Bitcoin Mining Company Earns $31.7 Million from Texas Power Authorities
Bitcoin mining outfit Riot Platforms earned $31.7 million from Texas power authorities last month for curtailing operations – far more than the value of the Bitcoin it mined in the same period.
Bitcoin Production vs Energy Credits
In a press release yesterday, Riot said it produced 333 Bitcoin at its mining operations in Rockdale, Texas, which would have been worth just shy of $9 million on August 31. All the cash earned from those energy credits, on the other hand, equates to around 1,136 Bitcoin, Riot CEO Jason Les said in the company’s monthly update.
Record Month for Power and Demand Response Credits
“August was a landmark month for Riot in showcasing the benefits of our unique power strategy,” Les said. “Riot achieved a new monthly record for Power and Demand Response Credits … which surpassed the total amount of all Credits received in 2022.
Lowering Mining Costs
“These credits significantly lower Riot’s cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry,” Les said.
ERCOT’s Demand Response Program
The Electric Reliability Council of Texas (ERCOT) operates a demand response program that allows big energy consumers, like Riot, to earn power credits for using less of it for operations and selling power back to the grid, as well as additional credit for being enrolled in its demand response programs.
Inflated Electricity Costs and Decreased Bitcoin Value
Energy prices have been generally up, and aren’t coming down, but you know what has deflated? The price of a Bitcoin. The combination of inflated electricity costs and a drop in the value of Bitcoin means mining simply isn’t as profitable as it was in 2021, the year Riot’s revenue soared as demand for, and the value of, Bitcoins rose.
Struggles in the Crypto World
Analysts see Bitcoin miners struggling, and JPMorgan Chase said recently that the market cap of the largest Bitcoin mining firms in the US dropped by 21 percent in August. Riot, with a 39 percent drop in market cap over the month, was the worst hit.
ERCOT’s Payment for Not Mining
But if ERCOT is going to pay the market mWh rate for not mining, it can’t be that bad of a business model.
Neither ERCOT nor Riot responded to questions for this story. ®