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Bitcoin The Almighty Buck

Bitcoin Miner Made Millions In Credits By Shutting Rigs During Texas Heat (bloomberg.com) 68

Posted by BeauHD from the selling-at-a-premium dept.
An anonymous reader quotes a report from Bloomberg: Riot Blockchain earned about $9.5 million in credits last month from shutting down its Bitcoin mining rigs at a Texas facility while the region weathered a historic heat wave. The amount will be credited against the company's power usage. The value of the credit is equal to around 439 Bitcoin. Riot also mined 318 coins during the month, according to the company's monthly production and operations update.

The publicly traded miner has a 750-megawatt facility and is building another one-gigawatt site in the Lone Star State. The sites are two of the largest mining farms in the world. Nearly all industrial scale miners shut down their rigs in Texas while the state experienced a severe power crunch during the record heat wave in early July. While the power crunch sent electricity prices soaring and made Bitcoin mining operations unprofitable, some large-scale miners such as Riot were able to sell electricity purchased earlier at a lower price back to the grid with a premium.

Riot is participating in the 4 Coincident Peak program from the state power operator known as the Electric Reliability Council of Texas. Riot's 750-megawatt Whinstone Facility in Rockdale, Texas, is encouraged, though not required, to curtail consumption when called during the four summer months of peak energy demand. The company sold 275 mined coins for about $5.6 million in July. The 318 Bitcoin mined represents a decrease of 28% in production compared to the prior month, according to the update.
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Bitcoin Miner Made Millions In Credits By Shutting Rigs During Texas Heat More

Bitcoin Miner Made Millions In Credits By Shutting Rigs During Texas Heat

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  • They're also driving up the price of your electric (Score:5, Insightful)

    by rsilvergun ( 571051 ) on Friday August 05, 2022 @06:04PM (#62765888)
    By buying up all the cheap electricity themselves. So what's safe there is a hydroelectric dam and you can draw electricity from it at five cents a kilowatt along comes A crypto Miner and sets up shop there and buys all their electricity which they're happy to sell because it's a guaranteed customer. Now instead of that five cents a kilowatt hydroelectric power you need to buy electricity from a coal fired plant at 20 cents a kilowatt hour. Now you pay a flat rate but by next year your power company will have to raise your rates to make up that difference.

    Cryptocurrency is a blight on our civilization. It's okay for us to decide when some things are not a positive good for our country and our citizens. Ban crypto. If you feel uncomfortable doing it with direct legislation just make sure they don't get to call themselves a commodity so that they can't escape SEC regulation and make them buy the most expensive electricity instead of you. Take away their subsidies and their ability to externalize the costs of the electricity and electronics that they consume and regulate them properly and crypto goes away. Has an added bonus so does ransomware

    • Re: (Score:1)

      by fermion ( 181285 )
      We have little hydro in Texas. No natural lakes. You are talking about Las Vegas.

      In the US we do not pick winners and losers. Yes, evangelicals through threats of violence have managed to shut down legal legitimate businesses like bars and strip climbs, but more or less we try to redirect business to do less harm, like chemical refineries, rather than shut them down, or prevent innovative new business.

      And we donâ(TM)t infringe on basic rights to profit by just going in the the cops and shutting dow

      • or any other cheap power they can get their hands on (including the stuff you buy from Mexico, because for some crazy reason Texas connected to Mexico's power grid but refused to connect to their own country's. And no, it's not technical, those problems are easy to solve, they don't want to have to meet the reliability requirements other US States have).

        One way or another you will pay more in exchange for, well, nothing. Unless you're one of the people in on the scam I guess, but plenty of folks have tr

        • because for some crazy reason Texas connected to Mexico's power grid but refused to connect to their own country's.

          https://www.youtube.com/watch?... [youtube.com]

        • Re: (Score:3)

          by fermion ( 181285 )
          The link to Mexico is a relatively low power HVDC. Texas is not integrated

          A decade ago there was a solid solution in connect the continent in the form of the Tres Amigas superstation. It was an expensive but innovative solution to distributed renewable energy. I think about 5 years ago a major player on the eastern grid killed it

      • It would make sense for California to declare a state of emergency over the drought and send in the state military to secure farms

        No it wouldn't.

