ERCOT, the organization responsible for managing Texas’ energy grid, has adopted a unique approach to dealing with the energy-intensive crypto-mining industry in the state. Instead of imposing restrictions, ERCOT has developed friendly ties with crypto mining companies.
Crypto mining operations require vast amounts of electricity, and ERCOT recognized the need to cooperate rather than suppress these energy-hungry endeavours.
One notable facet of this relationship involves offering energy credits to crypto miners in exchange for reducing their power consumption during peak demand periods.
During an exceptionally hot summer in the northern hemisphere, ERCOT faced the risk of grid overload due to increased air conditioning usage. In a proactive move, ERCOT called upon companies like Riot Platforms to curtail their energy consumption temporarily.
To compensate for potential losses incurred by suspending Bitcoin mining operations, ERCOT extended a generous offer of $31.7 million in energy credits. This sum exceeded the potential profits miners could have earned from mining and selling Bitcoin during August.
“All you have to do is pay the miners slightly more than what they would have made mining for bitcoin that hour. It’s a win-win.”
Riot’s agreement with ERCOT represents a straightforward, albeit unconventional, method of generating profit during a cryptocurrency industry downturn. In the not-so-distant past, Riot Platforms experienced an astonishing 8000% surge in revenue.
Regrettably, this prosperous period was short-lived, and by 2022, Riot found itself facing a $500 deficit on its balance sheet. Since then, the mining platform’s loss rate has decelerated; in the last quarter, it incurred only $27.7 million in losses.
Presuming that the mining company prudently invested its substantial 2021 earnings, it should be able to withstand the current market uncertainties until confidence in the industry rebounds.
Meanwhile, the partnership with ERCOT is furnishing Riot Platforms with a welcome source of income, as indicated by CEO Jason Les.
“August was a landmark month for Riot in showcasing the benefits of our unique power strategy. The effects of these credits significantly lower Riot’s cost to mine Bitcoin and are a key element in making Riot one of the lowest-cost producers of Bitcoin in the industry.”
Riot’s shares have surged approximately 230% from their lowest point in 2022. If the recent speculations about Bitcoin ETFs materialize as anticipated, there is the potential for the stock’s value to maintain its upward trajectory.