Cryptocurrency miners flocking to Texas have caused a spike in electricity prices for local residents already burdened by rising energy costs.
Minimal regulation and relatively cheap electricity have drawn crypto companies like Riot Blockchain and Argo Blockchain to Texas, along with others seeking new locations following China’s ban on cryptocurrency mining last year.
And Governor Greg Abbott has pledged to make the state the global center for crypto mining.
However, increasing demand threatens to raise power bills for locals, many of whom survived a deep freeze last year that left hundreds dead.
The incident jacked up prices to the point of pushing many utility companies into debt, and some to bankruptcy.
Texas grid members to vote this month
The state’s grid operator, the Electric Reliability Council of Texas (Ercot), said its members would vote this month on creating a task force that would evaluate how Bitcoin mining would affect the power system.
“Ercot will continue to coordinate and collaborate with its regulators and stakeholders to successfully integrate crypto loads,” the grid operator said.
While estimates of how much power bills could rise are still unclear, the city of Plattsburgh, New York, provides an example.
Following a surge in energy prices after allowing mining, the practice was banned in 2018 until regulatory measures were later passed.
A 2021 University of California Berkeley study concluded that Bitcoin mining had cost residents and businesses in the region of $250 million a year in higher electricity bills.
According to the study, individuals pay up to $8 more per month on electric bills, while small businesses pay up to $12.
Many crypto mining companies have appealed for an upgrade in utilities to handle the increased load. David Naylor, CEO of Rayburn Country Electric Cooperative, received multiple proposals to build Bitcoin mines.
Two proposals would require $20 million in upgrades, which would each consume enough electricity to power 60,000 Texas homes.
Ercot consumers are the ones footing the bill for new investments, which the operator expects could reach a total of $4.5 billion this year.