Bitcoin Hashrate Plummets 34% in Texas Freezing Weather

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23 Mar 2024

The freezing temperatures in Texas have triggered a significant 34% drop in Bitcoin’s hashrate. As the State faced subzero weather conditions, Bitcoin miners were compelled to cut back operations, impacting the state’s energy grid.
Quick Take:

Freezing temperatures in Texas cause a 34% drop in Bitcoin’s hashrate, impacting mining operations.
Data shows Texas contributes nearly 29% of the U.S. Bitcoin hashrate.
Bitcoin miners, including Marathon Digital and Riot, curtail operations to support Texas’ electric grid during extreme weather.
Texas-based miners continue to play their role in balancing the state’s power grid.

This sudden freeze highlights the link between cryptocurrency mining and environmental factors. Moreover, it further shows the pivotal role of Texas in the global Bitcoin mining industry. However, the drop in hash rate could weaken the security of the digital currency just before the anticipated halving event.

Texas Faces Weather-Induced Challenges

The drop in Bitcoin’s hashrate unfolded following a cold snap in Texas that commenced on January 14. Many regions in the state experienced temperatures below freezing, reminiscent of the massive ice storm in February 2023.
The data reveals a decline, with the total Bitcoin network hashrate plummeting from over 629 exahashes per second (EH/s) on January 11 to approximately 415 EH/s on January 15. This marks a staggering 34% decrease. A temporary rise to more than 454 EH/s on January 16 coincided with a brief temperature increase in Austin.
Further data indicates that Texas contributes nearly 29% of the Bitcoin hashrate in the United States. Thus, making it a significant Bitcoin mining hub. The state gained prominence as miners migrated from China following the 2021 crackdown on the cryptocurrency industry.
Major players in the sector, including Marathon Digital, Riot Platforms, Bitdeer, and Core Scientific, have established operations in Texas. They are drawn by factors such as cheap electricity, grid incentives, and a deregulated energy market.

Bitcoin Miners Respond to the Challenging Conditions

Unlike the disruptions witnessed in 2021, when extreme winter conditions led to power outages and grid failures, Texas experienced fewer significant issues. The Electric Reliability Council of Texas (ERCOT) issued official conservation appeals during the period of extreme cold.
The authority urged businesses and residents to conserve electricity. Mining firms participating in ERCOT’s program adjusted their loads on the state’s power grid to balance demand during challenging weather conditions.
Marathon Digital and other Bitcoin miners are curtailing operations during the freezing temperatures. They align with the broader goal of supporting Texas’ electric grid and its residents.

Charlie Schumacher, VP of Corporate Communications at Marathon Digital, emphasized that Bitcoin miners function as a base load, turning off during extreme weather events to make energy more abundant and affordable for those in need.
He added,

“Many Bitcoin miners in Texas, Marathon included, have curtailed operations over the past few days to support the Texas grid and the state’s citizens during the current cold outbreak, and that’s exactly how this should be working.”

This recent incident is not the first time Texas-based Bitcoin miners have faced curtailment requests. Riot Platforms set a record in August, receiving $31.7 million worth of power and demand response credits after drastically reducing power usage during a summer heatwave.
The flexibility in adjusting loads has positioned Bitcoin miners as valuable contributors to Texas’ energy infrastructure during times of crisis. Despite weather-induced challenges in Texas, Bitcoin mining and environmental factors are closely intertwined.
The recent hashrate plunge serves as a stark reminder of the industry’s vulnerability to external conditions. There is no doubt that Texas, with its significant share of U.S. hashrate, will remain a key player as it balances mining operations with the state’s energy needs.
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Afroz Ahmad