        But that is not how the US operates.

        No, it always acts as if money is infinite and deficit be damned. Deficit is the next guy's problem after I've finished pilfering.

        • When there's a Democrat in charge (Score:4)

          by rsilvergun ( 571051 ) on Saturday August 06, 2022 @11:40AM (#62767110)
          there's usually a budget surplus. Especially if that Dem has at least a majority. We didn't start having budget problems until Reagan pumped the military budget while cutting taxes to absurd levels. To the point where generals are saying "for the love of God stop sending me tanks!".

          Deficits are only a problem when there's a Democrat in charge. When there's a Republican it's all good. Almost as if harping on the deficit is propaganda and a nation's budget doesn't work like yours and mine. I seem to remember a certain fellow of the orange persuasion saying deficits were fine during his primary election too...

          I'm just sayin', you're being tricked. Deficits aren't the problem, the right wing raiding the treasury is the problem.

      • But these crypto miners are profiting off of a public resource, and profiting off of infrastructure to the disadvantage of those who paid for the infrastructure. But actual citizens don't matter so much in Texas as they can't afford the same legislators that the money makers can.

        Texas should not have to pay these companies to not use electricity, they could just cut the power to those crypto miners instead. Let them use excess power. In other words, let the citizens drink from the well first before the lee

      • Re: (Score:3)

        by ZeroPly ( 881915 )
        A 5 year old could tell that your argument is ridiculous. Of course the US picks winners and losers. If you don't believe me, go out and try to buy some lawn darts.

      • "We do not pick winners and losers"

        That's rich. Tell us another whopper. Massive subsidies and political fights over decarbonization fundamentally disagree with you.

    • > and their ability to externalize the costs of the electricity

      Electricity doesn't have any intrinsic negative externalities in it, the externality is in the carbon used to make some (most) of it.

      It would be better to tax the carbon directly (with a pigovian tax) and redistribute the extra to everyone to cover the increase in prices. The market would then naturally switch to lower carbon sources.

      Bitcoin largely doesn't break the assumptions of the free market except for this.

    • Re: (Score:1)

      by Anonymous Coward
      For sure. The only thing I could think of when reading this was: What. The. Fuck. The crappiest of electricity networks gets taxed more for nothing and they get payed to not strain the system. And texans are still proud of their state?
    • OK, have you ever heard of something called, you know, basic rules of economy? I mean, seriously? Some hydro plant selling energy at 5c when everyone else is selling at 20c, because of, I dunno, kindness of their hearts? No, they're going to be selling at 20c like everyone else, and pocketing the 15c for themselves. Price of anything, including electricity, is regulated by the supply and demand, not by "some bitcoin miner settling near a hydro dam and somehow magically convincing them to sell at production

    • Don't forget to take away subsidies from oil & gas too.

      Especially their free ticket to externalise the gigantic cost they're causing to the current and dozens of future generations. Bitcoin will go away. The CO2 will stay much longer.

      Also, be careful blaming a publicly traded company for utilising a revenue opportunity. They are obliged to act in the best interest of their shareholders, and you might have them in your pension portfolio.

      I have no sympathy for crypto, but at least they are ruthlessly e

  • Let me see if I've got this right (Score:5, Insightful)

    by Joce640k ( 829181 ) on Friday August 05, 2022 @06:06PM (#62765898) Homepage

    When electricity becomes too expensive to make mining profitable they simply turn the machine off and get 10 million off their next bill?

    More than the bitcoins would have been worth?

    Can I build a huge resistive heatsink in a warehouse then retire from the profits made by turning it on and off?

    • Yes. Yes. No.

    • Re:Let me see if I've got this right (Score:5, Insightful)

      by TomGreenhaw ( 929233 ) on Friday August 05, 2022 @06:19PM (#62765934)
      It depends. Have you donated money to politicians to people like Ted Cruz who thinks this is a good idea? https://ncfacanada.org/senator... [ncfacanada.org]

    • Re: (Score:1)

      by Anonymous Coward

      Welcome to Texas "logic". If you're a corporation, come on in, ride on the backs of our citizens, we don't care about them and they love it.

