ERCOT paid Bitcoin mining operation more than $32 million to cut power use

The Electric Reliability Council of Texas (ERCOT) paid a bitcoin mining operation nearly $32 million last month to cut its energy consumption as the state's power grid struggled to keep up with demand driven by record heat.

Colorado-based Bitcoin miner Riot Platforms Inc. revealed the details of the arrangement Wednesday, the same day ERCOT, the operator of the state grid, entered Level 2 Emergency Operations for the first time since 2021's devastating Winter Storm Uri.

Riot — which maintains an operation in in the Central Texas town of Rockdale — earned $24.2 million in power curtailment credits under its contract with ERCOT in August, according to a company press release. That same month, the firm raked in an additional $7.4 million from ERCOT's demand response program, which pays users to reduce their power during peak demand times.

"Riot continued to execute its power strategy by curtailing its power usage by more than 95% during periods of peak demand, forgoing revenue from its Bitcoin mining operations to instead provide energy resources to ERCOT," company officials said in the news release. "The company's curtailment of operations meaningfully contributed to reducing overall power demand in ERCOT, helping to ensure that consumers did not experience interruptions in service."

So far this summer, ERCOT has asked Texans to conserve energy due to tight grid conditions 10 times, including Wednesday, according to the Texas Tribune.

During those periods, the state's grid operator also can dole out so-called "energy credits" to large corporate power users that agree to substantially cut their consumption.

Indeed, Riot racked up more in August revenue by selling energy back to ERCOT than it did mining bitcoin, according to its press release. The company posted $8.9 million in mining revenue last month, or just a third of the amount it reaped in credits from the grid operator.

"Adding insult to inaction injury, corporations are paid to conserve, while hardworking Texans get nothing for doing the same," Kathleen Thompson, executive director of advocacy group Progress Texas said via email of corporate energy users' relationship with ERCOT. "Who pays the bill when it's due — we all do, in higher electricity bills."

ERCOT didn't immediately respond to request for comment regarding the Riot agreement.

The revelation that ERCOT was Riot's largest source of August revenue came hours before the state's grid operator was forced to enter Level 2 Emergency Operations.

"This is what happens when it is 97 degrees outside at 8 p.m.," Michael Webber, a professor at UT Austin's Department of Mechanical Engineering, wrote on X, the platform previously known as Twitter. "Deamnd at 8 p.m. this year is as high as our 5 p.m. peaks last year. Insane."

Thursday also is shaping up to be another close call for a grid that Gov. Greg Abbott assured Texans has drastically improved since 2021. As of press time, Thursday evening's energy demand was expected to exceed capacity, according to ERCOT.

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