You might be wondering what a story about Bitcoin
is doing in the middle of nowhere. And I mean nowhere.
With towns like Wink named after the fact that if you blink, you might miss it,
this vast region of West Texas, widely known
as the Permian Basin, is not exactly the Big Apple.
But that doesn't mean it's not important.
In fact, its primary export is the cornerstone
to life as we know it.
Energy.
That's right.
West Texas has energy for sale, lots of it.
And it is cheap.
And where there's cheap energy these days, you're bound
to find these things pop up like sucker fish.
These are Bitcoin miners, specialized machines custom built
to solve complex problems
to earn that magical Internet money that we're all really tired of hearing about.
I'm headed to a man camp.
Oil workers and energy makers live in these unironically named man campments
for months, even years at a time.
But fun names aside and assuming the believers are right
and crypto isn't the modern day tulip bulb, Bitcoin miners
will be increasingly calling these man camps home as they move into places
like West Texas for their cheap energy.
Wandering this man camp alone has me thinking,
if Bitcoin mining is so energy intensive, how does a place like Texas
with such historic grid problems let them in?
Can Bitcoin mining ever really become sustainable
or is it all just one giant energy sucker?
Should I quit my career as an actor to mine Bitcoins or would I
be better off waiting tables? I have too many questions.
And who better to ask than Bloomberg senior reporter
Mike Smith, whose work we plagiarized in order to make this cute
video.
Okay, so we're in this man camp checking out
this new wave of energy consumption through Bitcoin.
And you've written about this for a while, right?
Yeah. I've been writing about this since late last year.
Would you say Texas is unregulated?
Under regulated?
I would say it's lightly regulated in most cases
in terms of business and very lightly regulated
in terms of electricity.
And that's because the electrical system in Texas was basically created
a couple of decades ago to be almost entirely market driven.
The cost of electricity for big time users
of electricity is probably the lowest in the United States
and among the lowest in the world actually.
The state is doing everything they can to attract people here to mine Bitcoins.
How much electricity are we talking about?
Enough electricity to basically light up hundreds of thousands of homes.
Could it practically be used for homes instead of for mining Bitcoin,
or is it like conversations around hunger. Well, we have all this food,
we just don't have the mechanism to get it.
Yeah, well, that's the interesting thing
about where we are right now in West Texas.
What made me interested was learning how much electricity
these Bitcoin mines actually use and how they're sort of flooding into
the state of Texas, which has had serious issues with electricity.
And then I sort of, the more I looked into it,
the more I discovered it's not really black and white.
It's not that simple.
Enter Justin Ballard,
self-styled "crypto cowboy" and full on Bitcoin fanboy.
I'm a
believer that the Bitcoin network and what Bitcoin can do
for people around the world, not just in the US, is very, very powerful.
Guys like Justin are looking to capitalize on the Lone Star State's business
first energy market to buy cheap energy for his fleet
of thousands upon thousands of power hungry machines.
I came from the oil and gas space and I realized it's very similar
to the oil and gas industry in that you want to be the lowest
cost operator to produce a barrel in oil and gas.
So Bitcoin mining obviously does require a lot of energy
and the goal of a miner is to find the cheapest energy possible.
And typically that cheapest energy is found in remote areas.
So off we
go to guzzle gas on the open road to better understand
exactly what an energy hawk does to find cheap power.
So we're going to a solar site? Yeah.
This is a 180 megawatt solar farm that we're going to.
What's 180 watts in English?
180 megawatts?
What does that power?
Oh man, it can power a lot.
One megawatt is 200 homes.
Right.
So 360,000, I guess.
Right.
Something like that.
I'm horrible at math.
Wow. The old saying is true,
everything really is bigger in Texas.
But despite this vast expanse of panels, solar and other renewables
remain an intermittent power source that doesn't even come close to satiating
Bitcoin's appetite.
To do that, Bitcoin miners need to buy power from sources with a surplus
of energy.
And believe it or not, there's quite a few options around here.
So where are we going now? It's a substation.
What does that mean?
This is a substation that we are going to be taking power from.
There's a lot of excess power out here
that just is available but is not being utilized at this time, so.
What were they,
I guess what are they currently doing with the excess?
Nothing.
So it just goes into the ground? Right.
This type of power is known as stranded energy
and it's quite literally energy that has nowhere to go.
And this is what occupies a lot of Justin's time.
Finding sources of stranded or excess energy and capturing it.
He's doing a deal with this substation that has too much energy.
