The fallout from the arctic blast that swept across the US is prompting some large-scale Bitcoin mining companies to shutter parts of their energy-intensive operations as electricity costs surge.
A key measure of computing power to mint the token - known as the hash rate - has seen a steep decline, according to data compiled by Mining Pool Stats. That has been largely due to the output decreases in mining pools FoundryUSA and Luxor, which mostly serve US-based operators. The two pools saw drops as much as more than 50% in hash rate during the weekend and remain at relatively low levels as the effects of the winter storm continue to weigh on power grids.
Large-scale mining companies such as Riot Platforms Inc., whose main operations are in Texas, have participated in the demand response programs in the state, where miners can sell pre-purchased power back to the grid amid soaring energy prices. Some of the other miners without such setups in place are forced to shut down their machines given the high electricity rates. Riot didn't immediately respond to a request for comment.
“The most sophisticated Bitcoin miners are reacting within seconds to curtail and run their machine at a precise speed to maximize profit between revenue, power prices and grid servicing incentives.” said Ethan Vera, chief operating officer at Seattle-based mining services provider Luxor Technology.
Bitcoin mining is an energy-intensive process in which miners raise tens of billions of dollars to build data centers and purchase specialized computers to compete for token rewards from validating transactions on the blockchain. Mining pools are typically firms that provide the software that can aggregate computing power from miners to increase their chance to win those rewards.
Bitcoin miners outside the US have likely benefited from the curtailment with less competition and a much better chance to be the first to successful process a block of transaction data and win the rewards.
Shares of Riot fell about 6% on Monday, while Hallandale Beach, Florida-based MARA Holdings Inc. dropped around 5%.
The US has become a major Bitcoin-mining hub with some of the world's largest operations in crypto-friendly states such as Texas and Georgia, whose power grids are under strain from the extreme weather conditions.
Excessive energy use by Bitcoin miners have faced backlash from local power grid operators as well as residents that may have been affected by surging electricity bills. The rapid rise of artificial intelligence data centers have exacerbated a shortage in both power and energy infrastructure. Previous winter storms in Texas have caused multiple casualties due in part to power outages, while many residents had to pay much higher rates for electricity rates during those periods.
The storm over the weekend affected millions of people across the eastern two-thirds of the US, with 765,000 homes and businesses without electricity as of 1:30 p.m. New York time as snow and ice ravaged local distribution lines, according to PowerOutage.us. More than half of the outages were reported in three states: Tennessee, Mississippi and Louisiana. So far, power grids have avoided large system-level cuts, but sub-zero temperatures and dangerous wind chills are set to linger all week, testing seasonal power demand records from Texas to New England, meteorologist said.
The US has become a major Bitcoin-mining hub since China cracked down on the industry in 2021.
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