AUSTIN (KXAN) – Everything is bigger in Texas, including cryptocurrency mining operations. Texas is currently home to the largest cryptocurrency mining facility in North America and, of all the facilities in the state, accounts for about 15% of mining worldwide, according to researchers.
Attached to these mining operations is a Texas-sized use of power. In order to “mine” for cryptocurrency, computers must run computation algorithms to verify transactions. The computers that solve an algorithm get a “reward” in the form of cryptocurrency – such as Bitcoin – according to the Texas Comptroller. The more calculations a computer can solve, the higher the chance of receiving the reward, per the Texas Comptroller.
“In a nutshell, it is an extremely energy-intensive process to mine a Bitcoin. That is why the scale of these computing demands has reached the point that they can rival the consumption of a city’s worth of electricity,” said Le Xie, professor in the Department of Electrical and Computer Engineering at Texas A&M University.
The Texas Comptroller estimates that by 2023, cryptocurrency mining facilities in the state could demand as much power as Houston, the fourth-largest city in the U.S. Already, mining facilities in the state are consuming roughly as much energy as Austin, Xie said.
Despite the amount of energy these operations require, Texas political leaders have promoted the state as a destination for mining companies, per reporting in the Texas Tribune. Some rural areas where facilities have moved have welcomed them, reaping economic benefits from the operations.
What risk do these mining companies pose to the Texas energy grid?
Professor Le Xie has been studying the impacts these mining facilities have on the Texas grid.
His research has centered on examining mining facilities’ impact on three areas: grid reliability, carbon dioxide emissions and wholesale energy market prices.
“Their impact substantially depends upon the way you model them,” Xie said. “If they were modeled as sort of a [constant] demand, then there will be a substantial impact on grid reliability” because they must be served at all times and would stress the grid
Conversely, if the facilities are “flexible – meaning they can be turned off in times of grid precarity — they can actually be utilized to provide more energy to the Texas grid, Xie said.
Xie’s team’s findings were published in the March issue of the Institute of Electrical and Electronics Engineers Transactions on Energy Markets, Policy and Regulation and the June issue of Advances in Applied Energy.
“We are pleased to say that the kind of model and data that we have utilized can be useful not only here in Texas but also around the country for decision-makers to take a look and understand their performances during stressful situations,” he said.
Cryptocurrency and crypto mining is still a relatively new industry. Bitcoin – the most well-known cryptocurrency – has only been around since 2009.
“Any kind of demand going beyond certain thresholds would always have to be studied and integrated with careful analysis,” Xie said. “That’s the reason we’re doing the study, to understand [crypto mines] characteristics so that we can provide better decision support for the policymakers.”