Impact of Winter Storm Fern on Bitcoin Network Speed
or anyone to see, as mining pools known to have users with equipment along Fern’s path, such as Foundry USA and Luxor, saw their respective share of the network hashrate massively decline during this time. “Luxor mining pool users have collectively curtailed around 50% of their power consumption, a result of high power prices across all major US electricity grids,” Luxor’s Ethan Vera told Gizmodo. “The winter storm has caused power prices to surge and miners are reacting in real-time to remain profitable and, in some cases, benefit by selling power back to the grid.”
Vera’s comments shed light on an interesting aspect of the bitcoin mining industry. Miners can get paid to turn off their equipment by offering to curtail their use of power and sell it back to the grid during times of increased demand—such as when everyone is staying at home and cranking up the heat during a winter storm. This helps balance supply and demand for electricity, which is crucial for the grid’s overall health.
The Electric Reliability Council of Texas (ERCOT), which manages the electric grid in Texas, has recognized the benefits of bitcoin mining for grid management. ERCOT COO Woody Rickerson mentioned in 2024 that making all bitcoin mining controllable load resources would be advantageous for reliability. Bitcoin mining is a unique form of electrical demand that can be easily turned off without causing negative effects for the business.
This setup has been beneficial for ERCOT, especially during challenging weather events like Winter Storm Uri in February 2021. By introducing curtailment measures for bitcoin miners, ERCOT has managed to balance the grid more effectively during times of high demand. Reports indicate similar curtailments were put in place during the January 2024 winter storm and another heatwave in August 2023. However, increased demand from bitcoin mining operations can lead to higher electricity costs for consumers if these operations do not contribute new energy sources to the grid or if proper policies are not implemented at the government level. A 2023 report from energy data research group Wood Mackenzie suggested that bitcoin mining operations in Texas had caused electricity bills to increase by 4.7% for non-mining customers. Riot Platforms, a bitcoin miner, disputes this claim and argues that their operations actually lower electricity prices by providing demand during off-peak hours.
The constant demand for electricity associated with bitcoin mining has sparked theories that it could enhance the economics of renewable energy sources. Square (now Block) made a controversial argument in 2021 that Bitcoin’s energy use could potentially be beneficial. However, critics of the crypto network question the usefulness of Bitcoin’s energy consumption. Some individuals have even incorporated bitcoin mining equipment into their home heating systems to stay warm during winter. Moreover, startups are exploring commercial ventures using bitcoin mining to offset costs associated with water heaters, heating systems for greenhouses, or even entire homes.
