Texas Coalition Against Cryptomining is hosting a weeklong schedule of events Oct. 23-27 to raise awareness of a cryptomining data transaction processing center being built near Corsicana. Photo courtesy of Storyblocks.
Oct. 20, 2023
Environmental activists will be part of a consortium of public interest groups and cryptocurrency experts meeting next week in Corsicana, just an hour south of Dallas to participate in a public awareness campaign about the cryptocurrency industry in the state and the risks that it poses to the electric power grid, utility rates and natural resources.
Organized by the Texas Coalition Against Cryptomining, the weeklong schedule of events will include participation by Greenpeace and Stand Up for Change: Navarro County. Special guests who are scheduled to make presentations during the week are Ed Hirs, Energy Fellow at the University of Houston and Adrian Shelly, director for Public Citizen's Texas office.
GRID UNDER STRAIN
Critics say the digital currency industry, increasingly used by drug cartels, sex traffickers and cyber criminals, will not only drain natural resources, it may soon force Texans to pay skyrocketing electric bills while contributing to the risk of rolling blackouts.
Navarro County resident and TCAC founder Jackie Sawicky says the new Bitcoin cryptomining data transaction processing center being built by Colorado-based Riot Platforms on roughly 265 acres in Navarro County will become the largest cryptomining data transaction processing center in the world.
She says it will further destabilize the state’s electric grid while potentially increasing electric prices for families and small businesses once the Bitcoin facility is fully operational.
She points to the recent summer, when Texans were urged by the Electric Reliability Council of Texas to cut back on power consumption or face the risk of forced shutdowns as demand for electricity threatened to surge past supply.
Sawicky says the new one-gigawatt Bitcoin facility will be the equivalent of adding 300,000 to one million homes to the state’s already strained electric power grid once all phases of expansion are implemented.
Additionally, she says the facility once fully expanded will use more than 1.4 million gallons of water every day during peak months from mid-May to mid-October, even as Texas faces extreme drought conditions during most summers.
Sawicky says she was prompted to form TCAC by "the surprise announcement" in April 2022 that Riot Platforms, formerly named Riot Blockchain, was building the massive cryptomining center in Navarro County.
The new Bitcoin mine will be Riot Platforms’s second in the state, joining a facility already operating in Rockdale, about 58 miles from Austin. The Corsicana facility is considered an expansion of Riot’s mining operation. After completing the first 400-megawatt phase of the expansion, future capacity at the site will be expandable by an additional 600 megawatts to 1,000 megawatts, which is equal to one gigawatt.
Sawicky says that a Bitcoin mining facility is a sort of data transaction processing center that consists of rows of large warehouses that contain thousands of specialized computers tasked with the energy-intensive work of processing Bitcoin blockchain information.
“It uses an incredible amount of power. One single Bitcoin mine for one single day uses the equivalent power of an average house for two years," she says.
Such a huge power demand will potentially increase electric rates for the 26 million power customers in Texas as the state’s electric fees are determined from moment to moment by supply and demand: as demand comes closer to matching supply, fees rise sharply, she says.
Joshua Archer, Bitcoin Project Lead for Greenpeace USA says, “If Bitcoin mining continues to rapidly expand in Texas, energy prices for consumers could spike significantly. Over the past couple of years, Texans have experienced instability in their grid, causing devastating blackouts like during Winter Storm Uri.”
A Riot spokesperson contests such a characterization, saying, “Riot’s operations result in lower electricity costs for ratepayers because the company purchases energy that would otherwise be stranded in off-peak times and reduces demand at peak times.”
ENERGY BUYBACKS UNDER SCRUTINY
Ed Hirs, a Houston-based energy consultant and economics expert, says the cryptomining industry has been welcomed to the state by high level politicians such as Governor Greg Abbot and Senator Ted Cruz. Meanwhile, the industry seems to profit from the very power grid instability that it exacerbates, through payments issued for mines to curb their energy use during power emergencies, he says.
A look at Riot’s own August 2023 production and operations update reveals that between ERCOT’s payment of $7.4 million to shut down, and the company’s sale of pre-purchased energy in the amount of $24 million in energy credits prompted by soaring energy demand across the state, Riot came out about $31 million ahead in one month through its power arrangement with both ERCOT and TXU.
The update boasts: “’August was a landmark month for Riot in showcasing the benefits of our unique power strategy,’ said Jason Les, CEO of Riot. ‘Riot achieved a new monthly record for Power and Demand Response Credits, totaling $31.7 million in August, which surpassed the total amount of all Credits received in 2022.’”
Riot’s spokesperson defends the company’s participation in ERCOT’s ancillary services program: “With regard to ancillary services, ERCOT pays large industrial customers, on a competitive bid basis, to control their electrical loads and either keep their consumption on during high prices, turn it off, or adjust it, depending on ERCOT’s needs to balance and stabilize the grid. Riot is a small part —less than 1 percent — but a proud part of the ancillary service market in Texas, which serves over 25 million customers in a geographic area larger than most countries.”
In another statement issued by Riot to address the subsequent controversy over the ERCOT and TXU payments, the company claims:
“In August, Riot provided over 84,000 megawatt hours of energy to the market in Texas to reduce overall demand, lower consumer prices, and stabilize the grid during a heat wave. This ensured that consumers did not experience disruptions during extreme temperatures.”
Riot Platforms, Inc., however, does not generate electricity. Hirs explains that their claim of providing megawatt hours to the Texas market amounts to little more than a scheme through which Riot received energy credit for curtailing consumption when the price was very high, and then returned these credits to buy electricity when prices were much cheaper, thereby coming out ahead.
