- Bitcoin mining giant Riot Platforms is preparing to open a massive facility in rural Texas.
- It is the latest development of what some have called a Bitcoin gold rush in the state.
- Local residents and green activists are fighting back, saying Riot is lining its pockets thanks to sweetheart deals with the state.
About an hour’s drive south of Dallas, Texas, in Navarro County, is Corsicana, population not even 25,000. Once an oil boom frontier town, it’s now a sleepy municipality.
Just outside of Corsicana is what promises to be the world’s largest Bitcoin mining facility, operated by NASDAQ-listed Riot Platforms.
The facility, built on a sprawling 265-acre site, is expected to start operations this quarter, and Riot says it will create 270 direct jobs.
Its first phase will consist of 400 megawatts, but authorities have approved a total capacity of one gigawatt.
It’s a sign of how cheap energy has transformed Texas into a hub for Bitcoin mining — leading to inevitable comparisons to gold rushes of old.
Chinese miners, especially, have flocked there since their home country banned crypto mining in 2021.
But a grassroots organisation called the Texas Coalition Against Blockchain Mining is fighting the project — and by extension the entire Bitcoin mining industry.
In conjunction with non-profit Greenpeace, the coalition planned a week of action this week to raise awareness of what it says will be an environmental disaster.
The coalition’s founder, Jackie Sawicky, and Joshua Archer, a senior climate campaigner at Greenpeace, called a news conference on Thursday.
They said the Riot mining outfit will put pressure on an already overburdened power grid and suck up an obscene amount of water in an environment prone to historic droughts, and where ranchers have had to sell off cattle amid water and feed shortages.
“Let’s be clear about what Riot promises to bring to Navarro County,” Archer said. “The pollution factory they’re building is going to take water away from Corsicana, Dawson and other towns in Navarro County.
“Its electricity demand is going to threaten more blackouts and brownouts, and the lives and livelihoods of people who are vulnerable.”
Archer said Riot was lining the pockets of its management and its shareholders, which include Wall Street giants BlackRock, Vanguard, and JPMorgan Chase.
No. 1 in Bitcoin mining
Activists say local authorities — as well as Texas Governor Greg Abbott and Senator Ted Cruz — have rolled out the red carpet for Bitcoin miners, enticing them with public subsidies and tax breaks.
Riot is a participant in a so-called “demand response” programme implemented by the Texas energy supplier to incentivise reducing electricity consumption in peak times.
Under this programme, Riot can essentially sell power back to the grid for a fat profit, activists say.
CNBC reported in September that Riot earned $31.7 million in energy credits in August from the Texas power grid operator by voluntarily curtailing its energy consumption during a record-breaking heatwave.
The Bitcoin mining business model was hit hard by the crypto winter, and Riot is essentially funding itself with this rebate, CNBC said — it earned just $8.9 million mining Bitcoin that same month.
Sawicky said the demand response programme is unfair to Texas residents.
“[Riot] are paying 2.9 cents per kilowatt hour when average Texans are seeing 12 to 18 cents per kilowatt hour,” she said. “They get paid to shut down because the grid is unstable. They turn around and sell that deeply discounted energy back to the grid for up to 100 times what they paid for it originally.
“While every single Texan’s bills are skyrocketing, this company is essentially gouging and inserting itself between consumers and the Texas grid.”
A Texas state bill to prevent Bitcoin miners from participating in these kinds of programmes passed unanimously out of the state Senate in April, but is languishing in the House of Representatives.
Proof of waste
Riot Platforms already operates what it says is the largest Bitcoin mine in North America in the Texas town of Rockdale, on about 100 acres two hours away from Corsicana. Riot says the Rockdale facility uses about 450 MW of power, with a full capacity of 700 MW.
Greenpeace, quoting a New York Times investigation into the Bitcoin mining industry in Texas, says that’s equivalent to the amount of electricity used by the nearest 300,000 homes.
The Navarro facility will have a much greater power capacity than Rockdale, Greenpeace says.
Bitcoin mining has become a target of criticism from environmentalists, the mainstream media and researchers.
They say mining rigs need a huge amount of power to perform the proof-of-work validations needed to create the Bitcoin blockchain.
The Times investigation found that Texas Bitcoin miners drew enough electricity to power New York City, even as the grid failed during winter storms and Texans froze to death.
Still, the miners say they use less power than most other industries.
Riot has said that globally, proof-of-work “accounts for roughly 0.27% of energy consumption — less than gold mining or residential air conditioners,” and that mining produces no emissions at all.
The company has said its operations at Rockdale created 200 full-time and 400 contractor jobs, including in construction, IT, and support staff, in a region where the average income is less than $50,000 a year.
“Riot and other Bitcoin miners help stabilise the grid by being flexible industrial load,” a spokesperson for Riot told DL News. “Riot uses the most energy-efficient equipment and state-of-the-art cooling technology to operate in a quiet and environmentally friendly manner.
“The development and operations of our data centres create hundreds of jobs in rural Texas.”
Riot has also pushed back on what it called sensational and inaccurate headlines around its profits from the demand response programme, saying this actually ensures uninterrupted service for consumers.
“Many industries in addition to Bitcoin miners participate in such programmes, including steel mills, electrical battery companies, oil and gas companies, and power generators,” the company said in a statement.
“These programmes utilise market forces to drive grid stability.”
Data debate
It’s difficult to come by data on Bitcoin mining’s impact that everyone agrees on.
One respected institute, the Cambridge Centre for Alternative Finance, estimated that in March 2021, Bitcoin mining alone accounted for as much carbon output as the entire nation of Austria.
And green activists say greenhouse gas emissions are worse since China’s ban, as miners there could partly rely on cleaner forms of energy like hydroelectricity.
But recent research has downgraded these impacts. Accounting firm KPMG, for example, released a report in August saying that Bitcoin has a net positive environmental and social impact on the world.
When DL News asked Greenpeace’s Archer about this data debate, he replied: “There has been some downward revision of some estimates of Bitcoin’s electricity consumption, but it still consumes as much as entire countries. And the cost of that is accelerated climate change.”
If Bitcoin increases in value, mining competition will become more intense and its electricity use and energy consumption will continue to increase, Archer added.
“It’s not consistent with our climate goals to continue proof-of-work mining,” he said.
Have a view on Bitcoin mining? Email the author at joanna@dlnews.com.