Texas Grid Operator’s Forecast Could Dampen State’s Bitcoin Mining Dreams

ERCOT said it expects peak demand to double within six years, citing the growth of cryptocurrency mining and AI data centers in the Lone Star State.

Power lines in Dallas on June 12, 2022. Shelby Tauber/Reuters

Texas’s electricity grid operator revealed its new five-year forecast during a state Senate committee hearing last week, and the revelations could dampen the state’s bitcoin mining dreams.

Officials from the Electric Reliability Council of Texas (ERCOT), the organization that manages the state’s grid, testified on June 12 at a Senate Business and Commerce Committee hearing in Austin that cryptocurrency mining and artificial intelligence (AI) data centers could impact the reliability of the state’s power grid.

ERCOT CEO Pablo Vegas told the committee that, based on ERCOT’s latest five-year forecast, power grid demands are expected to nearly double by 2030.

“That number increased from 110 [gigawatts] to 150 [gigawatts],” Mr. Vegas told the committee. “Going from [an] 80 [gigawatt] to 85 gigawatt range where we are today to 150 [gigawatts] in 2030 is almost doubling of the total peak demand over a six-year period, effectively.”

He said the expected demand is significantly higher than ERCOT had previously estimated.

“We were forecasting that we would go from the peak where we were last summer of 85 gigawatts to a peak in 2029 of 110,” Mr. Vegas explained. “And then we ran that same analysis this year after the passage of 5066, which requires us to look at all prospective loads that there’s strong belief is going to come to Texas and develop.”

The state’s population increase and normal business growth are contributing factors to higher power demands, but crypto mining and AI data centers would be responsible for approximately half of the predicted growth, according to ERCOT.

A single “AI Google search” pulls as much as 30 times more power than a traditional Google search, Mr. Vegas said.

After the committee hearing, Lt. Gov. Dan Patrick expressed his concerns on social media.

“Texans will ultimately pay the price,” Mr. Patrick wrote on X, formerly known as Twitter. “I’m more interested in building the grid to service customers in their homes, apartments, and normal businesses and keeping costs as low as possible for them instead of for very niche industries that have massive power demands and produce few jobs.

“We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.”

Power lines in Houston on June 15, 2021. Brandon Bell/Getty Images

Improving the grid and attracting investment in new natural gas plants have been among Mr. Patrick’s top priorities since the ice storm dubbed Uri in February 2021 left millions of Texans without power for days across the state.

Texas crypto miners currently require about 2.6 gigawatts to operate—enough power to support the city of Austin—but ERCOT told the committee that the demand drops to about 200 megawatts when conditions tighten. Crypto miners are pulling in millions of dollars in profits by selling back to the grid or utility providers when demand peaks.

Bitcoin mining company Riot announced record power credits last summer during peak demand.

“August was a landmark month for Riot in showcasing the benefits of our unique power strategy,” Riot CEO Jason Les said in a statement in September 2023. “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.”

AI data centers, unlike cryptocurrency miners, don’t have the ability to tamp down their demands when the grid is stressed.

‘Nobody Should Be Surprised’

Ed Hirs, energy fellow at the University of Houston, told The Epoch Times that ERCOT’s projections should not come as a surprise to anyone.

“Really, nobody should be surprised at the expected growth and demand on the ERCOT grid,” he said on June 14. “That the senators are surprised really is just indicative of their lack of attention to the most critical part of the Texas infrastructure.”

Mr. Hirs said it is important to differentiate between the operations of AI data centers and cryptocurrency miners.

“The data centers are part of business and commerce,” he said. “Crypto miners are directly taking money away from other ERCOT customers to produce their own profits.”

In 2022, ERCOT reported that 33 gigawatts of cryptocurrency miners had applied to join the grid, according to the Association of Electric Companies of Texas. The interest in Texas followed China’s ban on crypto mining operations a year earlier.

“Keep in mind, China threw out the cryptocurrency miners years ago, and they found a welcome home in Texas,” Mr. Hirs said, adding that he believes that these operations are often used to facilitate black market transactions and nontax transactions and reduce the cost of money laundering for drug traffickers and human traffickers.

According to ERCOT’s Independent Market Monitor, ERCOT’s power-sourcing rules cost Texans more than $12 billion in overcharges in 2023.

As for shoring up the grid, it’s out of the state’s hands, according to Mr. Hirs.

“Texas as a state is not empowered to build new power plants,” he said, and neither is ERCOT, which is basically a “traffic cop that directs electricity around the grid.”

Mr. Hirs said it depends on power companies investing in new power plants, but even if they started building now, it would take years to bring them online. If, for example, NRG Energy replaced a current site that already had interconnection hookups, it could potentially be connected within two years, he said.

“Otherwise, we are looking at four to five years, if we started today.”