    • Re: (Score:3)

      by EvilSS ( 557649 )
      I'm not sure how you retire off of electric bill credits, but no. To get the credits you have to buy a shit-ton of power. Way more than those credits would be worth. Since your giant resistive load won't net you any profit when it's on and consuming power, you will be well in the hole before the next heatwave/coldsnap.

      But if it helps you could brand it NFT something. Losing money is par for the course with those.

      • Since your giant resistive load won't net you any profit when it's on and consuming power.

        I can use the column of rising air for paragliding. Maybe even get some investors for a startup in hot-air-column shipping - get the goods up high enough then glide them to the next state. It's green shipping without producing any CO2!

      • You would only use the heatsink when electricity prices are negative. Otherwise you just resell the electricity, sometimes at a profit, sometimes at a loss. Trading energy futures has nothing to do with crypto-currency. The crypto-mining is actually an ingenious way to deal with the situation where prices are negative so you don't have to put up extra cash. Or just charge a battery.
    • Is that they can agree to buy the electricity and then waste it in the form of mining cryptocurrency but get suckers involved in the pyramid scheme that is crypto to give them money and then get paid back for the electricity they don't use.

      A better solution would be that they can buy the electricity but if they don't use it they lose it. They don't get to do stupid trading schemes. Crazy stuff like this is what happens when you take something that is a necessity like electricity and let it be traded lik
    • You don't even have to build the resistive heatsink. You can trade energy futures on an exchange similar to oil futures, stock options, et cetera.

      https://www.cmegroup.com/tradi... [cmegroup.com] Rather than build a resistive heat sink, you can buy electricity on a long-term contract and then resale the electricity in the short-term market and profit from the arbitrage (which is basically what the bitcoin miners did).

      The only problem you will have is that sometimes short-term energy prices are negative in which case

    • That actually worked in Northern Ireland, for a time. They used to have a generous and fixed subsidy on biomass fuel. Fixed... so when the cost of the fuel actually fell below the subsidy, people on the scheme realized they could make lots of money by just heating an empty building as hot as practical. To make matters worse, the subsidies were guaranteed with legally-binding long-term contracts - because no-one is going to buy an expansive new furnace if they are not assured that the subsidy is safe from th

    • Re: (Score:2)

      by orlanz ( 882574 )

      No, they basically did a sale of a futures contract. They had a contract for power at a certain fixed rate, rather than exercise it, they sold it back for more than they bought it. We don't know if it net them more than the coin rate, but most likely it did. The seller bought it back at a lower loss than if they had to sell their expensive power at the contracted price.

  • BRB gonna print money in Texas (Score:4, Insightful)

    by locater16 ( 2326718 ) on Friday August 05, 2022 @06:06PM (#62765902)
    I'm just going to claim I'm running a black hole creation accelerator to hell in Texas then whenever I get paid to not use electricity I'll claim I'm saving twenty trillion zettawatts. Then when I can flip the power back on I'll sell it to everyone else, creating my own power company made of nothing but paperwork.

    This will bankrupt Texas, but that's a sacrifice I'm willing to make.

    • I'm just going to claim I'm running a black hole creation accelerator to hell in Texas then whenever I get paid to not use electricity I'll claim I'm saving twenty trillion zettawatts. Then when I can flip the power back on I'll sell it to everyone else, creating my own power company made of nothing but paperwork.

      We're talking about Texas - tell them you're building a high-power-demand quantum radar that detects illegal aliens who're crossing the border to stuff ballot boxes and rape white women.

      • Better idea: They're only allowed to use electricity generated from the leaking gas in the Permean Basin. They pay for the infrastructure costs. See: https://science.slashdot.org/s... [slashdot.org]

      • ... tell them you're building a high-power-demand quantum radar that detects illegal aliens who're crossing the border

        The only problem with quantum radar is you can only know (a) where they are *or* (b) where they're going, but not both.

  • "DeFi" = "Deregulated Finance" (Score:3, Insightful)

    by Anonymous Coward on Friday August 05, 2022 @06:16PM (#62765926)

    Don't let the crypto bros fool you: "DeFi" means "Deregulated Finance", not "decentralized" as they're trying to pass it off.

