Bitcoin Mining Faces Backlash Over Controversial Power Deals in Texas

Bitcoin mining has recently come under fire again, this time due to a report from The Economist that has stirred debate about the industry's environmental impact.

The focus of the controversy is the practice of the Electric Reliability Council of Texas (ERCOT), which compensates Bitcoin miners to reduce their operations during periods of high electricity demand. Last August, Riot Platforms reportedly saw a significant increase in revenue simply by halting mining activities during these peak times.

Critics, including journalist Robert Evans, argue that this arrangement essentially allows Bitcoin miners to profit from avoiding energy consumption rather than paying higher rates for their electricity.

Some voices, like Ed Zitron, CEO of EZPR, have called for stricter measures, suggesting that miners should face penalties for high energy use rather than receiving payments for reducing their operations.

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Others, such as former Bloomberg columnist Noah Smith, predict a growing backlash against this practice. Technology journalist Kelsey D. Atherton has proposed that instead of compensating miners, the government should take more direct action, like confiscating mining equipment.

The situation has even been described as a form of “extortion,” with accusations that mining companies are effectively manipulating the state’s power grid. Economist Nathan Tankus compared the situation to the notorious Enron scandal, suggesting that the crypto industry has created a modern, legally acceptable version of Enron’s controversial tactics.

Alexander Stefanov