A hot potato: Imagine being paid not to do your job. That's essentially what happened to Bitcoin miner Riot Platforms, which was given $31.6 million by a Texas power grid operator ERCOT for voluntarily curtailing its energy usage during a record-breaking heatwave.
CNBC reports that Riot was one of the companies to benefit from the crypto boom of 2021, recording a revenue increase of almost 8,000%. But the crash of 2022 led to a net loss of $500 million for the year, and things haven't improved much since then; it lost $27.7 million in the latest quarter.
Thankfully for Riot, there is a way to offset these losses: energy credits. It received $24.2 million from the Electric Reliability Council of Texas (ERCOT) in power curtailment credits for reducing its energy consumption in August, along with $7.4 million from ERCOT's demand response program.
The more than $31 million Riot received for its actions was over three times what it earned from Bitcoin mining during the same month; the 333 coins the company mined were worth around $8.9 million.
"August was a landmark month for Riot in showcasing the benefits of our unique power strategy," said Jason Les, CEO of Riot, in the company's press release. "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."
ERCOT's demand response programs compensate customers for reducing their power usage during periods of high demand, which reached record-breaking levels during the brutal summer heatwave in Texas that saw homes running air conditioners at full. If ERCOT is willing to pay crypto-mining companies more than what they would earn from mining, they'll be happy to reduce workloads.
Fred Thiel, CEO of crypto mining firm Marathon, told CNBC that companies get curtailment requests less than 3% of the time in the course of a year, which he estimates comes to about five to ten hours a month.
While Bitcoin has seen its price increase this year from $16,605 to its current price of $25,733, it remains far from its 2021 peaks of almost $70,000. This is reflected in Riot's stock, which is up 230% in 2023 to $11.24 but remains a fraction of its 2021 peak of $77.90.