“As the cryptocurrency miners require more and more electricity, they will drive up the price of electricity for 26 million Texans and destabilize the grid. But, and here is the beauty of their scheme, the cryptocurrency miners will rescue the grid by selling back their electricity at a major markup. Texas consumers will pay and pay again. As the scheme progresses, cryptocurrency miners will become tapeworms on the ERCOT grid,” Hirs explains in a column for Barron’s.
Regarding payment for ancillary services, ERCOT responded to Green Source DFW’s request for information with the following statement:
“ERCOT does pay Market Participants who provide Ancillary Services, which are reserves to support grid reliability. ERCOT is required to procure Ancillary Services each day on behalf of Texas consumers, and does so through a competitive bidding process. Any qualified generator or load may bid in, and the services are awarded at least cost to consumers. ERCOT does not award Ancillary Services based on generator or load type.”
Hirs says the response is legalistically correct, but “that’s a bullshit statement.”
“You're being asked to shut down your electricity. And they're being paid to shut down theirs,” he adds. “Cryptominers have inserted themselves ahead of 26 million normal Texans, and they get a sweetheart deal to turn off their power.”
CRYPTOCURRENCY UNDER FIRE
Hirs says that if the risks to Texas’ power prices and grid stability were not enough reason to scrutinize the industry cropping up in the state, cryptocurrency has become the preferred currency of organized crime, partly because the digital money allows for massive transfers of funds around the globe shielded from the scrutiny of governments, banks and law enforcement while eliminating the need to hide ill-gotten funds through costly, secretive schemes.
“The introduction of cryptocurrencies in this country has given human traffickers, sex traffickers, drug traffickers a 25 percent pay increase pay increase because that's what they would have lost just laundering the money,” he says.
Sawicky adds that several of the high-profile ransomware incidents that have been resolved by the affected hospital, municipality or corporation simply paying the ransom to recover their computer systems have involved cryptocurrency payments.
According to a report by the U.S. Senate Committee on Homeland Security and Governmental Affairs, "Cryptocurrency, typically Bitcoin, has become a near universal form of ransom payment in ransomware attacks, in part, because cryptocurrency enables criminals to extort huge sums of money from victims across diverse sectors with incredible speed."
Sawicky says that such illegal activity involving cryptocurrency alone should motivate U.S. and state legislators and policy makers in Navarro County to at least remain neutral about the industry rather than welcoming it with tax abatements, reduced wholesale electric prices and cryptocurrency-friendly laws.
Riot’s spokesperson counters, “The Bitcoin network maintains a global, transparent and immutable ledger, which makes it exceedingly difficult for illicit financial transactions to succeed on it. Leading analytics firm Chainalysis estimates that less than 0.25 percent of transaction volume using all cryptocurrencies is attributable to illicit activity, while the UN estimates that 2-5 percent of transactions using fiat currency are attributable to illicit finance. For a recent example, Hamas stopped fundraising with Bitcoin because the clear records created by the blockchain empowered the U.S. and Israeli governments to successfully crack down on the group’s money laundering operation.”
Archer says Greenpeace USA does not oppose the cryptocurrency industry in general but supports TCAC efforts to address the environmental consequences of Bitcoin’s current energy-intensive mode of operation. The organization has launched a Clean Up Bitcoin campaign to raise awareness about the issue.
“Our main goal with the Clean Up Bitcoin campaign is to innovate Bitcoin to a less energy-intensive consensus mechanism,” he says. “Our mission is to ensure a just and joyful planet for life in all its forms. The planned one-gigawatt facility in Corsicana goes against that mission.”
Riot’s spokesperson says, “Riot’s Corsicana facility will use the most efficient machines on the market, which are electric and produce zero carbon emissions. The Bitcoin network globally uses less than a quarter of a percent of the world’s energy and is only becoming more sustainable and energy efficient. Riot’s machines are also the most advanced and durable, resulting in reduced e-waste, and they will be 100 percent immersion cooled, making them virtually silent. Riot is proud to be a leading job creator in two different parts of the great state of Texas and enjoys strong community involvement and partnerships.”
Sawicky says she’s hoping that the TCAC Week of Action encourages more people to look into concerns expressed about cryptocurrency and cryptomining, and she wants the event to provoke local media outlets to keep residents of both Navarro County and the state informed about how the world's largest Bitcoin mine and the cryptocurrency industry will affect Texas’ electric and water resources.
“Locally, we want transparency and accountability,” she says. “We're starting a new petition during the Week of Action to demand an official public town hall with the folks who brought this here participating, and the company too. We want to see the local and DFW papers cover this and other issues critically and listen to their readers.
“We want to gain new members here and across Texas to build a statewide, grassroots coalition. And we want national legislation to protect consumers, local communities, and the environment.”
Texas Coalition Against Cryptomining Week of Action
When: Oct 23 - 27, 2023
Oct. 23, Monday - Official Navarro County and Corsicana City Council Meetings, at 10 a.m. and 6 p.m.
Oct. 24, Tuesday - Public Town Hall Meeting, 6 p.m.
Oct. 25, Wednesday - Action at the Site, 11 a.m.
Oct. 26, Thursday - Interviews, Videos, and Contacting Reps, Noon
Oct. 27, Friday - Celebration of Community Action, 6 p.m.
Stay up to date on everything green in North Texas, including the latest news and events! Sign up for the weekly Green Source DFW Newsletter! Follow us on Facebook,Twitter and Instagram. Also check out our podcast The Texas Green Report, available on your favorite podcast app.