A crypto mining setup takes a lot of energy to run, and right now energy is something the state of Texas doesn't have a lot of. The state's power grid operator has asked businesses to conserve energy because a heat wave is pushing the limits on how much power is available.
On Monday, the Electric Reliability Council of Texas asked Texans to reduce their power consumption to avoid rolling blackouts across the state. Crypto mining companies that operate in Texas followed suit, even though it means a loss of profits, according to Bloomberg.
ERCOT says there aren't any requirements for mining companies to conserve energy, but it hopes businesses will heed its request.
Mining for cryptocurrency is energy-intensive. Companies have computer-filled warehouses, also known as mining rigs, running nonstop to complete complicated calculations required for transactions. A rig that completes the computation for the bitcoin blockchain, for example, can receive 6.2 bitcoins, or about $123,000 at current prices.
"Currently, 100% of the machines located in Texas have been powered off to provide support for the ERCOT grid," Core Scientific CEO Mike Levitt told Bloomberg.
ERCOT expects Texas crypto mining companies to require 6 gigawatts of power by mid-2023. That's enough energy to power the entire city of Houston. It sent another power conservation appeal to businesses on Wednesday to avoid outages in the state.
Bitcoin prices, as well as those of other cryptocurrencies, have been on the decline for most of 2022. Last November, one bitcoin was worth more than $67,000, but the value dropped significantly, falling below $18,000 last month. A combination of record inflation and a downturn of the global economy prompted crypto holders to sell off their digital coins, causing the values to tumble. US regulators and legislators are also putting their foot down on certain cryptocurrency practices, while states are looking to stop or reduce crypto mining.