Texas is facing a potential electricity crisis due to the growth of cryptocurrency mining and AI data centers in the state, according to the Electric Reliability Council of Texas (ERCOT). In a recent state senate committee hearing, ERCOT revealed its five-year forecast, which predicts that power grid demands in Texas will nearly double by 2030. This increase is significantly higher than previous estimates and is attributed to the rise of crypto mining and AI data centers.
ERCOT CEO Pablo Vegas explained that the expected demand of 150 gigawatts in 2030 is almost double the current peak demand of 85 gigawatts. He noted that crypto mining and AI data centers would be responsible for approximately half of this growth. It’s worth mentioning that a single “AI Google search” consumes 30 times more power than a traditional search. This revelation has raised concerns among officials about the reliability of the grid and the potential impact on electricity prices for Texans.
Lt. Gov. Dan Patrick expressed his worries on social media, emphasizing the need to prioritize the grid’s stability and affordability for residential and commercial customers over niche industries with high power demands but few job opportunities. Patrick’s concerns stem from the devastating ice storm Uri in February 2021, which left millions of Texans without power for days. Since then, improving the grid and attracting investments in new natural gas plants have been among his top priorities.
Currently, Texas crypto miners require around 2.6 gigawatts to operate, equivalent to the power needed to support the city of Austin. However, when conditions tighten, their demand drops to approximately 200 megawatts. Crypto miners have been able to generate significant profits by selling excess power back to the grid or utility providers during peak demand periods. For instance, Bitcoin mining company Riot announced record power credits last summer, totaling $31.7 million in August alone.
On the other hand, AI data centers do not have the ability to reduce their power demands when the grid is stressed. This distinction is crucial, according to Ed Hirs, an energy fellow at the University of Houston. He argues that while data centers are essential for business and commerce, crypto miners are essentially diverting resources from other ERCOT customers to generate their own profits.
Hirs also highlights the influx of cryptocurrency miners into Texas following China’s ban on crypto mining operations. He believes that these operations may be used for illicit activities such as facilitating black market transactions, nontax transactions, and money laundering for drug and human traffickers. In 2022, ERCOT reported that 33 gigawatts of cryptocurrency miners had applied to join the grid.
Additionally, ERCOT’s power-sourcing rules have resulted in significant overcharges for Texans, costing them over $12 billion last year, according to the Independent Market Monitor. To address the potential electricity crisis and strengthen the grid, Hirs emphasizes that it’s up to power companies to invest in new power plants. However, this process takes time, as it would require years to bring new plants online.
In conclusion, Texas faces a pressing challenge in meeting the increasing power demands driven by cryptocurrency mining and AI data centers. The state needs to find a balance between supporting these industries and ensuring the reliability and affordability of electricity for its residents and businesses. The potential consequences of an unstable grid and rising electricity prices highlight the urgency of addressing this issue promptly.
