TTP Report: Crypto Miners’ Sweetheart Deals Threaten Texas Grid
FOR IMMEDIATE RELEASE: July 22, 2022
Contact: Michael Clauw, email@example.com, 202.780.5750
WASHINGTON, D.C. – Today, Campaign for Accountability (CfA) a nonprofit watchdog group that runs the Tech Transparency Project (TTP), released a comprehensive new report detailing how bitcoin miners are adding new strains to the already fragile Texas energy grid and earning huge payouts from programs that allow big energy consumers to resell power at a mark-up. As a result, miners are collecting millions of dollars while ordinary Texans are footing the bill—and still have reasons to worry about whether the state can keep the lights on.
Campaign for Accountability Executive Director Michelle Kuppersmith said, “Bitcoin miners are cashing in on the fragility of the Texas grid while adding huge new energy demands. Although the state’s payouts to crypto miners are brokered in secret with minimal public scrutiny, it will be the public who pays the greatest price if miners fail to live up to their promises.”
TTP reviewed SEC filings, public utility commission records, industry publications, social media posts, and data from the state’s energy authorities to show how Texas cryptocurrency miners are using long-term energy contracts and other market-distorting deals to position themselves as powerful players in the Texas grid. These deeply-discounted energy contracts allow miners to resell electricity at massive mark-ups and collect millions of dollars in incentive payments from the state grid operator.
According to a previously unreported SEC filing, one cryptocurrency miner resold electricity valued at more than $125 million to the Texas grid during the damaging winter storm that struck in February 2021. The state still owes the miner $86 million, with that amount likely to be paid by ordinary utility customers.
Texas also pays some bitcoin miners millions for their willingness to curtail their power demand, whether they actually reduce their energy usage or not. According to one miner, they are only called on to curtail their load 3% of the time that the state pays for their participation in the program. TTP estimates that Bitcoin miners may collect as much as $170 million a year from programs like these. With several Bitcoin miners proposing to add an additional 2.6 gigawatts of mining capacity to the Texas grid, TTP analysis shows that these payments could soon rise to more than half a billion dollars a year.
While crypto advocates claim that the miners’ presence brings a stabilizing effect to the grid, there is reason to doubt assurances that Texas miners will “do the right thing” and decrease their electricity consumption in times of need—especially when it doesn’t align with their economic interests. In communications with investors, mining companies appear to be more preoccupied with their bottom line. One miner’s parent company tells shareholders it will “opportunistically sell electricity” depending on the market price.
Texas officials’ shortsighted reliance on bitcoin miners as suppliers of emergency energy places the stability of the state’s grid at the mercy of factors beyond miners’ or regulators’ control. If the price of the cryptocurrency goes up, Texas will have to pay miners more to sell power the next time a natural disaster strikes.
Conversely, if the price of bitcoin remains stagnant or declines as mining becomes more difficult, the state could be stuck with a coterie of mini-Enrons adding unnecessary mark-ups to Texans’ energy bills. New analysis by TTP suggests that this could already be happening on many days out of the year.
Ms. Kuppersmith continued, “The crypto industry has already produced far too many greedy, bad-faith actors to be entrusted with the power to make or break the Texas grid. Even in the best case scenario—where Bitcoin mining companies would somehow act without greed and stabilize the grid as promised—Texas officials will opting for a solution that unnecessarily increases energy use and enriches crypto executives at the taxpayers’ expense.”
Campaign for Accountability is a nonpartisan, nonprofit watchdog organization that uses research, litigation, and aggressive communications to expose misconduct and malfeasance in public life and hold those who act at the expense of the public good accountable for their actions.