Texas paid Bitcoin company $175k an hour to stop using energy during fatal 2021 winter blackout

During a powerful winter storm, Texas paid a Bitcoin mining company an average of $175,000 per hour to keep their computers offline as the state faced a power crisis.

In February 2021, Texas’ power grid was under duress after the state was hit with three powerful winter storms including Winter Storm Uri and Winter Storm Viola.

As Texas residents faced blackouts and freezing temperatures, a Bitcoin mining company called Bitdeer was continuously running its computers until just after midnight on 14 February 2021 when Texas’ power grid operator ordered them to turn off, according to an investigation from The New York Times.

The computers were allegedly using enough electricity to power 6,500 homes.

In order to turn off the computers, Texas had to pay Bitdeer an “average of $175,000 an hour.” The computers remained off for four days, meaning Texas paid Bitdeer $18 million in the end.

Bitdeer is one Bitcoin company part of an agreement that exists in states like Texas, New York, and Pennsylvania where Bitcoin operators’ revenue can come from other power customers.

In Texas, if Bitcoin companies promise to power down when necessary to prevent blackouts, they can be paid by the grid operator, per The New York Times.

On Twitter, Bitdeer responded to the article saying, “New York Times falsely claimed that we realized $18mm in revenue by participating in the demand response programs during Winter Storm Uri in 2021.”

Bitdeer denied receiving “windfall payments” while closing down operations during the storm.

“We willingly assumed net losses to ensure that electricity was delivered to residential and essential commercial customers. We did not receive windfall payments as reported,” Bitdeer wrote.

Bitcoin mining consists of computers performing trillions of calculations every second to find a combination of numbers that Bitcoin accepts. A computer guesses the right number combination approximately every 10 minutes.

Mining requires massive amounts of electricity, which has led to large quantities of carbon emissions. Researchers at the University of Cambridge estimate Bitcoin has emitted 200m tonnes of CO2 since it launched.

The electricity consumption needed for Bitcoin mining can affect residents in the areas mines are settled.

Where Bitcoin mines exist in West Texas, energy bills have risen 9 per cent. In other areas, bills have risen anywhere from 4 to 5 per cent.