Texas cold snap threatens 15% of global Bitcoin mining activity

Cold weather in Texas is proving to be a benefit for Bitcoin miners around the globe. Miners in the Lone Star state halted operations to avoid a power grid failure as temperatures fell below freezing.

A state prone to power grid failures

Bitcoin’s hashrate dropped roughly 34% over the weekend — from 629 terahashes per second on January 12 to 414 terahashes per second on January 15 — according to data from Blockchain.com.

The hashrate is the total computational power working to process transactions on the Bitcoin network.

The drop was due to Bitcoin miners turning off their machines to support the power grid as Texans increased their energy needs — primarily to heat their homes in the midst of a cold spell.

“Marathon has been curtailing operations in Texas over the past few days to support the Texas grid and the state’s citizens during the current cold outbreak,” Marathon VP of Corporate Communications Charlie Schumacher told DL News.

“Because we have operations all across the globe, from Texas to Abu Dhabi, we are still able operate effectively and support the Bitcoin network when we curtail in a specific region.”

Texas is leaning increasingly on intermittent renewable energy sources, which can make the grid vulnerable to disruptions when solar or wind power sources experience dips in output.

Similarly, cold snaps and heat waves place particular strain on the grid, which is prone to blackouts and brownouts.

But the state has also become a Bitcoin mining hub — thanks to cheap energy costs, powerful subsidies, and an influx of mining companies fleeing a Chinese ban on all things Bitcoin in 2021.

Fort Worth-based investment advisor Kristine Cranley lauded the “free market” for energy in Texas, attributing miners’ voluntary halts to financial incentives.

“Miners in Texas are incentivized to power down during storms in a number of ways,” Cranley told DL News.

“Many have hedged power contracts, enabling them to earn more by selling power back to the grid when the prices surge during emergencies,” Cranley said.

“Others shut down when power costs exceed their break-even point.” During storms miners “proactively turn off” to support the grid, even in the absence of power outage risks, Cranley added.

It isn’t the first time miners have dialled back operations.

In December 2022, Texas Bitcoin miners voluntarily halted 99% of activities to assist the power grid as a storm ravaged much of the country.

That event saw Bitcoin’s hashrate drop around 40%.

As recently as September, miners curtailed operations by 95% to deal with high temperatures and declining solar power generation.

Crypto market movers

• Bitcoin fell 1% to below $42,000 since Wednesday.
• Ethereum fell 1.6% to $2,485.

What we’re reading

• Bitcoin ETFs lure ‘insane’ $10bn in first days as US tightens grip on crypto market — DL News
• Judge Roasts SEC’s Lawsuit Against Coinbase, Seeks Clarity On Securities Laws — Milk Road
• 25% of Crypto Developers Have Left the Ecosystem Over the Past Year: Report — Unchained
• Telegram trading bot Unibot hits record use on Solana after Ethereum success — DL News

Tyler Pearson is a markets correspondent at DL News. He is based out of Alberta, Canada. Got a hot tip? Reach out to him at ty@dlnews.com. Tom Carreras is a markets correspondent at DL News. Reach out at tcarreras@dlnews.com.