In a significant move to regulate the growing cryptocurrency mining industry, the Public Utility Commission of Texas (PUCT) has adopted a new rule requiring large-scale crypto mining facilities to register with state authorities.
The decision, adopted on Thursday, aims to ensure the reliability of Texas's power grid amid surging electricity demand driven by the rapid growth of energy-intensive crypto mining operations that include popular cryptocurrencies like Bitcoin, which has been soaring in value of late.
"This is another example of the PUCT and ERCOT (Electric Reliability Council of Texas) adapting to support a rapidly changing industrial landscape," PUCT chairman Thomas Gleeson said in a statement. "Most importantly, we will always take the steps necessary to ensure reliable, affordable power for all Texans."
Effective immediately, cryptocurrency mining facilities connected to the ERCOT grid that consume more than 75 megawatts (MW) of power are required to register with the PUCT and ERCOT.
These facilities must disclose critical information, including their location, ownership structure, anticipated peak electricity demand for the next five years, and actual power consumption from the previous year. Existing facilities have until February 1 to comply and must renew their registration annually. Failure to register could result in penalties of up to $25,000 per violation per day.
The rule was mandated by a 2023 bill, Senate Bill 1929, which was passed to address the challenges posed by the crypto mining industry's substantial energy consumption. According to the bill, the registration aims to help ERCOT manage the grid reliably as more virtual currency mining facilities connect to it.
Crypto mining operations are classified as "large flexible loads" by state regulators due to their ability to adjust power consumption rapidly. This flexibility allows them to reduce their energy use during peak demand periods, potentially aiding grid stability.
However, their overall energy consumption is significant. As of July, ERCOT estimated that crypto mining facilities could use up to 2,600 MW of power—the equivalent of the electricity consumption of the entire city of Austin. Additionally, new facilities expected to consume another 2,600 MW have been approved, with more likely to come.
The influx of crypto miners, along with increasing demand from data centers, hydrogen production facilities, and the electrification of oil and gas operations, has led ERCOT to predict that electricity demand in Texas could nearly double within six years.
The grid operator anticipates demand could reach around 150 gigawatts (GW) by 2030, up from a record peak of 85 GW last year during the state's hottest summer on record.
"To ensure the ERCOT grid is reliable and meets the electricity needs of all Texans, the PUCT and ERCOT need to know the location and power needs of virtual currency miners," Gleeson said.
While the new regulations aim to bolster grid reliability, they have raised concerns within the crypto mining community about the confidentiality of proprietary and commercially sensitive information.
Miners have requested that the registration data be explicitly identified as confidential to protect their competitive advantage. However, the commission declined to make this change, noting that the information will be collected via an internal-facing online tool that will not be publicly accessible.
"Furthermore, the majority of information being collected is already publicly available in various locations," the commission stated in its order. "Neither the commission nor ERCOT will disclose competitively sensitive or proprietary information unless legally required to do so."
The Texas Blockchain Council expressed appreciation for the commission's approach. "The information that the PUC is requesting is appropriate and far less invasive than what the Federal Government attempted earlier this year," Lee Bratcher, president of the Texas Blockchain Council, said in an email to Utility Dive.
Texas's new rule comes amid a broader national conversation about the regulation of cryptocurrency mining.
Several states, including Montana, Mississippi, Oklahoma, and Arkansas, have passed "Right-to-Mine" laws aimed at protecting the rights of crypto miners, prohibiting discriminatory regulations and predatory practices like overcharging for electricity.
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