- Large-scale bitcoin miners are pausing activity as Texas' power grid nears failure.
- Crypto mining encompasses millions of computers that use mass amounts of energy to solve code.
- Texas has become a crypto-mining darling thanks to its low energy costs.
Bitcoin mining heavyweights are pausing operations as the Texas energy grid buckles and state officials warn of rolling blackouts, Bloomberg first reported.
A heatwave in the state is pushing its power grid to a breaking point and raising conservation concerns. Companies including Riot Blockchain Inc., Argo Blockchain Plc and Core Scientific Inc flocked to Texas thanks to its low energy costs that are favorable to bitcoin miners. The companies collectively operate millions of computers in the state to solve complex coding problems which then awards miners with bitcoins.
The cutback follows peak usage on Friday, where miners hit 78,206 megawatts which shattered the previous record of 77,460 set on July 5. Companies could potentially see further losses in revenues as computers remained shuttered as Texas sorts out its energy situation.
Miners were already dealing with mounting debt, sitting on roughly $4 billion worth of loans as cryptocurrencies suffer massive losses this year. Bitcoin, the largest cryptocurrency by market cap, is way off from all-time highs of $69,000 hit in November of 2021, and is changing hands on Monday just above $20,000. As a result, Core Scientific unloaded 2,000 bitcoins in June to cover operating costs.
And the volatility which cryptocurrencies have become known for has pushed rates for loans to bitcoin miners higher as firms flock to traditional banks and institutions to back ventures. Crypto firms have been feeling the pain broadly as they run out of cash and look to alternative sources, including FTX's Sam Bankman-Fried, for a lifeline.
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