Ensuring Operational Efficiency Amid Extreme Weather Conditions for Bitcoin Mining in the US
Bitcoin miners across various states in the U.S. are increasingly facing shutdowns during peak electricity demand periods due to extreme weather conditions. This practice ensures grid stability and prevents blackouts. Here are several examples illustrating this trend:
In recent years, the growth of Bitcoin mining has been phenomenal, with numerous operations sprouting across the United States. These mining facilities, which require significant amounts of electricity to power their operations, have become a crucial part of the cryptocurrency ecosystem. However, their high energy consumption has also posed challenges, particularly during times of extreme weather when electricity demand surges. To address these challenges and maintain grid stability, various states have implemented policies requiring Bitcoin mining operations to curtail their activities during peak electricity demand periods.
- South Carolina: Local regulations require mining facilities to temporarily shut down during peak electricity demand periods to prevent grid overload and ensure reliable service. This policy is in place during both summer and winter extremes when electricity demand surges due to air conditioning and heating needs.
- Texas: In August 2023, Riot Platforms reduced its power consumption by 95% during a heatwave, earning $31.7 million in energy credits for helping to stabilize the grid. This practice is part of Texas’s strategy to manage energy reliability during extreme weather conditions.
- Houston, Texas: Bitcoin mining companies such as Bitdeer and Argo Blockchain have been asked by ERCOT to power down during high electricity demand periods. These companies participate in demand response programs, receiving compensation for reducing energy usage during critical times.
- California has stringent energy regulations and rolling blackout protocols that can lead to mandatory reductions in power consumption for high-usage industries, including Bitcoin mining, especially during peak electricity demand. While the state focuses on regulating the crypto sector through licensing and compliance laws, Bitcoin mining operations might face curtailments without direct financial compensation, driven by the state’s broader energy management and environmental protection policies.
- Montana: Although Montana has passed pro-cryptocurrency mining legislation protecting miners’ rights and prohibiting discriminatory electrical rates, there are still instances where mining operations might be curtailed without compensation. Local authorities and environmental regulations can enforce shutdowns during peak demand times to ensure grid stability and compliance with environmental standards.
- New York: New York has implemented a two-year moratorium on new fossil fuel-powered cryptocurrency mining operations to address environmental concerns and energy consumption. The moratorium aims to limit operations that rely on carbon-based energy without offering financial compensation. This policy is intended to reduce the environmental impact and ensure compliance with the state’s climate goals. The restrictions have caused some mining companies to relocate to other states
The trend of curtailing Bitcoin mining operations during peak electricity demand periods is a clear indication of the growing interplay between cryptocurrency mining and energy management. As the demand for electricity continues to rise, particularly during extreme weather conditions, states are implementing policies to ensure grid stability and prevent blackouts. These measures, while sometimes challenging for mining operations, are essential for maintaining the reliability of the power grid and supporting broader environmental and regulatory goals. By participating in demand response programs and adhering to state regulations, Bitcoin miners can contribute to a more stable and sustainable energy future while continuing to play a vital role in the cryptocurrency ecosystem.
The Effect
Bitcoin mining companies in the U.S. incur significant costs due to mandatory electricity shutdowns during peak usage times. Here are specific impacts on several major companies:
- Riot Platforms: During a heatwave in August 2023, Riot reduced its power consumption by 95%, resulting in a substantial loss of potential Bitcoin production. The company mined only $8.9 million worth of Bitcoin, significantly lower than what could have been achieved without the curtailment.
- Marathon Digital Holdings (MARA): Reported a 40% drop in Bitcoin production in June 2024 due to operational shutdowns and the April Halving. Production fell from 979 BTC to 590 BTC, highlighting the significant impact of these shutdowns on their gross yield.
- Core Scientific: Experienced a reduction in Bitcoin production, earning 430 Bitcoin in June 2024, down from previous months. The company implemented power curtailments to support the grid, which led to reduced power consumption and operational challenges.
- CleanSpark: Mined 445 Bitcoin in June 2024, a decrease compared to previous months. The company utilized interruptible-load power purchase agreements at new mining sites in Georgia, balancing load and supporting the grid during peak demand, resulting in reduced production .
These shutdowns, while essential for grid stability, lead to significant operational losses and increased costs for miners, especially in states like California with stringent energy regulations and rolling blackouts
What could we do?
When planning for the potential impact of extreme weather on our Bitcoin mining operations, it’s crucial to stay informed through reliable weather forecasting sites. In the U.S., several top-tier sources provide comprehensive and timely updates. The National Weather Service (NWS) offers detailed forecasts and alerts for hurricanes, thunderstorms, and extreme temperatures. Weather.com, operated by The Weather Channel, provides user-friendly interfaces and real-time updates on severe weather conditions. AccuWeather is another excellent resource, known for its minute-by-minute precipitation forecasts and severe weather warnings. For those who prefer mobile options, apps like Dark Sky offer hyperlocal weather predictions and severe weather alerts.
