[probablyexists]

Don't worry, Texas is just helping the crypto miners rather than their citizens again. "The Electric Reliability Council of Texas (ERCOT) paid a bitcoin miner $31.7 million in energy credits in August to not mine bitcoin. During the August heat wave, ERCOT issued eight calls for voluntary energy conservation. People were asked to adjust home thermostats or delay doing laundry during the energy call."

[actionfromafar]

I think I have to set up shop in Texas with some space heaters and claim my bitcoin energy credits!

[kaibee]

>“His specialty was alfalfa, and he made a good thing out of not growing any. The government paid him well for every bushel of alfalfa he did not grow. The more alfalfa he did not grow, the more money the government gave him, and he spent every penny he didn't earn on new land to increase the amount of alfalfa he did not produce. Major Major's father worked without rest at not growing alfalfa. On long winter evenings he remained indoors and did not mend harness, and he sprang out of bed at the crack of noon every day just to make certain that the chores would not be done. He invested in land wisely and soon was not growing more alfalfa than any other man in the county. Neighbours sought him out for advice on all subjects, for he had made much money and was therefore wise. “As ye sow, so shall ye reap,” he counselled one and all, and everyone said “Amen.”

The more things change eh

[hindsightbias]

“His specialty was crypto, and he made a good thing out of not mining any. The government paid him well for every coin of crypto he did not mine. The more crypto he did not mine, the more money the government gave him, and he spent every penny he didn't earn on new servers to increase the amount of crypto he did not produce. Major Major's father worked without rest at not mining crypto. On long winter evenings he remained indoors and did not mend cable ties, and he sprang out of bed at the crack of noon every day just to make certain that the admin would not be done. He invested in datacenters wisely and soon was not mining more crypto than any other man in the county. Neighbours sought him out for advice on all subjects, for he had made much money and was therefore wise. “As ye sow, so shall ye reap,” he counselled one and all, and everyone said “KK.”

[anon____]

The quote is from Joseph Heller's Catch-22.

[4567546]

Unfortunately not how it works. The reason that Texas is paying miners to load shed is because they are being paid to supply a constant load to the grid. They shut down in order to dump capacity into the grid because that is less expensive than attempting to bring new capacity online to meet demand and then later bring that capacity back down when it is no longer needed. Because of the way miners can ramp up and down their loads systems can be set up to smooth out extreme spikes in electrical demand.

These miners have no choice but to shut down because ERCOT can also remotely kill their ability to consume the load. Part of the payments they get are because of the service being provided to the grid and also to encourage miners to continue operating in good faith by volunteering to load shed and work with grid operators.

The story is even more complex when you throw in things like land being bought to the sum of 240 million for these miners to operate on and locals in areas like this seem excited for the job opportunity so I have to believe good portions of that 34 million are making its way right back into the local economy of central Texas.

The reason Bitcoin mining works and not your space heater is because of the incentive structures built into the proof of work system within Bitcoin.

I think this is worth digging into deeper and figuring out how we can objectively measure if this is successful or not. I think there is a legitimate counter argument to make that without mining actually, Texas would have had a full grid blackout this summer.

[Aloha]

I also have the somewhat controversial opinion that things like bitcoin are useful because they create static but easy to shed demand.

So to explain what I mean by that in depth - the economic losses from shutdown are limited to production losses during the shutdown, and there is no loss of inventory, or other secondary losses like process startup and shutdown for a refinery, semiconductor fab, or other kinds of manufacturing which product a physical good.

This static load absorbs some of the excess generation from wind and solar, thereby keeping the spot price in the grid high enough that thermal generation is still cost effective to build and operate.

Now, that all said, I dont think we should be paying them to shut down, they should just be disconnected wholesale from the grid during periods of ultra high demand as a condition of their interconnection to it. That said, we have programs designed to offset economic losses from disconnection from the grid during high use periods, and the bitcoin plants are just using that existing mechanism - I have mixed feelings about it, but I dont think its all bad.

[actionfromafar]

This only makes sense with the unstated premise that the state is helpless to regulate the market with its own set of incentives.

[Aloha]

Legally, it in some ways, it currently is.

Could Texas return to Integrated utilities, and Rate of Return based pricing? sure, but that'd be up to the legislature to deal with.

I think the current system surprisingly (even to me) works well, I think building in market incentives is probably easier than trying to put the genie back in the bottle.

[actionfromafar]

“Pay Bitcoin miners” to stabilise the grid, that market incentive?

[gcr]

even with incentives, it’s still cash-negative for the miners to buy electricity from ERCOT though, right?

[actionfromafar]

In that vein, I’m more interested in what Crusoe Energy is doing. They started out with Bitcoin mining at “energy island” locations. Now they are setting up AI data centres at such sites.

[amelius]

My thought too and a perfect example of the Cobra effect :)

https://en.wikipedia.org/wiki/Perverse_incentive#The_origina...

[Buttons840]

Yeah, but if they pay you to not mine Bitcoin and then find out you're not mining Bitcoin, won't you be in trouble?

[4567546]

Correct me if I am wrong but I think you mean "And then find out you're mining Bitcoin" but I am not sure. Assuming that is what you meant ERCOT is able to remotely monitor the load and verify if they are shedding load or not. The miners just sort of exist on the grid and it gives ERCOT the ability to control inbound and outbound capacity which is how I think they are able to smooth out the electrical demands or whatever. It is also possible that ERCOT knows granular details about the load since these miners (known as an ASIC) consume a set amount of power from the wall. But they don't need that much detail, they only need to see the total load from the miners come down in order to know that miners are doing as they should.

It is all really new stuff to me but interesting. I think a lot of negative attention takes the light because the state of Texas is a political dumpster fire and I would be incredibly suspicious of anything the state tries to do, especially when it comes to something adjacent to a trendy industry that has made big news for scams after scams lately. But from what I am able to gather so far, there might actually be something here.

I do agree with one commenter in that I am not entirely sure its needed to provide payment to these guys, but maybe they are not able to be profitable with mining and selling Bitcoin alone, or need to hedge against the volatility of the price and payments help with both of those things.

[actionfromafar]

How efficient does the not mining bitcoin have to be?

[itsoktocry]

>The Electric Reliability Council of Texas (ERCOT) paid a bitcoin miner $31.7 million in energy credits

Politicians are utterly useless. They all herded to the crypto grift frenzy as if this was going to do anything for the local economy. Wonder how it's turning out? The 2021 fad has subsided, now they are paying customers to mine coins? Beyond stupid.

[polygamous_bat]

> Politicians are utterly useless.

Step 1: get in power. Step 2: make government smaller by dismantling systems made to protect the public. Step 3: grift. Step 4: "See, governments are all grifters! Never vote for people who ask for bigger governments." Step 5: goto step 1

[SketchySeaBeast]

Did they all get in on the crypto grift frenzy? I know in Canada there's a certain political slant (up to and including the leader of our official opposition who spoke highly of bitcoin) that seemed more enamored with it than the rest.

[datadata]

The payment was to not mine coins and thus conserve electricity to more important consumers during times of shortages

[euroderf]

You too can smelt bauxite at home !