Shocking: Texas Paid A Bitcoin Miner Millions To Shut Down- Here’s Why
Well, this is one way to make money off of Bitcoin.
The State of Texas recently paid a Bitcoin miner Riot Platforms a jaw-dropping $31.7 million in energy credits to shut down temporarily in August- a month that saw many back-to-back 100+ degree days across most of the state.
The company generated the credits by voluntarily curtailing its energy consumption during a record-breaking heatwave.
This sounds like an insane bribe- but it's actually more nuanced and even beneficial to Texas- in a convoluted way.
Riot Platforms made only $8.9 million in mined bitcoin during August- so the energy credits were a boon to the company- who will use them as part of their "energy strategy"- and will make the company, "one of the lowest cost producers of bitcoin in the industry," thanks to their voluntary agreement with Texas.
Bitcoin is an incredibly volatile form of investment, and high energy costs have hindered its success. But Riot Platforms may have found a win/win in volunteering to suspend operations during the hottest times in Texas. If this seems like a bad deal for Texas energy consumers, it actually isn't:
ERCOT has historically struggled with fluctuating energy prices and sporadic service, so it strikes deals with flexible energy buyers like crypto miners. The agency also counts on bitcoin miners to soak up excess power when there’s too much supply, keeping prices in check.
Modern problems require modern solutions, and I can't think of a more appropriate example than this one. Instead of letting natural gas or windmills sit idle (and probably having to subsidize them to do so) this solution allows Texas to even out the extremes with perhaps the only industry ever that can be so flexible with its power needs.