We will use these tools to closely monitor weather conditions, enabling us to prepare for potential disruptions to our mining servers caused by extreme weather. These resources are also beneficial for community members, equipping them with the information needed to set expectations and take proactive measures. By regularly consulting these sources, everyone involved in Bitcoin mining can better anticipate and mitigate the impact of severe weather, ensuring minimal disruption to operations and maintaining a stable mining environment.
HAG performs comparatively well given the situation.
In fact, HAG still achieves higher operational efficiency compared with mining peers in the U.S. The average number of servers HAG needs to mine 1 BTC is about 220, as evidenced by statistics from f2pool. In contrast, our peers require between 343 to 546 servers to mine the same amount. This indicates that HAG’s approach provides a more efficient and scalable solution. Even though Bitcoin mining companies in the U.S. face the same general peak usage environment and weather conditions, HAG performs exceptionally well. The HAG management team is committed to maintaining agility and ensuring high operational efficiency, regardless of external challenges.
Conclusion
The increasingly frequent and severe weather conditions present significant challenges to Bitcoin mining operations in the U.S., leading to mandatory shutdowns and operational losses. However, by leveraging reliable weather forecasting tools, miners can better prepare for these disruptions and mitigate their impact. HAG has demonstrated operational efficiency, requiring significantly fewer servers to mine 1 BTC compared to its peers. Despite facing the same weather conditions and peak usage environments, HAG’s approach proves to be more efficient and scalable. The HAG management team remains dedicated to maintaining high operational standards and agility, ensuring that the company continues to thrive even in the face of external challenges.
Reference:
South Carolina Energy Office report: https://energy.sc.gov/sites/energy/files/Documents/view/DSM%20Report_2021.pdf#:~:text=URL%3A%20https%3A%2F%2Fenergy.sc.gov%2Fsites%2Fenergy%2Ffiles%2FDocuments%2Fview%2FDSM%2520Report_2021.pdf%0AVisible%3A%200%25%20
Duke Energy relative reports: https://businessnc.com/energy-demand-soaring-at-unprecedented-rate-duke-energy-says/
Clean Technical report: https://cleantechnica.com/2024/04/30/growing-demand-for-electricity-is-upending-the-utility-industry/
Decrypt report: https://decrypt.co/155272/texas-paid-riot-platforms-31-7m-to-slash-bitcoin-mining-in-august-heatwave
Texas Monthly report: https://www.texasmonthly.com/news-politics/texas-bitcoin-miner-riot-31-million-energy-credits/
Texas public Radio: https://www.tpr.org/technology-entrepreneurship/2023-09-06/texas-paid-a-bitcoin-miner-more-than-30-million-to-power-down-during-heat-wave
Polotoco: https://www.politico.com/news/2023/01/07/new-york-cryptocurrency-mining-ban-00072564
Blockworks-New York: https://blockworks.co/news/us-crypto-mining-regulation-states
Investopedia: https://www.investopedia.com/crypto-mining-ban-5409564
Cointelegraph-New York: https://cointelegraph.com/news/new-york-state-senate-passes-bitcoin-mining-moratorium
Cointelegraph- Montana: https://cointelegraph.com/news/montana-governor-signs-pro-cryptocurrency-mining-bill-into-law
Blockworks- Montana: https://blockworks.co/news/montana-mining-bill-passes-house
Cooley: https://www.cooley.com/news/insight/2023/2023-07-12-california-enacts-two-new-virtual-currency-laws
Cointelegraph-California: https://cointelegraph.com/news/california-gov-newsom-greenlights-crypto-regulation-bill-for-2025
National Law Review: https://www.natlawreview.com/article/california-s-cryptocurrency-regulation-and-blockchain-technology
MARA Press Release: https://ir.mara.com/news-events/press-releases/detail/1361/mara-announces-bitcoin-production-and-mining-operation
Clean Spark PR: https://investors.cleanspark.com/news/news-details/2024/CleanSpark-Releases-June-2024-Bitcoin-Mining-Update/default.aspx
Core Scientific PR: https://investors.corescientific.com/news-events/press-releases/detail/79/core-scientific-announces-june-2024-production-and-operations-updates
About Hashrate Asset Group
Hashrate Asset Group aspires to build the world’s first sustainable, compliant and transparent Bitcoin standard arithmetic operating model. HAG Token allows investors to join the ecosystem and receive a real-time return on your investment. HAG mining farm is located in the United States, and the team is composed of industry-leading professionals from Bitmain, Goldman Sachs, and TSMC.
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