Bitcoin mining heavyweights suspend operations as Texas energy grid buckles and state officials warn of blackouts, Bloomberg first reported.
A heat wave in the state pushes its power grid to breaking point and raises conservation concerns. Companies such as Riot Blockchain Inc., Argo Blockchain Plc, and Core Scientific Inc have flocked to Texas thanks to its low energy costs favorable to bitcoin miners. The companies collectively operate millions of computers in the state to solve complex coding problems which then reward miners with bitcoins.
The reduction follows Friday’s spike in usage, when miners hit 78,206 megawatts, breaking the previous record of 77,460 set on July 5. Businesses could potentially suffer further revenue losses as computers remain shut down as Texas fixes its energy situation.
Miners were already facing growing debt, sitting on roughly $4 billion in loans as cryptocurrencies suffer massive losses this year. Bitcoin, the largest cryptocurrency by market capitalization, is a long way from all-time highs of $69,000 hit in November 2021, and is changing hands on Monday just above $20,000. As a result, Core Scientific offloaded 2,000 bitcoins in June to cover operating costs.
And the volatility that cryptocurrencies have become known for has driven up lending rates to bitcoin miners as businesses flock to banks and traditional institutions to prop up businesses. Crypto firms are widely feeling the pain as they run out of cash and turn to alternative sources, including FTX’s Sam Bankman-Fried, for a lifeline.