    The crypto bros all want to wrestle control away from governments and the 'big banks' (just like they're trying to do with "Web3" vs. all tech companies), under a system in which they set the rules ("code is law") and do it without any oversight, and hence no accountability whatsoever. Why else do you think they're all throwing a fit whenever the specter of regulation comes up (you know, the thing all legitimate financial institutions have to adhere to?)

  • 750 megawatt? (Score:5, Interesting)

    by thegarbz ( 1787294 ) on Friday August 05, 2022 @06:19PM (#62765936)

    For a single bitcoin facility? Fuck these fuckers, they belong in in small jail cell suspended over the flue stack of a coal fired power plant.

    • just the typical electrical output of most our nuclear reactors, if you see 2500 MWt rating that's about 750 MW electrical. hahaha that is immense.

      • They're planning a gigawatt "facility" in the next field.

        I don't understand how they can build these in the middle of a worldwide semiconductor/copper shortage.

      • Good to know they are making money by uselessly turning the entire electrical output of a large power plant into heat without the useful byproduct of any meaningful computational work. And then making more money by not turning that electricity into heat, still accomplishing the same amount of meaningful computational work.

        Fuck bitcoin, and the crypto bros. This is absolutely disgusting and should be banned.

    • Its Texas in summer, gotta wonder how much of that 750MW is for cooling. Producing 10s of bitcoins per day really would require a massive amount of mining. Truly sad that the vast majority of all of the processing goes to waste.

    • Their next facility will require 1.21 gigawatts.
  • In Catch-22 [wikipedia.org] this is a description of the character Major Major Major Major's [wikipedia.org] father.

    His specialty was alfalfa, and he made a good thing out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remai

    • Given how much water it takes to grow alfalfa, it's a quite reasonable investment to buy up land with associated water rights that is currently being used to grow alfalfa, do something sane with the land, and resell the water rights.
      • Satire [wordnik.com]

        A literary work in which human foolishness or vice is attacked through irony, derision, or wit.

        Do you often fail the "I am not a robot" test?

        • I think his point was that while it was a satirical story from a novel, it could actually be based on reality.
          Sometimes truth is stranger than fiction.

          • It was based on a real policy that occurred in the US in the 1930's during the Great Depression. Part of the satirical jab is the the character being self-righteous about doing nothing and gaining respect.
  • When you have to pay someone to not fuck you up, that's extortion. There is no legitimate purpose behind crypto mining. Just fucking tax it already commensurate with the harm it does.

    • You can try to tax it, but it was designed with the purpose of tax evasion. If the operator decides to shuffle half their bitcoin off to Luxembourg, how will anyone ever know?

      • That's why you tax the exorbitant, continuous use of electricity, not the esoteric output. It's pretty easy to design a tax to hit only crypto miners. They make even server farms look frugal. A crypto miner is like a big hole in the grid just spewing power out into nothing 24/7.

        • "It's pretty easy to design a tax to hit only crypto miners"

          Lol. You think politicians can properly legislate the difference between a crypto-miner and other purpose built computers? The miners would just add a bit of general purpose computing, call it a PC and continue operating.

          • The only overt problem with crypto mining is the energy consumption, so design the tax to address that. It's very simple. I'm sure politicians would fuck it up anyway, but the fact remains that it is simple.

          • Why would you try to tax the equipment? That would be a really stupid way to do it. Instead, tax the electricity, putting in targeted regulation that hits crypto miners but not "legitimate" data centers. I'm pretty sure you could ask some advice from Amazon, Apple, Google, Microsoft, Oracle, etc. on what that could look like, even if it's a licensing regime requiring inspections (paid for by the tax or licensing fees) to make sure some asshat crypto bro doesn't just perjure themselves on an application..

  • I'm just here for the usual anti-crypto circlejerk. Be sure y'all are socially distanced! Monkeypox is spreading. You won't be able to type up the same tired talking points if you're in immense pain.
  • I still can't believe that it's possible to make so much money in this field. I'm thinking about getting into as well, and I even managed to discover a good Blockchain software development [accelone.com] company, so I think I might try developing a crypto project, and hopefully, it'll be profitable for me because it doesn't seem hard.

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