Continuing its strategic shift aimed at mitigating losses, Riot Platforms, a prominent Bitcoin miner, continues to capitalize on Texas’s energy credits system, earning a substantial $31.7 million in August alone.
According to a report by CNBC, Riot voluntarily adjusted its operations during the state’s record-breaking heatwave, thus significantly reducing its power consumption and gaining advantage of the available energy credits.
CNBC reported that Riot mined just $8.9 million in Bitcoin during August, far below the revenue generated from energy credits.
This approach demonstrates Riot’s successful implementation of its unique power strategy, as the company navigated August’s strenuous heatwave and simultaneously generated more income from energy credits than from Bitcoin mining. Jason Les, CEO of Riot, emphasized that these credits have notably reduced Riot’s cost to mine Bitcoin, placing it as one of the industry’s lowest-cost producers at just $8,300 per Bitcoin.
Diversifying energy strategies.
In a realignment of its revenue streams, the company is now depending on these energy credits as an alternative source of income, particularly as the crypto mining sector grapples with low trading volumes and mounting energy prices.
This recent development builds on Riot’s historic relationship with the Electric Reliability Council of Texas (ERCOT). ERCOT has consistently engaged with flexible energy consumers like Riot through its “demand response” programs, compensating them for reducing power use during critical periods for the grid. This mutually beneficial interaction has helped ERCOT manage fluctuating energy prices and maintain service reliability.
Riot’s unique power strategy allows the company to contribute significantly to the broader energy grid without relying solely on Bitcoin sales for revenue. The company participates in ERCOT’s ancillary services and the Four Coincident Peak (4CP) program to balance electricity supply and demand. Riot sells access to electrical load to ERCOT and, in return, receives compensation irrespective of whether ERCOT requires a power down.
Riot’s case exemplifies how companies strategically leverage their resources to navigate challenging market conditions and generate alternative revenue streams.
This development underscores the interplay between the crypto sector and energy industries, a dynamic that could shape their mutual growth trajectories in the long run.