Dan Patrick targets Texas electric grid’s bitcoin mines

Texas lawmakers were shocked, SHOCKED, to learn that electricity demand is going up, customers’ bills are following apace, and that maybe — just maybe — adding all that bitcoin mining to the grid was not such a great idea after all.

“Shocking testimony today in the Senate Committee on Business & Commerce that within only six years (that’s only three legislative sessions), our power grid needs will grow from about 85,000 to 150,000 megawatts. That is much higher than the 110,000 megawatts they previously projected,” Lt. Gov. Dan Patrick frantically posted on Twitter, now known as X.

If only they’d read a newspaper. My colleagues Claire Hao and Sara DiNatale have written extensively about the Electric Reliability Council of Texas’ forecasts since April and cryptocurrency miners’ role in driving up demand and prices.

Patrick, Gov. Greg Abbott and other Republican leaders had touted bitcoin mining as a solution to stabilizing the ERCOT grid, but Patrick no longer believes the crypto enthusiasts’ fable.

“Crypto miners and data centers will be responsible for over 50% of the added growth. We need to take a close look at those two industries. They produce very few jobs compared to the incredible demands they place on our grid,” Patrick continued. “Crypto mining may actually make more money selling electricity back to the grid than from their crypto mining operations.”

“Texans will ultimately pay the price,” he added.

Indeed, they will. I’ve been writing about this for almost two years, but then again, I’m not his favorite journalist.

Twenty-five years ago, Texas’s decision to deregulate the electricity market was innovative and revolutionary. Competition between generators to supply the cheapest electrons drove down electricity bills and boosted the economy.

When China banned cryptocurrency mining, companies came to Texas because of our low wholesale electricity prices, virtually no limits on connecting to the grid, and a program where ERCOT pays companies to go offline when demand exceeds supply.

Low prices, though, led to very little investment.

Things really fell apart during Winter Storm Uri in 2021 when millions of people lost power for days, and hundreds of Texans died. Investigations revealed that poorly regulated natural gas pipelines and decrepit natural gas generators caused most outages.

The Public Utility Commission of Texas, which regulates the electric grid, didn’t even have a performance standard for keeping the lights on. The PUC is now proposing a standard of one rolling blackout every decade, during which customers are without power for no more than 12 hours.

The question is how to build a grid that meets that standard. State leaders are finally recognizing that the laissez-faire ERCOT grid operation needs more government oversight.

The Republican-controlled legislature has chosen to subsidize natural gas suppliers and generators rather than choosing lower-cost options, such as connecting to the national grid or adopting energy-efficient technologies. ERCOT staff also keeps trying to hamstring battery storage and other renewable energy sources to boost natural gas.

NRG, one of Texas’s three largest generation companies, is demanding $925 million in taxpayer-backed, low-interest loans by September in return for building new plants. The company has worked on plans for new gas-fueled plants since 2019 but will not build anything until it gets government money and guaranteed higher prices, Hao reported Thursday.

Vistra, another large generator, also has a multibillion-dollar plan to build more gas-fired plants if certain conditions are met. Executives there also require a chunk of the $5 billion Texas Energy Fund’s low-interest loans and a new wholesale market that provides higher electricity prices.

The scramble is on for the public’s money to make powerful politicians happy. Patrick has made it clear that if generators don’t do what he wants, he will punish them in the next legislative session.

Clean energy advocates are disgusted by Texas’s subsidies flowing to the GOP’s fossil fuel donors in the face of climate change. There are cheaper ways to meet the PUC’s reliability standards with cleaner fuels.

The easiest and most crucial step is not wasting electricity on nonsense industries. Here is a rare case where I agree with Patrick.

“I’m more interested in building the grid to service customers in their homes, apartments, and normal businesses and keeping costs as low as possible for them instead of for very niche industries that have massive power demands and produce few jobs.,” his post said. “We want data centers, but it can’t be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off.”

Preach, Brother Dan, preach.

Award-winning opinion writer Chris Tomlinson writes commentary about money, politics and life in Texas. Sign up for his “Tomlinson’s Take” newsletter at houstonchronicle.com/tomlinsonnewsletter or expressnews.com/tomlinsonnewsletter.