The heat wave that is coming to Europe and America is also affecting the cryptocurrency sector. In Texas, almost all major cryptocurrency mining operators are shut down due to high electricity demand. What can we expect?
Electricity demand has skyrocketed in Texas
As a reminder, Texas has become one of the nerve centers of cryptocurrency mining, thanks in particular to its low electricity costs, as well as its rather open regulations in terms of blockchain. According to data from the University of Cambridge, the US state gathered 11% of the hashrate in December 2021. For comparison, the US as a whole accounted for 37% of the global hashrate over the same period.
But Texas is struggling with regard to its electricity supply, and this affects the mining sector. Faced with the heat wave, the air conditioning, ubiquitous in the United States, is running at full speed. To the point that Texas is expecting power shortages, the state not being able to fully meet demand.
On all sides, companies and individuals are therefore invited to conserve electricity, in order to avoid power cuts as much as possible. In the city of Houston, temperatures are expected to reach 40 degrees Celsius today.
👉 More info in our guide – What is mining?
Texas mining farms shut down due to heatwave
Of course it plays on the Bitcoin (BTC) mining industry. According to information reported by Bloomberg, the vast majority of operators in Texas have simply ceased operations, in order to free up electricity for a particular use.
According to Lee Bratcher, president of the Blockchain Association of Texas, companies have submitted to requests from the Electric Reliability Council of Texas (ERCOT)the body that manages the electricity supply:
“There are over 1,000 megawatts of bitcoin mining load that responded to ERCOT’s requests, shutting down their machines to conserve power. […] This represents nearly all of Texas-wide industrial miningand this makes it possible to redistribute 1% of the overall capacity of the electricity network for private and commercial uses.»
Major operators like Core Scientific, Riot Blockchain and Argo Blockchain are therefore on hold. This is not entirely a surprise, with the industry being told to scale down in the event of such an event. In the event of a heat wave, miners are asked to turn off their machines, or for any other event that pushes the network to its limits. Texas hit record high electricity consumption last Friday, with 78,206 megawatts.
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Bad news for the mining industry?
The mining industry could suffer from this heatwave – it was already facing under considerable financial pressure, while the Bitcoin price has been living around $20,000 for several weeks. We have seen the direct effects in recent weeks, with miners starting to sell to cushion the costs.
In addition, companies in the sector have seen their shares fall considerably. From April 8 to July 7, the majority of them lost between -47% and -80%. And if we have seen a recovery with the rebound of BTC in recent days, the difficulties are far from over for the sector.
👉 On the same subject – Sam Bankman-Fried makes available “a few billion” to help crypto businesses
Sources: CBECI, CoinDesk, Bloomberg
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