Cheryl Shadden, a 61-year-old nurse, is having trouble sleeping due to the constant noise of fans spinning to cool tens of thousands of computers. As an anesthesia provider at hospitals, she finds the nonstop mechanical whir to be disruptive to her sleep schedule.
Shadden resides in Granbury, located 40 miles southwest of Fort Worth, Texas, in the company of her seven dogs, six horses, six cats, and a parrot. However, in 2022, her peaceful abode was disrupted by the arrival of a 300-megawatt Bitcoin facility, also known as a “mine,” which operates 24/7 and aids in the upkeep of a worldwide network of cryptocurrency transactions.
According to Shadden, living in this area is not a wise decision. The windows in his house rattle constantly, and the sound penetrates through the walls, causing his ears to ring non-stop, 24 hours a day, 7 days a week.
Shadden has noticed a significant change in her animals’ behavior since the facility’s opening. Her dogs have been restless and even pulled out their fur. Alarmed by her deteriorating hearing, she visited a doctor for an examination. The tests revealed that she had incurred permanent hearing loss. Shadden strongly believes that the noise from the Bitcoin mine has caused her hearing loss and her animals’ distressing behavior.
Texans may be losing sleep over more than just noise pollution when it comes to Bitcoin mining. Marathon Digital’s mining facility is just one of many cryptocurrency mining operations opening up across the US, with Texas being a particularly popular location due to its low taxes, abundance of land, and deregulated energy market. However, as demand for electricity increases, everyday Texans may end up footing the bill on their monthly utility statements.
In 2008, Bitcoin was introduced as a revolutionary electronic payment system that eliminates intermediaries such as banks and credit card companies. This cryptocurrency is managed by a decentralized network of Bitcoin users, making all transactions secure and transparent. Currently valued at around $58,000, Bitcoin can be easily purchased with dollars from a Bitcoin exchange such as Coinbase. To make a purchase using Bitcoin, a buyer simply sends the currency from their digital wallet to the seller’s digital wallet.
Mining Bitcoin isn’t as straightforward as it may seem. To confirm a transaction, a distinct random code is assigned to each one, which must be correctly guessed. This is where “mining” comes into play. Companies operate powerful computers around the clock, generating a never-ending stream of random numbers in the hopes of hitting upon the correct code. Whenever a miner’s computer correctly guesses a transaction code, they receive a reward of 3.125 newly minted Bitcoins, which is currently valued at around $181,250. This fee is their compensation for their contribution in maintaining the network’s security.
On average, it takes around 10 minutes for a Bitcoin miner from any part of the world to guess a code and authenticate a transaction. However, as more computing power is added to the system, the algorithm increases the complexity of the codes, resulting in a surge of energy consumption. This phenomenon has been labeled as an energy arms race, as the miners require enormous amounts of electricity to operate their computers.
Currently, 10 out of the 34 large Bitcoin mines are situated in Texas.
Texans are often requested to conserve power during extreme weather conditions such as cold spells or heat waves. In August 2023, the state’s grid operator issued eight conservation appeals, urging the public to reduce electricity consumption to avert a potential emergency that might lead to rolling blackouts. Texas lawmakers are growing increasingly concerned that energy-intensive mines could pose a challenge to maintaining a stable power supply throughout the state.
During a public hearing on June 12, State Senator José Menéndez, who represents San Antonio and is a member of the Democratic Party, expressed his concerns about the potential danger that increased power consumption could pose to the power grid. He stated, “The power they’re drawing could put our grid at risk.”
During a six-hour long session, members of the Business and Commerce Committee questioned grid operators, public utility commissioners, and industry representatives, including those from the manufacturing, oil and gas, and cryptocurrency sectors. The legislators were particularly concerned about the significant increase in energy demand on the state’s primary electrical grid. The Electric Reliability Council of Texas has estimated that the peak demand, which was around 85,000 megawatts last year, will soar to 150,000 megawatts by 2030.
After the hearing, Lt. Gov. Dan Patrick took to social media and expressed his concerns about the state’s data centers and crypto miners causing power outages. He emphasized the need to prevent a scenario where these entities can act unrestrained and cause chaos in the grid. Additionally, there has been a call for stricter regulations in the power plant loan sector to ensure that the power supply remains stable and consistent.
