Texas cryptomining outfit earns more from idling rigs than digging Bitcoin
- Reference: 1694107808
- News link: https://www.theregister.co.uk/2023/09/07/texas_crypto_mining_outfit_energy/
- Source link:
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 [1]said in the company's monthly update.
"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.
[2]
"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.
[3]
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The Electric Reliability Council of Texas (ERCOT) operates a demand response [5]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.
As we [6]reported in August of last year, the company earned $9.5 million in credits during a July 2022 heatwave as well – still far less than it earned in Texas's [7]hottest August on record this year.
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Energy prices have been generally up, and [9]aren't coming down, but you know what has deflated? The price of a Bitcoin. Sure, the price of 1 BTC has been [10]up from the depths it plumbed late last year, but hovering in the mid-$20k range all year is nothing like the heady late-2021 highs of near $70k per coin.
[11]Guy who ran Bitcoins4Less tells Feds he had less than zero laundering protections
[12]Tor turns to proof-of-work puzzles to defend onion network from DDoS attacks
[13]North Korea may be itching to sell $40m of purloined Bitcoin
[14]Couple admit they laundered $4B in stolen Bitcoins after Bitfinex super-heist
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 [15]soared as demand for, and the value of, Bitcoins rose.
Fast forward just a year and things began looking [16]different . Losses followed as Bitcoin prices plummeted and trade volume started to shrink – a problem that has only [17]continued in the crypto world.
Analysts see Bitcoin miners [18]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. Surprise, surprise – Riot, with a 39 percent drop in market cap over the month, was the worst hit. While Riot's stock is up this year, like Bitcoin its value has dropped precipitously since 2021, when the mining firm peaked at [19]$71.33 a share. Today it's worth just $11.10.
But if ERCOT is going to pay the market mWh rate for not mining, it can't be that bad of a business model.
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Neither ERCOT nor Riot responded to questions for this story. ®
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[1] https://www.riotplatforms.com/news-media/press-releases/detail/159/riot-announces-august-2023-production-and-operations-updates
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZPpIA0lE8pEjAHplsiDX1wAAA44&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZPpIA0lE8pEjAHplsiDX1wAAA44&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZPpIA0lE8pEjAHplsiDX1wAAA44&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://www.ercot.com/services/programs/load
[6] https://www.theregister.com/2022/08/03/texas_bitcoin_power/
[7] https://www.expressnews.com/san-antonio-weather/article/texas-hottest-august-ever-recorded-18340522.php
[8] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZPpIA0lE8pEjAHplsiDX1wAAA44&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[9] https://www.cbsnews.com/news/inflation-electricity-bills-higher-summer-2023/
[10] https://www.google.com/search?q=btc&oq=btc&aqs=chrome..69i57j69i59j69i64j0i131i433i512j0i131i433i650j0i131i433i512l2j0i433i512.673j0j7&sourceid=chrome&ie=UTF-8
[11] https://www.theregister.com/2023/09/06/bitcoin_exchange_guilty/
[12] https://www.theregister.com/2023/08/26/tor_tweaks_onion_routing_software/
[13] https://www.theregister.com/2023/08/23/fbi_dprk_cyber_crooks/
[14] https://www.theregister.com/2023/08/04/couple_bitfinex_hack_guilty/
[15] https://www.riotplatforms.com/investors/sec-filings/annual-reports##document-4476-0001079973-22-000280-2
[16] https://www.riotplatforms.com/investors/sec-filings/annual-reports##document-4653-0001558370-23-002704-2
[17] https://www.reuters.com/technology/cryptoverse-bitcoin-miners-get-stuck-bear-pit-2022-09-27/
[18] https://www.cnbc.com/2023/09/06/texas-paid-bitcoin-miner-riot-31point7-million-to-shut-down-in-august.html
[19] https://www.nasdaq.com/articles/3-bitcoin-stocks-that-could-crash-31-to-66-according-to-wall-street-2021-02-23
[20] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZPpIA0lE8pEjAHplsiDX1wAAA44&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[21] https://whitepapers.theregister.com/
instead of paying them not to mine, why didn't they just stop selling them electricity? this is betrayal of the lower class for sure.
Big electricity buyers sign contracts covering their demand patterns, hour by hour, for months or even years in advance.
The sellers are fine with it because it makes a large part of the market way more predictable than it could be. And the buyers benefit from being insulated from sudden price fluctuations, which can be extreme. (Of course it means the fluctuations are greatly exaggerated, for people who don't have such contracts, because now the full brunt of the unpredictability is being carried by a relatively small slice of the total traded volume. But no-one forces them to pay spot price, that's what retailers are for. Unless the customers insist on paying spot prices, but frankly there's no helping some people.)
So they've bought the electricity fair and square, having paid for it, and if they want to sell it back to the grid that's up to them.
Essentially trading on the energy market, securing long-term contracts at low cost and reselling when prices are high.
Small buyers can do similar things, but getting a small rate discount by allowing the power company to kill your AC on the hottest days is not an attractive prospect.
This reminds me, what happened to El Reg having a story on smart electric meters on what seemed like a weekly basis? Has that kerfuffle been forgotten and the media moved on to AI, etc?
So am i correct in thinking they are usually spending millions a month on their electric bills to mine bitcoin?
Its crazy to think that we are wasting all that power on creating made up fun bucks, even if it comes from 100% renewals (which i doubt it does) It could be put to much better uses, such as electrolysis of water to produce hydrogen, which is actually something useful people need.
when I was in college we joked about buying a farm and letting the government pay us for not growing wheat. now we can buy a crypto farm and let the government pay us for not mining bitcoin.
the more things change......