Don’t Mine Me: ERCOT Requirements May Slow Texas’ New Crypto Currency Mining Operations
As Texas positions itself to become the world’s newest bitcoin mining hub, the Electric Reliability Council of Texas (“ERCOT”) has recently taken actions that may stall the integration of new cryptocurrency mining operations within the state. Apprehensions about the potential impacts of the crypto mining boom on the reliability of the Texas power grid have prompted ERCOT to place new requirements on certain large loads attempting to interconnect to the grid.
Specifically, ERCOT has established an interim process requiring the submission and approval of reliability studies prior to the interconnection of large loads, and has commissioned a task force to develop a more permanent set of standards. According to ERCOT, the new interim process and task force are largely meant to address the inability of ERCOT’s existing planning models and processes to incorporate the accelerated development timelines associated with crypto mining operations.
While it has historically taken around two years for the activities associated with a large-load interconnection request to come to fruition, crypto mining projects often become operational in less than a year. Crypto mining projects typically involve using powerful computers to solve complicated puzzles that validate previous cryptocurrency transactions on the distributed ledger of a blockchain (e.g., the Ethereum blockchain) and add new blocks to the ledger. This process is critical to the decentralized nature and security of cryptocurrency and requires large quantities of power to complete. According to the Texas Blockchain Council, in addition to the approximately two Gigawatts of crypto mining capacity currently active in Texas, the state is attracting an additional two Gigawatts of capacity per year. The rapid development timeline of crypto mining projects has exposed gaps in ERCOT’s existing methods of evaluating the reliability impacts of new large loads.
There have also been concerns about the ability of current review processes to capture the transmission impacts of ancillary services provided to the ERCOT market by crypto mining operations.
Interim Process
Pursuant to a March 25 market notice published by ERCOT, large loads that meet certain requirements must follow a new “Interim Large Load Interconnection Process” before being allowed to interconnect. This interim process applies to load interconnection requests that have not already been modeled and studied in a completed ERCOT Regional Transmission Plan, Full Interconnection Study, or Regional Planning Group review, and that meet the following requirements:
New loads not co-located with a Resource with total demand within the next two years of 75 MW or greater;
Existing loads not co-located with a Resource increasing total demand by 75 MW or greater within the next two years;
