Why a Bitcoin mine can earn money by going dark
A large Bitcoin mine is unusual electricity demand: its computers can be switched off quickly and restarted later. That makes it a flexible load—a customer that can reduce its consumption when the grid is strained, rather than a power plant that must produce more electricity.
In Texas, the grid operator, ERCOT, can call on participating customers to cut demand during tight conditions. Riot Platforms has also received credits or other compensation associated with reducing its electricity use. The economic value comes partly from the electricity the company no longer has to buy, and partly from payments or credits tied to its participation in market programs. Those are different things, even when both improve the company’s bottom line.
The tradeoff behind the shutdown
Bitcoin mining machines compete to solve computational puzzles. If they run, they may earn bitcoin, but they also consume electricity. A miner compares that expected mining revenue with the cost of power and the value of curtailing. When electricity becomes especially valuable to the grid—or when a program rewards reduced use—turning machines off can be the more profitable choice.
The grid benefits because one large customer’s sudden drop in demand can ease pressure without waiting to build new generation. The miner gives up some possible mining income and accepts interruptions; in return, it can avoid expensive power and, under applicable arrangements, receive compensation. The arrangement is valuable precisely because the company can stop consuming at short notice.
What the payments do—and do not mean
Large reported curtailment-related revenues can make shutdowns look like a simple public payment for doing nothing. In practice, the total may combine avoided electricity costs with program credits or other market revenues, and its size depends on the period and the program. It is not automatically a direct payout from taxpayers, nor does it show that every shutdown occurred during a winter storm.
Nor does a miner’s compensation establish that households were left without heat because it received money. Grid operators use demand response to manage supply and demand across the system; the payment is meant to make interruptible consumption available when it is useful. The striking implication is that, in a stressed grid, a warehouse full of computers can be worth more to its owner—and more useful to the system—temporarily switched off.