Currently, cryptocurrency mining — mostly for Bitcoin — can draw up to 2,600 megawatts of power from the grid operated by the Electric Reliability Council of Texas, ERCOT’s senior vice president, Woody Rickerson, told senators. That’s about the same amount of power used by the city of Austin, and another 2,600 megawatts of mining is already approved to connect to the grid. Even more Bitcoin mines are expected to come to Texas in the near future.
According to ERCOT, the grid is expected to face an increase of up to 43,600 megawatts in electricity demand by 2027 from facilities categorized as “Large Flexible Loads,” which require over 75 megawatts. ERCOT revealed that the crypto mining industry is currently the largest contributor to these large flexible loads seeking to interconnect with the ERCOT System. Additionally, data centers dedicated to artificial intelligence and facilities that produce hydrogen from water through electrolysis are also among the large flexible loads.
Texas is responding to the surge in demand, primarily due to Bitcoin mining, by utilizing natural gas power plants, with initial funding provided by taxpayers. In 2023, the Texas Legislature established a loan program, which was later endorsed by voters as ballot Proposition 7, to offer low-interest loans to companies for constructing or expanding power plants. The Texas Energy Fund will have $10 billion to distribute initially, after receiving requests exceeding $39 billion.
Constellation Energy, the owner of the Wolf Hollow II power plant in Granbury, is among the companies seeking a loan. Marathon Digital has an agreement with Constellation to lease space adjacent to the plant for Bitcoin mining and to buy electricity directly from Wolf Hollow II.
Constellation plans to increase the power generation capacity of Wolf Hollow II by adding more turbines that can produce up to 300 megawatts of power, which is the amount needed to run a marathon.
Constellation recently submitted an application to the Texas Commission on Environmental Quality. The proposal includes adding eight turbines to the power plant, which would result in the release of over 796,000 additional tons of carbon dioxide annually. Due to the staggering amount of greenhouse gas emissions, environmental activists have been strongly opposing cryptocurrency mining. As per reports, Bitcoin has been accused of “gaming the system.”
Marathon and Constellation’s agreement, which is referred to as a power purchase agreement, is a significant factor that sets Bitcoin mines apart as key players in the Texas energy market, rather than just power consumers. Typically, crypto facilities secure a reasonably low rate for buying electricity “behind the meter” in most agreements, so the supply doesn’t enter the ERCOT market. However, Bitcoin mining firms can opt to sell that power to the ERCOT market instead of using it to power their computers.
Riot Platforms, a leading Bitcoin mining company, currently runs two of the world’s largest Bitcoin facilities. These facilities are situated in Texas and are known for their incredible power consumption. In fact, according to a report by The New York Times, Riot Platforms’ mining operation in Rockdale was the most power-intensive Bitcoin mining operation in the United States, using electricity equivalent to that consumed by the nearest 300,000 homes.
In 2022, one of the facilities managed to pay a meager 2.5 cents per kilowatt-hour of electricity, which is significantly lower than the average price of over 10 cents throughout Texas.
During the scorching summer days of August 2023, energy prices soared, and Riot Platforms saw an opportunity to profit. Through their private agreements, they purchased power and resold it on the wholesale energy market, earning a whopping $24.2 million. Interestingly, this amount is almost three times the $8.6 million the company made that same month from mining and selling Bitcoin.
Mandy DeRoche, an attorney at the nonprofit Earthjustice, who has dealt with cases concerning crypto mines throughout the country, stated that “they can manipulate the system in various ways to maximize their profits.”
Bitcoin companies have the option to take part in demand response programs that enable ERCOT operators to regulate the energy load of their facility. This helps in reducing usage during sudden outages or peak demand periods in other parts of the grid, especially during extreme weather conditions. Participating companies receive a premium payment from ERCOT, and an additional fee each time their energy load is controlled through the program. According to a monthly earnings report, Riot Platforms earned a whopping $7.2 million from such programs in August 2023.
According to the chairman of the Business and Commerce Committee, state Sen. Charles Schwertner (R-Georgetown), Texas has established a system that provides a considerable advantage for crypto mining.
Consumer advocates are concerned that the millions of profits generated by Bitcoin mining in Texas are not being earned ethically. This has raised the question of who bears the brunt of the cost. Cheryl Shadden and her fellow residents of Granbury are at the forefront of this issue. Adrian Shelley, the Texas director for the nonprofit Public Citizen, has stated that the cost is passed on directly to ratepayers. He further added that Bitcoin miners are in a prime position to manipulate the energy market, leading to higher prices for consumers.
