As Crypto-Mining Costs Texans Millions, Residents and Climate Experts Call for Reform

AUSTIN, NY (09/15/2023) (readMedia)-- On Friday, Texans and advocacy groups joined forces for a press conference in response to Riot Platforms' announcement of $31.7 million in energy credits from ERCOT for temporarily shutting down their crypto-mining operations during Texas's record-breaking August heatwave. Riot is not the only crypto-miner cashing in on the Texas heatwave. Last year, just five Bitcoin mining operations earned a whopping $60 million from Texas taxpayers for promising to shut off when asked. Meanwhile, Texans were asked to voluntarily turn down their ACs during these long, and for some, deadly stretches of triple digit heat.

Watch the presser here.

"For several days out of last month, The Electric Reliability Council of Texas asked Texans to turn up their thermostat, conserve energy, and hope for the best. We Texans are still collectively traumatized by the grid crash of Winter Storm Uri in 2021 when hundreds of Texans died in those awful few days, but bitcoin miners like Riot Platforms cash in on these tragedies," said Jackie Sawicky, founder of Texas Coalition Against Cryptomining and member of National Coalition Against Cryptomining. "In August, on the same day that Riot disclosed ERCOT and TXU Energy gave them a whopping $31.6 million in energy credits, the Texas grid came within fifteen minutes of another catastrophic event. If Bitcoin miners weren't putting a massive burden on the Texas grid, to begin with, would we have had 21 record days of peak demand? What will happen when the world's largest Bitcoin mine goes online where I live in Navarro County?"

"Crypto-mining companies are wasting precious water, driving up all our energy bills, and destabilizing an already unreliable grid. In Navarro County where I live, Riot Platforms applied for tax abatements, so we won't see the benefit of that tax revenue in the community. There have been promises of new jobs, which are desperately needed, but those jobs have yet to be seen. I have not read one report where a resident was glad a Bitcoin mining facility had moved in, and Navarro County will be no different," said Kimberlee Walter, Founder, Stand Up For Change, Navarro County.

ERCOT's 'demand response program', which pays crypto-miners and other industrial consumers for just promising to shut down if they're asked – and pays more if they comply – makes Texas an attractive location for energy-guzzling crypto-miners. Texas has become the top state for Bitcoin mining, with five of the 10 largest mines located in the state. At the rate crypto mines are expanding, by 2026 they will use as much electricity as the entire state of Florida, just in Texas alone.

Riot Platforms is just one of the grid-straining crypto-mining companies in Texas, with two operations that make the company one of the largest publicly-traded Bitcoin mining companies in North America. More information about Riot Blockchain:

• Riot Blockchain is state sales tax exempt and its facility in Milam County, located on over $150 million worth of land exempt from property taxes
• A recent New York Times investigation determined Riot's Rockdale mine, near Austin, is the most power-intensive in the country, consuming as much electricity as "the nearest 300,000 homes."
• Riot received a fixed energy rate of 2.9 cents per KWH in 2022. In 2022, the average price of energy for other industrial businesses in Texas was 7.2 cents, and 13.5 cents for residents.
• Riot sells power credits back to ERCOT at market-driven spot prices.
• In May 2023, Riot hired former ERCOT CEO Brad Jones to serve on its advisory board

As crypto-miners strain the grid, Texas is asking voters to decide on Proposition 7 this November to incentivize fracked gas power plant owners to increase generating capacity. This proposal does nothing to halt rising demand, and ignores less costly strategies that would reduce demand and support a cleaner grid.

Read more about the negative impacts of crypto-mining in Texas with this fact sheet.

"Across the country, crypto-mining operations are straining grids and increasing use of fossil fuels at a time when we must be laser focused on fighting local air and water pollution and climate change. Crypto-mining is taking us backwards," said Mandy DeRoche, Deputy Managing Attorney, Clean Energy Program, Earthjustice. "It's not progress for crypto-miners to receive economic incentives and subsidies to the detriment of local communities who bear the brunt of the air, water and noise pollution from cryptominers. We need oversight to mitigate the harms of this industry, especially in Texas."

"Crypto mining consumes absurd amounts of electricity and produces nothing of value for Texans," said Adrian Shelley, Texas director of Public Citizen. "It is laughable that the industry tries to portray itself as a savior while adding demand that brings the Texas grid to the brink of collapse. Taking millions in tax dollars to fix a problem you caused isn't a great business model. Unfortunately, state politicians are letting it happen. Texas must start placing some common-sense restrictions on crypto miners and stop inviting them to come here.

