DALLAS (CBSDFW.COM) - Texas cryptocurrency miners must now obtain ERCOT approval to connect to the state's power grid.
State regulators said the new requirement is to ensure large new loads don't overwhelm the network.
Ever since China began cracking down on Bitcoin mining, miners have rushed to Texas to take advantage of the state's cheap energy prices, tax incentives and the ability to connect quickly to the grid.
In the next two years, cryptocurrency mining operations are expected to quadruple in Texas, according to the Texas Blockchain Council. This would put the Lone Star state on track to become the world's largest Bitcoin producer in less than two years.
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โThis is going to put a tremendous amount of stress on the Texas power grid,โ said William Magnuson, author of Blockchain Democracy and cryptocurrency legal expert at Texas A&M Law School. "We know that the Texas power grid has had its problems in recent years, so I'm concerned about the effects of imposing massive new energy use on a grid that we know has been relatively unstable."
During the deadly winter storm of 2021, millions of Texans were without power for days as the Texas grid failed in freezing conditions to meet demand.
Last year, steps were taken to increase the capacity of the power grid and prepare power plants for winter.
Still, many energy experts believe the Texas grid remains vulnerable and a high-energy burst using cryptocurrency mining facilities could further stress the grid.
A typical large crypto mining facility hosts tens of thousands of high-powered computer servers, called "miners." These miners operate 24 hours a day competing with other miners to solve complex mathematical equations. The computer that solves the problem first produces a new Bitcoin and is then rewarded with Bitcoins for itself.
The electricity it takes to produce a single Bitcoin is equivalent to the amount used to power an average Texas home for 62 days.
Magnuson said that ERCOT's new approval process for large cryptocurrency mining facilities is a good start, but added that what state regulators do with the information they learn from the studies will be key.
"How are they going to weigh the costs and benefits of adding these new mining companies to the network? That's where the rubber meets the road," he said.
Lee Bratcher, president of the Texas Blockchain Council, said he sees the new approval step as an opportunity to share with ERCOT how cryptocurrency miners can make the network stronger.
"Actually, we see this approval process as a positive development," he said.
By using electricity that might otherwise go to waste during times of low demand and then shut down during times of peak demand, Bratcher said Bitcoin miners will bring additional power generators to the state while offering flexibility to stabilize the network.
In many cases, Bitcoin miners can make money off power by selling their electricity back to the grid when demand is high.
"Bitcoin mining is not going to solve all the network problems, but it is certainly part of the solution," said Bratcher.
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Some cryptocurrency miners have raised concerns about how long the approval process could take.
ERCOT officials told CBS 11's I-Team: "The length of time ERCOT takes for its interim review will vary by site and the concerns that are identified. Each study is based on the unique circumstances it presents."
ERCOT officials and cryptocurrency miners are expected to meet later this month to discuss the details of the new approval process.
