The US power grid is under immense demand for more energy to more homes, businesses and public services, and that demand is growing faster and to greater levels than ever before. This may not seem surprising when you consider traditional factors like population growth and uptake of new commercial and personal technologies, but there is one other driving force for massive energy consumption that you weren’t aware of.
Crypto currency.
How can crypto currencies like bitcoin be responsible for so much power consumption? Well, it turns out that mining bitcoin at scale requires a serious amount of computing from massive networks of machines.
Picture hundreds of computers, lined up in rows, filling the floors of former factories and office buildings, each one powered on day and night, running complex calculations – trillions per second – all to accomplish the virtual goal of mining bitcoin. According to a recent investigation in the New York Times, there are 34 known bitcoin mining facilities of this size in the United States – 10 of which are in Texas. One facility listed is in a former aluminum smelting plant in Austin Texas, where vast arrays of computers used up enough electricity to power 6,500 homes.
This is in a state which continues to suffer from winter power cuts due to surges in demand and old infrastructure impacted by cold weather. We’ve discussed before the challenges that areas like Austin and Houston have felt, and why investment in construction of new and upgraded transmission and distribution area has been essential for a long time. It’s why Coalesce works with leading businesses to provide construction and project management expertise – because we have the skilled contractors (change to Consultants or Project Experts) who can deliver these upgrades and we understand the value and impact that they will have on the local communities.
An incentive for change?
That drive to improve Texas’ power grid infrastructure come based on the demand for power. Some running Bitcoin businesses claim that their dependence on power only incentivizes the development further.
“Expanding Texas generation is crucial and allowing different energy sources to compete in the market will help drive down prices”, said Gideon Powell, Chief Executive of Cholla – a Texas based energy exploration company developing Bitcoin mines.
In fact, most Bitcoin businesses promote themselves as having low carbon footprints with claims that they operate in rural areas where renewable energy is readily available.
But the reality is that those renewable sources weren’t built for Bitcoin mining operations – they were built to power homes and hospitals, businesses and services. Crypto mining just takes power from the grid and has, in some cases, resulted in more reliance on “back up” options of oil, gas and even coal.
The Times’ analysis found that the 34 mins was causing nearly 16.4 million tons of carbon pollution each year. It’s for this reason that other countries are putting strict regulations on the practice of crypto mining, with China – previously the world leader in crypto mines – outright banning it in 2021.
What does this mean for the future?
Most people who use or trade in crypto currencies probably don’t realise the carbon emissions and climate impact that this seemingly invisible, virtual currency has – or the immediate impact on those reliant on power.
In addition to power cuts, Texans have seen their electricity bills rise 5%, or as much as $1.8 billion per year.
And the solution for excess power from crypto facilities in that former smelting plant in Austin? An agreement that if the system is about to be overloaded, the operator – Bitdeer – will turn off their machines. In exchange for $175,000 for every hour they’re offline.
Despite all this, crypto growth continues as many see the possibility of investments over the wider impact.
More facilities are planned, and Gov. Greg Abbott has proudly announced that “Texas will be the crypto leader”.
Whether it’s sustainable or not, the State is going to need a lot more power to keep up with demand.
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Coalesce Management Consulting works with leading businesses in renewable energy and transmission & distribution to support projects delivering clean energy to all businesses across the States. We specialist in construction and project management of large-scale developments, with skilled contractors available to deploy quickly. Get in touch with our teams to learn more.