Bitcoin’s hashrate has experienced a significant 25% drop since the weekend, raising concerns about network security as the highly anticipated “halving” event approaches.
Data from BTC.com shows a decline in global hashrate estimates from approximately 600 EH/s on Friday to 450 EH/s by Tuesday.
Texas Cold Weather Impact on Bitcoin Hashrate
The drop in Bitcoin’s hashrate coincided with a weather warning issued by the Electric Reliability Council of Texas (ERCOT) for January 14 to 17 due to extreme cold conditions. ERCOT, which regulates most of Texas’ grid, issued conservation appeals on Sunday, Monday, and Tuesday, expressing concerns about low operating reserves due to freezing temperatures, high demand, and unusually low wind.
This decrease in hashrate suggests that more than four gigawatts of power capacity were curtailed during this period. Foundry USA Pool, a major mining pool operator, contributed to about half of this decline, with its estimated hashrate dropping from 155 EH/s on Friday to 77 EH/s on the following day before partially recovering, according to MiningPoolStats.
The impact extended to users of Luxor Mining Pool and Marathon Digital, a Bitcoin mining company. Luxor Technology’s COO, Ethan Vera, mentioned that their mining partners significantly reduced operations, shutting down machines to redirect power to the grid over the past few days.
Charlie Schumacher, Marathon’s VP of Corporate Communications, emphasized that Bitcoin miners in Texas play a crucial role as a flexible baseload that can be quickly curtailed to release energy for others during times of crisis, as observed recently.
Texas Emerges as a Bitcoin Mining Hub
Texas has emerged as an alternative hub for Bitcoin mining after China’s dominance waned following the crypto mining crackdown. Texas miners argue that the relationship between the industry and the state is mutually beneficial.
Several companies, including Marathon Digital, Riot Platforms, and Iris Energy, have contributed to the growing concentration of Bitcoin mining facilities in Texas, attracted by factors such as cheap electricity, grid incentives, and the state’s deregulated energy market.
Texas-based Bitcoin miners have become accustomed to curtailment requests from the state. For example, in August, Riot Platforms received a record $31.7 million worth of power and demand response credits from ERCOT after significantly reducing power usage by over 95% during a summer heatwave.
Similarly, Iris Energy received $2.3 million in energy credits in the same month, primarily due to voluntary curtailment at its Childress site in Texas.