They literally cannot give it away before they have to let it go.
This is the Al Hill substation
and it's going to be a 40 megawatt site here.
So this is like
the giant outlet in the wall that you're going to plug
your Bitcoin computers into? Yeah.
The sources of stranded energy are as diverse as energy itself.
And a true energy hunter finds power from places you couldn't dream of.
What are we actually going to see?
So we're going to go to a well site that has a flare stack on it.
But these wells are not economic
from a selling natural gas standpoint, but they can be economic for us
to go mine Bitcoin on because the amount of gas required to mine is so small.
So like when you
see that, can you just imagine Bitcoins coming out of there?
Coming right out of the top, yeah. Money.
Yeah I'm catching them, I've got a basket to run around with.
It doesn't take a rocket scientist -
I'm just an actor - to understand that capping flared gas and turning it
into energy is a lot greener than releasing it into the atmosphere.
But there's a huge "but" here.
Much of Bitcoin miners' current operations plug straight into grids that power homes
and offices.
A lot comes from nonrenewable sources
like natural gas and coal.
Not only that, but Bitcoin's energy demands could potentially strain
the grid's output, taking power away from residents
who need it, especially in times of emergencies.
In February of 2021, an ice storm brought the state to its knees,
overwhelming the power grid, causing it to shut down.
No heat, no water after this first storm.
And it's been deadly. 246 people died.
Today, we're in the midst of an insane heat wave.
In fact, the day we filmed this, almost every Bitcoin miner in the state
had to shut down to accommodate peak demand for energy.
Can a state with such serious energy concerns really afford to sell their power
to Bitcoin miners?
As it turns out, Bitcoin maximalists have an argument for why their intense
power demands on the grid is actually a good thing for energy stability.
They're not putting the Texas grid at risk.
They're actually stabilizing the Texas grid.
There is a balance that is required for the grid to continue to operate,
and it's a very small tolerance that you can get above or below.
The benefit of Bitcoin mining for the grid is that
you take your base load from this to this.
When you keep your base load higher, when you do have a peak
demand from residential use because of a storm or whatever,
it's much easier to already just start curtailing your power
away from the Bitcoin miners,
they shut down, and it is diverted to the residential use.
Did you get all that? Yeah. Neither did I.
So I decided to zoom in for a second opinion
with independent energy consultant Doug Lewin.
Is the grid and are the energy sources capable
of supporting all of the growth in crypto?
So I think the answer is a firm maybe,
and what it depends on is good regulation
and of course, Texas is not necessarily a state that has a reputation
for being good at regulating anything, unfortunately.
Well, women's bodies.
So you have to keep things at 60 hertz.
If a plant drops, your frequency drops.
You need something to balance that.
You have to balance supply and demand at every second.
I do think large flexible loads, whether that's
Bitcoin or others, have a lot going for them.
If, and this is a huge "if," if they are using
clean sources of energy to power their operations
and if they will shut down when things are getting tight on the grid,
I would like to see us be able to integrate Bitcoin miners.
Not because I care a lot about Bitcoin mining.
I don't.
What I care about is, in order to get Texas
to a place where Texas is the leader
in low polluting, low emission, clean energy,
we are going to need a lot of large flexible loads. If they can do it,
then we've got a template for these other large flexible loads to enter the market.
And that
is how in a perfect world of fulfilled ifs, Bitcoin mining's
constant exponential demand for power can help stabilize
the energy grid and drive innovation towards sustainability.
Man, Bitcoin miners really are the sucker fish of the energy sector.
But here's the thing.
Despite their unfortunate name, sucker fish, keep the big fish
clean all while getting what they need to survive.
Sure, yeah, it's kind of parasitic,
but at the same time, it's elegantly symbiotic.
In a weird way,
that's what Bitcoin miners are proposing to do to our power grids.
Let's not forget that guys like Justin are still a minority in the space
and that even if he was to use only renewables,
he wouldn't make much of a dent in the estimated 73 million
tons of carbon dioxide per year that Bitcoin mining emits.
Maybe we should coin a new phrase here like sucker coins
or fish bits or not.
Wouldn't it be amazing if we could stop talking about Bitcoin?
Look, I know Bitcoin's pretty annoying, and you're probably hoping
it just goes away,
but so long as dudes like Justin think they can get rich
from mining the stuff, it's probably here to stay.
And if there really is a chance that mining
the stuff can help stabilize our grids, then maybe we should give the sucker fish
a chance.