Texas Governor Greg Abbott is looking to Bitcoin miners to fix the state’s power crisis. The Austin meeting was the first in a series hosted by Abbott, who has been exploring how crypto can help Texas. Bitcoin mining could be the answer.
Texas Governor Greg Abbott gathered dozens of cryptocurrency deal makers in Austin last fall to discuss an idea that, on the surface, seemed almost backwards: Bitcoin miners could shore up the power grid in the state, a top priority after a deep freeze resulted in blackouts that killed hundreds last winter.
Industry advocates have been pitching the governor on that for years. In theory, the miners’ computer arrays would consume so much electricity that someone would build more power plants, something Texas desperately needs.
It is likely that miners would shut down if the grid begins to wobble, as it did during Winter Storm Uri in February 2021, when power plants froze up.
There have already been two miners who have offered to do that. There’s no guarantee that more miners will emerge or that they will switch off just because we ask them.
There’s a chance the plan will backfire and put even more strain on the grid. But Abbott made it clear at last October’s meeting that the grid would depend on the miners’ assistance this winter.
Four people who attended the meeting said that the governor asked for their help to get through the winter. Getting through the winter may be the key to Abbott’s political future as he seeks reelection.
In the March 1 Republican primary, he will face two opponents; he will face Democrat Beto O’Rourke in November. Texans disapprove of how the state has handled the grid’s reliability in a recent poll by the University of Texas/Texas Tribune, conducted in October.
Bitcoin Mining Is Becoming More Profitable Than Ever
“There has to be a really thoughtful approach to bringing gigawatts worth of Bitcoin onto the system,” said Doug Lewin, an energy consultant in Austin. Instead of allowing mines to close voluntarily, he said regulators should require them to do so during a crisis. “We’ve got to make sure that if we’re getting close to scarcity, people aren’t mining Bitcoins anymore.”
The industry in which Abbott is investing sees itself as a libertarian form of finance free of meddling by banks and government — an ideal that appeals to his core GOP voters.
The state’s support for Bitcoin mining, as well as its cheap electricity and lack of regulation, has attracted big companies to Texas, including Riot Blockchain Inc., Bitdeer Group of Singapore and Argo Blockchain Plc of the U.K.
According to the lobbying group Texas Blockchain Council, Texas has seven big mining companies and over 20 smaller ones. Texas Governor Greg Abbott and Republican lawmakers have taken some of the most aggressive steps to attract mining companies to the state.
Texas’s Largest Utility Provider Is Now Accepting Bitcoin
As of last May, Texas became one of a few states to ease the process of holding crypto assets and using them as collateral for loans. Abbott also created a group called the Work Group on Blockchain Matters, which is staffed by industry experts and insiders.
According to Christopher Calicott, who heads Trammell Venture Partners in Austin and is a member of Abbott’s crypto task force, Abbott sees a huge opportunity in the energy sector.
There are a number of countries that have outright banned or limited crypto mining because of its drain on electric grids, including China, Kazakhstan, and Iceland. Texas is luring miners partly because other places don’t want them.
Texas Blockchain Council president Lee Bratcher believes these bans are a chance to promote Bitcoin mining’s benefits to the power grid. Bratcher has met with Abbott several times to discuss Bitcoin mining’s benefits.
Bratcher said in an interview, “It’s a very good dynamic that brings tax revenue, creates jobs, and strengthens the grid.” Gov. Abbott has been very supportive.
The president is not the only state leader pushing Texas as a crypto paradise. Austin Mayor Steve Adler and Republican Senator Ted Cruz are doing the same. Cruz spoke for 38 minutes at a blockchain industry conference a few days before the governor’s meeting on crypto in Austin, emphasizing the potential for Bitcoin mining to enhance the state’s power infrastructure. “In five years, I expect to see a dramatically different terrain with Bitcoin mining playing a significant role as strengthening and hardening the resiliency of the grid,” he said.
Ben Hertz-Shargel, global head of Wood Mackenzie’s Grid Edge, said Bitcoin miners are risky because they may not shut down or may take a very long time to shut off.
Families and businesses could compete for power as the crisis looms. “At those times, Bitcoin mining would be competing with basic core societal needs like heating or cooling homes or the functioning of hospitals and nursing homes,” Hertz-Shargel said.
Despite multiple requests for comment by email and phone, Abbott’s spokespeople did not respond.
Why The Governor Abbott Of Texas Is Pushing For Crypto Mining
Governor Abbott has embraced crypto mining for a number of years. Oil wildcatter Gideon Powell says he pitched crypto to Abbott shortly after getting into Bitcoin mining five years ago.The governor quizzed Powell a few weeks after the storm about how the industry could help stabilize the grid. “He seems to get it,” Powell said. “And it’s such a weird concept: ‘Hey, we’re gonna put more energy consumption in an energy system, and that’s going to stabilize the grid.’”
The miners’ pitch places a high value on Texas’ competitive power market. Electricity is essential to Bitcoin mining. Powered by it, all the world’s Bitcoins are created by the computers that hum nonstop solving complicated algorithmic equations.
The Future of Bitcoin Mining?
By 2023, there will be enough new Bitcoin mines in Texas to require as much as 5 gigawatts of additional electricity, according to the Texas Blockchain Council. That’s enough energy to light up Austin, a city of almost 1 million people, twice over.
It’s possible those projections may have to be revised. Mining becomes profitable when Bitcoins trade above the cost of the power and computers needed to create them, and the price of bitcoins is down almost 50% from November’s record high.
It is anathema to Texans who lived through last year’s storm, when ice covered gas wells and forced power plants offline, that further stress on the grid would delay mining expansions.
Hundreds of power plants were ordered to be winterized following the blackouts, which left more than 200 people dead. Texans blamed Abbott’s lack of regulation of the electrical grid.
According to a spokesperson for the Electric Reliability Council of Texas (Ercot), “Everything that needed to be done was done” to fix the grid, Abbott said in June.
However, there are signs that blackouts are still possible. Two arctic blasts in January cut gas production and exposed continued vulnerabilities in equipment that ensures fuel is flowing to electricity generators.
Rivals are hounding Abbott over his handling of the power disaster.
After the governor promised the lights would remain on this winter, O’Rourke tweeted, “Experts continue to warn that Texas could face another grid failure the next time we experience an extreme weather event.”
“Abbott and his appointees shouldn’t be betting our lives on the weather.”
“I am committed to making Texas the Citadel for Bitcoin,” Huffines said in a statement. Former state senator Don Huffines is a GOP challenger who wants to do more than Abbott to promote crypto.
Abbott made it clear at the governor’s mansion meeting on Oct. 13 that he’s all-in on crypto mining. The governor smiled and agreed when someone asked if Texas is “Bitcoin Country.” His blockchain working group is seeking more crypto-friendly laws and incentives, and the industry’s expansion plans have his backing.
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Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