There are three primary methods for Bitcoin miners to generate profits, each with its own impact on the availability of energy in Texas. These methods include energy-intensive computations for mining Bitcoin, selling power on the wholesale energy market, or participating in demand response. It’s important to note that the decision of which method to choose varies significantly among miners.
According to DeRoche, when the price of Bitcoin is relatively low, there is a greater incentive for individuals to power down their computers during times of high demand or extreme weather conditions.
The value of Bitcoin has skyrocketed to unprecedented heights this year, hovering at around $60,000 since March, which is twice as high as it was in August 2023. DeRoche has expressed concerns that the increased price may lead to greater difficulty in forecasting when miners will shut down during energy shortages. Additionally, a phased strategy for reducing noise has been proposed.
According to Bitcoin advocates, the mining industry’s flexibility actually strengthens the power grid. Lee Bratcher, who serves as the president of the Texas Blockchain Council, emphasizes the importance of having price-sensitive loads on the grid. He explained in an email to Inside Climate News that by situating mining operations in rural areas that have excess power but insufficient transmission capacity to reach major population centers, the cryptocurrency industry is utilizing power that would have otherwise gone to waste.
According to him, numerous mines run on full capacity at night when the demand is low and reduce their power usage during peak hours such as hot afternoons in summers or cold snaps in winters.
Despite being requested for interviews, Bratcher and representatives from Marathon Digital and Constellation Energy declined to comment on the matter. However, Jim Crawford, the Chief Operating Officer for Marathon, explained via email that the company encourages the production of wind and solar power by entering into power purchase agreements with renewable energy generators.
Crawford emphasized the importance of commitments in completing renewable energy projects, stating that without them, these projects may never see the light of day. While Marathon’s facility in Granbury is situated next to a natural gas plant, their other facilities in Texas are located near wind power. Crawford proudly highlighted that their contribution to the displacement of fossil fuel generation is significant.
In a report by DeRoche, titled “Breaking Through the Bitcoin Myths,” she sheds light on the industry and raises concerns about the veracity of Bitcoin miners’ claims on using renewable energy. According to DeRoche, verifying these claims is a challenge since power purchase agreements are confidential and proprietary. She further adds that many of these claims appear to be baseless.
Crawford addressed the concerns regarding noise levels in Granbury by stating that Marathon had released a phased plan in March to mitigate noise. However, he refrained from commenting further on the issue at this time.
In April, the phased plan was initiated to increase energy efficiency. As a part of this plan, fans are now shut off whenever computers are not in use. Additionally, there is a transition to liquid cooling underway, where computers are submerged in a non-conductive liquid solution that silently absorbs heat. This will help in reducing energy consumption and promoting a more eco-friendly environment.
Marathon has been facing criticism from the community for causing noise pollution. In response, Constellation, the parent company of Marathon, acknowledged the feedback and stated in an email that they are actively working with Marathon to find a solution to the problem.
Despite the wall that was built on the east side of the Bitcoin facility to reduce the noise, according to Shadden, who resides northwest of the mine, the sound still reverberates off the wall. Depending on atmospheric conditions, the neighbors living miles away can still hear the noise. Shadden also mentioned that even with the initial measures taken by Marathon to address the issue, the noise level has not improved and remains as bad as ever.
Marathon has been cited by local law enforcement for more than 30 instances of violating the noise limits of 85 decibels. On the day of the Senate hearing, a neighbor measured 87.9 decibels on a reader from the edge of Shadden’s property. Despite speaking with local elected officials, neighbors have not seen significant action taken as a result of these meetings.
John Highsmith, a resident of Granbury, expressed his concern regarding the county’s perspective on the matter, stating that some individuals view it merely as a profitable opportunity without giving much thought to the health issues at hand. “You certainly get the impression that there’s people that see this is just a great, you know, money opportunity for the county, right? And the health issues they haven’t gotten too concerned about,” he emphasized.
Constellation is facing criticism from neighbors who are concerned about the risks posed by the Bitcoin mine it is hosting. These individuals have expressed their grievances to the company, claiming that it is endangering the community. In addition, they are gearing up for a hearing with the state environmental regulator later this year to contest the power plant’s expansion plans, which they argue will increase air pollution. Hood County residents, including a county commissioner, are also urging the county not to renew Constellation’s tax abatement.
Shadden declared that the community has reached its limit.
This piece was initially published on the Texas Tribune.
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