Energy is everything for Bitcoin miners. And as the summer months set in, demand for energy peaks across North America–now home to some +30% of Bitcoin’s hashrate.
As such, let’s take a look at what government energy departments and energy experts are expecting over the next dozen weeks, focusing on capacity, generation and mining activity in Texas. For reference, we’ll be using:
- The Energy Information Agency’s (EIA) May Short Term Energy Outlook (STEO)
- The Energy Reliability Council of Texas (ERCOT) Seasonal Assessment of Resource Adequacy (SARA), issued in May
- The Texas Energy and Power Newsletter, from our friend Doug Lewin at Stoic Energy
Generation
Net generation takes into account all generation of electricity, minus energy used at the generating station. Last year, a peak of 4.24 trillion MegaWatt hours (MW/h) were generated during July 2022.
The EiA forecasts a slightly higher generation capacity this summer, particularly from renewables and natural gas resources. A planned 11 GW of coal is expected to come offline in 2023, with 75% before July.
Texas’ ERCOT grid–home to one of the largest concentrations of Bitcoin mining–is forecasting the highest capacity ever at 97.2 GW.
Demand
Nationally, consumption of electricity is not expected to change year-over-year by much–up only 1%. Texas forecasts a higher demand for electricity YoY at 82.7 GW, compared to last summer’s 80 GW of demand. For reference, ERCOT’s winter 2023 SARA forecasted 67.4 GW of demand and 87.3 GW of capacity during the cold season.
Texas’ growing demand for energy has been a point of contention for many in the state, particularly with the history of brownouts or complete grid failure. ERCOT has launched a new program, the ‘Texas Advisory and Notification System’ (TXANS) to coordinate voluntary reduction of energy usage during peak periods from retail and commercial buyers. The California Independent System Operator (CAISO) used a similar system to dramatic effect last summer.
Bitcoin mining
We don’t have granular data about Bitcoin mining in the United States that can be used without some concern. However, Texas’ ERCOT does include one measurement for ‘Large Flexible Loads’ (LFL)–another name for large Bitcoin miners enrolled in ERCOTs demand response program.
ERCOT expects some 1.1 GW of mining activity. These miners can be called upon to curtail mining activities during peak demand periods, adding further margin to Texas’ energy capacity. As a free market, these miners will likely only do so in the case where the price of energy exceeds that of mining rewards, which ERCOT estimates to be around $96/MWh based on spring 2023 data.
Higher demand likely means more curtailment in Texas this coming summer. And with Bitcoin mining revenues idling, curtailment will likely become a larger percentage of public miners’ monthly revenues as well.
