Bitcoin miners halt some operations in the U.S. due to high electricity prices

Following the Arctic storm that hit the United States, some major Bitcoin mining companies are temporarily halting part of their energy-intensive operations due to the sharp rise in electricity prices.

The key metric for network computing power – the hash rate – has seen a significant drop, according to Mining Pool Stats. The main reason is the reduction in production at mining pools FoundryUSA and Luxor, which primarily serve U.S.-based operators. Over the weekend, both pools recorded hash rate declines of more than 50%, with values remaining relatively low as the effects of the winter storm continue to strain power grids.

Major mining companies such as Riot Platforms Inc., whose main operations are in Texas, participate in demand response programs, where miners can sell pre-purchased electricity back to the grid during price spikes. Other operators without such agreements are forced to shut down their machines due to high rates. Riot has not provided a comment at this time.

“The most advanced Bitcoin miners react within seconds, adjusting the speed of their machines to maximize profit, balancing revenue, electricity costs, and incentives to service the network,” explained Ethan Vera, Chief Operating Officer of Seattle-based Luxor Technology.

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The process of Bitcoin mining is extremely energy-intensive. Miners invest tens of billions of dollars in building data centers and purchasing specialized computers to compete for rewards when validating transactions on the blockchain. Mining pools are typically companies that provide software to aggregate the computing power of multiple miners, increasing the chances of successfully processing blocks and receiving rewards.

The Arctic storm in the U.S. over the weekend led to temporary interruptions in Bitcoin mining across the country, likely giving an advantage to miners outside the U.S. They now face less competition and have a higher chance of processing blocks first and winning rewards.

Shares of Riot Platforms fell by approximately 6%, while those of Florida-based MARA Holdings Inc. dropped by around 5%.

The U.S. has become a major hub for Bitcoin mining, with some of the largest operations in “crypto-friendly” states such as Texas and Georgia, whose power grids are under pressure due to extreme weather conditions. Excessive energy consumption by miners is causing discontent among both grid operators and local residents affected by rising electricity bills. The growth of artificial intelligence data centers further exacerbates the shortage of electricity and energy infrastructure.

Previous winter storms in Texas have caused human casualties partly due to power outages, with locals paying significantly higher electricity bills. The Arctic storm over the weekend affected millions of people across the eastern two-thirds of the U.S., leaving 765,000 households and businesses without power by 1:30 PM New York time, as snow and ice damaged local power lines, according to PowerOutage.us. More than half of the outages were in Tennessee, Mississippi, and Louisiana.

Although grids have so far avoided serious systemic failures, forecasts of subzero temperatures and dangerously cold winds are expected to continue throughout the week, testing seasonal electricity demand records from Texas to New England.

After China imposed strict controls on the industry in 2021, the U.S. has established itself as a leading center for Bitcoin mining, attracting both companies and significant investments in cryptocurrency infrastructure.