Bitcoin Miner Gets Paid Nearly $32 Million To Reduce Mining Rate This August
ERCOT, the Texan energy grid operator, has long had an informal relationship with crypto mining companies in the state.
Since crypto mining companies often consume enormous amounts of electricity to power their activities, ERCOT opted to develop cordial relationships with them instead of trying to stifle their activities.
One of the ways this relationship unfolds is through the offering of energy credits in return for a reduction in power consumption during crucial moments.
Compensated For Freeing Up The Grid
As the northern hemisphere dealt with one of the hottest summers in recent memory, the Texan energy grid was at risk of being overwhelmed due to a marked increase in air conditioning equipment being used.
In order to stave off any unfortunate events, ERCOT asked Riot Platforms and other crypto miners to reduce their energy consumption.
To compensate for the loss of potential profit generated by mining Bitcoin, ERCOT offered the mining company $31.7 million in energy credits – a figure slightly higher than the potential proceeds of mining and selling Bitcoin during the month of August.
“All you have to do is pay the miners slightly more than what they would have made mining for bitcoin that hour. It’s a win-win.”
Alternative Income Source
Riot’s deal with ERCOT is a simple, if rather unorthodox, way of turning a profit during a downturn in the crypto industry.
Two years ago, Riot Platforms witnessed an astounding 8000% increase in revenue. Unfortunately, that year’s bull market ended quickly, and in 2022, Riot’s balance sheet was $500 in the red.
The mining platform’s attrition rate has since slowed – last quarter, only $27.7 million were lost. Still, assuming the mining company invested its stellar 2021 profits wisely, the firm should be able to weather the storm until confidence in the market recovers.
In the meantime, the deal with ERCOT is providing Riot Platforms with a welcome stream of revenue, according to CEO Jason Les.
“August was a landmark month for Riot in showcasing the benefits of our unique power strategy. The effects of these credits significantly lower Riot’s cost to mine Bitcoin and are a key element in making Riot one of the lowest cost producers of Bitcoin in the industry.”
Riot’s stock price has increased by about 230% since its all-time low back in 2022. If recent rumours regarding Bitcoin ETFs turn out as expected, the stocks’ price may continue on a positive trend.
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