Texas is a Bitcoin "hot spot" even as heat waves affect crypto miners

Texas is a Bitcoin “hot spot” even as heat waves affect crypto miners – Mail Bonus


Record heat waves are being recorded around the world as extreme weather worsens due to climate change. States across America continue to see temperatures rise above 100 degrees Fahrenheit (38 degrees Celsius), while Britain recently saw temperatures reach 104 degrees Fahrenheit (40 degrees Celsius).

While hot climates may be unusual for many of these regions, Texas — a state notorious for boiling summers — is experiencing hotter than normal temperatures. The Electric Reliability Council of Texas (ERCOT) recently stated that Texas’ power demand has been consistently breaking records this month.

Unsurprisingly, Texas’ constant heat wave is having a major impact on crypto miners located throughout the Lone Star State. As Cointelegraph recently reported, a number of miners in Texas had to shut down operations entirely earlier this month to cope with the strain on the Texas power grid.

Texas Blockchain Council President Lee Bratcher told Cointelegraph that there are about 10 industrial scale crypto miners and 20 smaller scale miners currently located in the region.

Earlier this month, ERCOT asked businesses and residents to voluntarily conserve electricity during the Texas heat wave. A spokesperson for Riot Blockchain told Cointelegraph that its Whinstone facility in Rockdale is now participating in ERCOT’s Four Coincident Peak program, noting that the facility will reduce all power to help stabilize the network during peak demand times. “As part of Riot’s participation in the program, in June the company reduced energy consumption to a total of 8,648 megawatt hours,” the spokesperson said.

Peter Wall, CEO of Argo Blockchain — a crypto mining company that recently opened a data center in West Texas — also told Cointelegraph that the company slows down mining when ERCOT issues a safeguard alert. On July 19, 2022, he said that Agro will have to undergo this along with many other miners in the region.

As a result, Bitcoin (BTC) miners saw the biggest drop in computing power on July 21, 2022, since China banned crypto mining in May 2021. This surprised industry experts who had expected Bitcoin hash rate difficulty to increase based on current trends. Frank Holmes, CEO of Hive Blockchain Technology – a publicly traded crypto mining company with operations in Canada and Europe – told Cointelegraph that Bitcoin’s hash rate difficulty should increase by 3% every month based on financial models, but that this has not been the case for a number of reasons. He said:

“When the price of Bitcoin dropped, many S9 miners went out of business, or electricity surged and miners had to go out of business. But even more importantly, many machines that were supposed to be connected now cannot be used, which has also caused the difficulty to decrease.”

Holmes noted that the reduction in Bitcoin computing power has been beneficial for Hive as their facilities have not been affected by climate change or other factors. He added that new mining machines are being delivered to Hive every month and that lead times are being filled to accommodate growth. Still, Holmes said Hive continues to look for locations to establish its next mining facility in Texas, which will serve as the company’s first facility in the United States.

Despite Texas’ harsh weather conditions for miners, Holmes explained that Hive’s method of using 100% green energy to mine both Bitcoin and Ether (ETH) will not disrupt the state’s power grid. Holmes explained that Hive’s future facility in Texas will operate as a solar wind farm, which will not be subject to ERCOT regulations. “There are various places in Texas that have the infrastructure that we need to do that.” There are also credits to ensure we build solar farms.”

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While Holmes is confident that Hive will soon be operating in Texas, he explained that the company has big ambitions for the facility, noting that it will require 300 megawatts of power. Given this, Holmes explained that Hive is wary of establishing itself in Texas too soon, noting that large-scale mining is risky when it comes to delivering on time. “We don’t want to scare communities or disappoint our shareholders,” he said.

Issac Holyoak, head of communications at CleanSpark – a sustainable Bitcoin mining and technology company – also told Cointelegraph that the company plans to open a mining facility in West Texas. While the bulk of CleanSpark’s miners are located in Georgia, Holyoak explained that the company has a West Texas solidarity agreement with energy company Lancium. He said:

“Lanzium does managed load response, so they build large data centers that can power up or down based on the power curve. If there is a lot of energy needed due to a hot afternoon, they can switch off to compensate for this. Alternatively, if there is a low demand for energy, they can turn on and mine Bitcoin.

According to Holyoak, CleanSpark and Lancium’s mining plant in Texas will open in December of this year. Like Hive, Holyoak noted that CleanSpark has benefited from Texas miners shutting down as there is less online competition. But he believes it’s beneficial for the company to have operations in Texas because of the region’s abundance of renewable energy, as well as being welcome in counties looking to get more business from mining.

“It’s a very unique market and it has renewable resources that are extremely important for sustainable miners,” he said. With locations in Georgia and several in upstate New York, Holyoak added that it’s important for CleanSpark and other miners to diversify their locations, noting that climate change and other extreme weather events can happen anywhere.

Will Sustainable Mining Help Texas Miners?

Even though Texas miners are affected by the extreme heat, Holmes believes many of them are handling the situation well by switching off when necessary. However, as more sustainable miners enter the state, already established operators may want to rethink their mining techniques.

For example, Holmes explained that Hive educates authorities in the regions where they are based to help them understand their long-term environmental, social and governance goals. He said:

“In Quebec we have a 40,000 square foot building with 30 megawatts of electricity and we send the heat generated from our ASIC miners to heat the 200 square foot building. The energy is recycled and is intended to cater to unique building structures in New Brunswick.

When this is the case, Holmes noted that having a long-term sustainable vision when it comes to mining can be very beneficial. He added that Hive’s Swedish location has software that ensures the company’s mining operations are down between 7am-9am and 5pm-7pm, five days a week. “These are sensitive, peak demand times. We have a strategic relationship with the region to ensure that our operations cease when necessary,” said Holmes. He further stated that Hive mines about 9.8 BTC and 100 ETH per day.

Taking a different approach, CleanSpark uses immersion cooling to mine Bitcoin. Matthew Schultz, CEO of CleanSpark, told Cointelegraph that the company was among the first large-scale data centers of its kind in North America to purchase refrigeration for its Norcross mining facility. He explained:

“Immersion cooling is a technology we use for Bitcoin mining. The mining machines are prepared by removing their fans and submerged in tanks of biodegradable petroleum. This increases mining efficiency by an estimated 20%. The oil is recycled through the facility and reused as it flows through a heat exchanger that maintains temperatures around 125 degrees F.”

Holyoak added that most mining fans are kept cool using ambient air, so hotter climates will affect engine performance, but immersion cooling can help mitigate this factor.

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He noted that immersion cooling is not affected by excessive heat. However, heat waves can increase energy prices, which in turn can make it uneconomical to run machines. According to Holyoak, this is likely the case with Riot, as the company last year announced the use of immersion cooling at their Whinstone facility.

Ultimately, industry experts believe that the use of clean energy sources will help miners overcome climate change. Elliot David, a carbon management expert at Sustainable Bitcoin Protocol – a company that verifies sustainable Bitcoin mining practices – told Cointelegraph that based on recent events, every mining company will need to think about climate resilience, whether they are located in a hot climate like Texas or a cold climate like and Norway:

“Using clean energy sources is also an important solution because while they are intermittent, energy systems are all really balancing exercises.” The network needs to meet demand with supply, and a flexible load like Bitcoin makes these balancing acts much easier.