable.
The heat wave in Texas in August 2023 was the hottest on record, causing widespread power outages and putting a strain on the state’s power grid. ERCOT’s demand response program is voluntary, but allows businesses like Riot to earn rewards for reducing energy use during peak demand.
Riot plans to use the $31.7 million payment to pay down debt and invest in new mining equipment. However, some argue it is unfair to pay bitcoin miners for reducing energy use, while others say it is necessary to maintain grid stability.
The payment has generated controversy, but demonstrates the growing interdependence between bitcoin mining operations and energy grid operators like ERCOT. As an increasing electricity consumer, bitcoin miners are able to provide demand response services to help prevent blackouts, while earning significant revenues in the process.