""Everyday Texans are struggling while major energy utilities and crypto-mining industries make record profits," said Dave Cortez, Director of the Sierra Club Lone Star Chapter. " We're in a perfect storm of a failed energy regulatory system, record energy consumption, and the harsh reality of the climate crisis. If you're tired of high bills and alerts about the grid, it is time to band together with fellow Texans from Navarro County to Brownsville to demand public officials and energy utilities do more to help lower our bills and pay us to use less energy."

Background

After China banned proof-of-work crypto-mining (the process Bitcoin uses), the U.S. is now hosting many energy-intensive proof-of-work crypto-mining operations. While these facilities of automated machines create few new jobs, they threaten the climate, in addition to small businesses, local economies, and natural resources.

Proof-of-work cryptocurrency mining is an energy-intensive process that requires thousands of machines whirring 24/7 to solve complex equations. The more machines that are running, the faster a coin is mined. Each one of these machines requires energy to run, plus more energy for cooling. Globally, Bitcoin mining consumes more energy each year than entire countries. Fossil-fueled mining facilities can also be major emitters of local air pollutants.

Earlier this year, the New York Times published an in-depth expose about the negative impacts of proof-of-work Bitcoin mining. In September 2022, the White House sounded the alarm about cryptocurrency mining - the Office of Science and Technology Policy released a report about the industry's climate threats and the need for regulation. But cryptocurrency mining continues to grow rapidly across the country. Earthjustice and the Sierra Club released a Guidebook, finding that in one year from mid-2021 to mid-2022, Bitcoin mining in the U.S. alone consumed as much electricity as four states combined, emitting 27.4 million tons of CO2 - equivalent to the emissions of as much as 6 million cars annually. More highlights from the Guidebook:

• Proof-of-work cryptocurrency mining has grown explosively in the United States since 2020. Today, an estimated 38% of Bitcoin is mined in the U.S, resulting in nearly 30 million tons of excess CO2 emissions in the last year alone.
• The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress toward achieving climate goals and reducing local pollution. In addition, cryptocurrency mining practices raise costs and risks for utilities and their ratepayers, can stress electric grids, and flood communities with noise.
• The cryptocurrency mining industry already uses half the electricity of the entire global banking sector, and it will overtake the sector in two years if current trends continue. Meanwhile, the ratio of Bitcoin's energy consumption to humans who actually have Bitcoin is extremely high.
• Rather than investing in long-term energy infrastructure that benefits the grid, the cryptocurrency mining industry seeks the fastest energy that can serve its needs, and looks for minimal regulation and oversight. In practice, that translates to mining cryptocurrency at coal and gas plants, straining the electric grid in Texas, and tapping into power grids that are often fossil-fuel heavy.
• Most mining facilities draw their power from the grid. That means electricity is generated by whatever existing energy is in place in the region. No grid anywhere in the U.S. is 100% renewable yet.
• Proponents also claim that mining is spurring new renewable development and stabilizing the grid. But clean energy allocated to cryptocurrency mining doesn't actually do anything to decarbonize the grid, and there are few mining facilities that are building renewables to even power their own operations, let alone send to the grid.
• Cryptocurrency mining proponents claim that mining uses "wasted" energy from solar or wind overproduction. But mining operations consume energy 24 hours a day, not just when there is excess solar or wind - meaning mining operations would fail to be profitable using only the hours when wasted energy is available.

Read the Sierra Club and Earthjustice guidebook here.

About Earthjustice

Earthjustice is the premier nonprofit environmental law organization. We wield the power of law and the strength of partnership to protect people's health, to preserve magnificent places and wildlife, to advance clean energy, and to combat climate change. We are here because the earth needs a good lawyer.

About Sierra Club's Lone Star Chapter

Sierra Club's Lone Star Chapter is the oldest grassroots environmental organization in Texas. We believe our open spaces, clean water, and natural resources should be protected so that current and future generations may enjoy them. The Lone Star Chapter includes more than 27,000 members throughout the state. The Lone Star Chapter's conservation priorities are: Clean Air & Water, Smart Energy Solutions, Texas Land & Wildlife Legacy, Water for People & the Environment, Responsible Transportation Choices and a Stable Climate.

For more information, visit https://www.sierraclub.org/texas/about-us

About Public Citizen's Texas Office

Public Citizen is a consumer advocacy nonprofit that champions the public interest in the halls of power. Headquartered in Washington, D.C., our Texas office, founded in 1984, works to protect the health and prosperity of our communities and families. We support a just energy transition that creates green jobs, living wages, and a strong economy.