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Bitcoin Mining and Population Growth Are Pushing the Texas Grid to the Brink

The Texas energy grid faced its first high-heat litmus test of the year this month as warming April temperatures placed an early strain on utilities. Earlier this month, the Electric Reliability Council of Texas (ERCOT) had to postpone scheduled maintenance to "to help alleviate potential tight conditions" in order to keep up with energy demand as more residents turned on their air conditioning units. Worryingly, it wasn't an intense or unprecedented heat wave that placed a stress test on the troubled grid, it was temperatures in the 80s - nothing impressive or unexpected for the region.

The Texas electrical grid regularly schedules maintenance in the springtime because there is typically excess energy production thanks to mild weather conditions. "Yet merely warm spring weather is now enough to push the Texas grid to the brink," the Wall Street Journal recently reported

There are a few reasons that the Texas grid is experiencing unprecedented strain. The first issue is booming population growth - for several years in a row, Texas has been the fastest-growing state in the nation. From 2000 to 2022, Texas gained 9,085,073 residents, nearly 3 million more than the next largest-gaining state, Florida. In addition to a ballooning population, Texas' industrial and tech sectors are also growing at a breakneck pace. Tech, in particular, is a huge consumer of energy as data centers proliferate and Artificial Intelligence eats up an ever-increasing amount of electricity. All of these factors contribute to a major uptick in energy demand for the Lone Star State. 

What's more, a recent surge in Bitcoin prices has caused the energy-sucking cryptocurrency miners to ramp up production. Many of these operations have opted to set up in Texas because, in a cruel irony, they can take advantage of Texas' considerable and increasing grid crunches for arbitrage, leveraging their enormous and ever-expanding energy needs by getting paid to reduce power usage

And then there's the issue of climate change. A particularly mild winter gave Texas a little break, but this summer is set to be one of the hottest on record. AC units across the state will be pushed to their limits - and so will the grid. The result of all these energy consumption factors is that the Texas energy grid could be in serious trouble this year. A spring crunch is a particularly worrying omen, and many experts are concerned that it may be the canary in the coal mine for a difficult and energy-insecure summer. And it certainly doesn't help that critical springtime maintenance was curtailed. 

The Texas grid has a tragic history of weather-related failures. In the winter of 2021, the grid collapsed during a cold snap, resulting in the deaths of at least 246 people across the state. And while Texas has done a lot of work to update and weatherize the grid since that tragic failure, only time will tell if the grid is ready for this summer's blistering temperatures and prolonged heat waves. 

The good news is that Texas has added a whole lot of solar and wind energy capacity to the grid, which should be able to generate a considerable amount of energy under this summer's sun. These renewable additions to the grid are credited with keeping the state's utilities afloat last summer. But the variability of these energy sources and the rapid increase of the state's energy needs leave this summer's energy security uncertain to say the least. Texas simply doesn't have enough energy storage capacity to keep the grid supplied with energy when the sun isn't shining and the wind isn't blowing. 

Luckily, Texas has a whole lot of natural gas resources to fall back on. But it lacks other critical back-ups. Unlike other U.S. states, the Texas energy grid is completely isolated from the rest of the country, a strategic decision that has allowed the state to eschew regulations and operate under its own Wild West ethos. This isolation was a key part of the reason that the grids failed so tragically and completely in 2021 - Texas couldn't quickly pull energy from neighboring states to fill the gaps. While many have argued that it's time for Texas to reconnect to the rest of the nation's grids for greater energy security, ERCOT has retained its lone-wolf status. Hopefully, this doesn't prove to be another tragic mistake. 

By Haley Zaremba for Oilprice.com 

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Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the… More